The German government said Wednesday it would set more ambitious targets to reduce CO2 emissions after a landmark ruling by the country's top court declared a flagship climate protection law "insufficient".

The government now expects to slash emissions by 65 percent by 2030 compared to 1990 levels and by 88 percent by 2040, with the goal of becoming carbon neutral by 2045, five years earlier than previously expected, Finance Minister Olaf Scholz said at a press conference in Berlin.

"We want to make our goals more precise," Scholz said, adding that the recent constitutional court ruling had given climate protection measures "a new boost".

The court ruled last Thursday that Germany's current emissions targets did not set a clear enough timeline for emissions reductions beyond 2030.

The current measures could "irreversibly offload major emission reduction burdens" onto the period after 2030, thereby "violating the freedoms" of future generations, the court said.

It demanded that the government set annual emission targets for the period after 2030, saying an improved plan must be put forward by December 2022.

Under pressure to show it is taking environmental issues seriously ahead of September's general election, outgoing Chancellor Angela Merkel's right-left coalition government has moved quickly to adjust the climate protection law, which it passed in 2019.

Both Merkel's conservative CDU and its centre-left coalition partner the SPD are currently lagging behind the Green Party in popularity surveys.

Buoyed in part by the rise of youth protest movements such as Fridays for Future, the ecologist party has surged in popularity in recent years and is now leading in opinion polls ahead of September's vote.

Speaking at a parallel event in Berlin on Wednesday, Merkel said that "young people have reminded us that we are going too slowly rather than too quickly" on climate change issues.

The constitutional court ruling "has told us: you can't just have freedoms for the generations alive today, you must also think about the freedoms of future generations", Merkel said.

"This is a new legal perspective that could have many consequences and impresses upon us that we must do more."