Germany is a front-runner in developing solutions to address the challenge of climate change. It managed to considerably reduce domestic greenhouse gas emissions over the 2000s and will meet its target under the Kyoto Protocol exclusively through domestic measures. This chapter reviews the policy initiatives implemented over the decade to achieve these results, the institutional and strategic frameworks and the mechanisms in place to monitor implementation. It assesses progress in using market-based instruments such as energy taxes and emission trading; it analyses the effectiveness of measures implemented in the energy and transport sectors, including those to promote renewables, energy efficiency and improved vehicle technologies. The interactions between different policy instruments are also considered. Finally, Germany’s ambitious emission reduction targets to 2020 and beyond are discussed.