Speaking Monday at the Petersberg Climate Dialogue in Berlin, Merkel warned the representatives of 35 countries in attendance that "waiting is not an option" for reaching a deal to cut the world's greenhouse gas emissions.
"If we do nothing, the road is even more complicated," she said. "Doing nothing also means that everything is much more expensive."
While acknowledging much has been accomplished and praising "individual initiatives" such the development of solar power in Saudi Arabia and the containment of rain forest destruction in Brazil, Merkel asserted pressure must be kept up on "all states" to do more to protect the climate.
"The path to a really combat climate change turns out to be a very complicated one," the German leader said.
She called for a new U.N. treaty replacing the Kyoto Protocol to be reached by 2015 and put in place by 2020, using as a base the 2009 U.N. conference in Copenhagen where the world's nations agreed to a target of limiting global warming to no more than 2 degrees Celsius more than 1990 levels.
Voluntary commitments to reduce greenhouse gas emissions aren't enough, she said, asserting that even if all industrialized countries emitted no more carbon dioxide, the goal wouldn't be achieved.
"The only way is a new, binding agreement for all countries," she said.
The Petersberg meeting, established as a personal initiative by Merkel, is in effect a warm-up to the annual U.N. Climate Conference, which this year will be in Poland. It was co-hosted by German Environment Minister Peter Altmaier and Polish counterpart Marcin Korolec.
Europe will continue to be a pioneer she said, endorsing the European Commission's goal of establishing new binding greenhouse gas reduction and renewable energy goals by 2030.
But, she warned, EU members are facing declining economic growth and that must be taken into account when setting the targets, which currently envision a 40 percent cut in carbon emissions from 1990 levels by 2030.
Merkel, who has been hotly criticized by environmentalists for not taking a strong stance on repairing the European Union's faltering emissions trading system, said it is "not taboo" to discuss reforming the market-based system, through which polluters buy emission allowances.
The German chancellor remained mostly silent as the European Parliament last month debated and ultimately rejected a bid to take 900 million of the allowances off the market as a way to boost their record-low prices -- Altmaier supported the move but Minister of Economics Philipp Rosler opposed it because it would raise costs for energy consumers.
Merkel said Germany must first complete reforms to its Renewable Energy Sources Act -- which seek to rein in quickly rising taxes paid by consumers to support the development of wind and solar power -- before propping up the ETS can be addressed.
"If the reform of the Renewable Energy Sources Act succeeds, then we can turn to the emissions trading in Europe again," she said.