The summer break in Berlin is finally over, the members of the German Bundestag are returning to the capital this week. Federal Finance Minister Lars Klingbeil (SPD) will present his draft budget for the coming year to parliament on Tuesday afternoon. The work, which contains more than 3,500 pages, also includes the economic plan of the Climate and Transformation Fund (KTF), which Parliament is likely to debate over in the coming weeks. Because some people are worried that Robert Habeck's once powerful instrument could be further undermined.
The then Green Federal Minister of Economics created the KTF in its current form in 2022 in order to finance the country's transformation into a climate-neutral economy. It is fed primarily by the proceeds from national and European CO₂ pricing, a total of 22.5 billion euros next year. Habeck and the then Federal Finance Minister Christian Lindner (FDP) had also provided him with loan authorizations of 60 billion euros that were not used during the corona pandemic. However, the Federal Constitutional Court declared this transfer invalid in November 2023. As a result, the traffic light government had to cut or completely cancel numerous funding programs.
The focus of criticism is now Klingbeil's plan to shift revenue of 2.7 billion euros from European emissions trading (ETS 1) into the core budget. Sharp protests came not only from the Greens and the Left; there was also criticism from within the coalition after the government draft was presented. Now the Future Climate Social think tank founded by climate scientist Brigitte Knopf is following up. She complains that the income from ETS 1 should actually be used by the EU member states for special purposes such as the expansion of renewable energies, energy efficiency or financial support for low-income households in the transformation. The fact that these funds are now being used to consolidate the state budget is a bad signal for climate protection, according to an analysis published by the F.A.Z. available in advance.
Another problem arises. In addition to the income from CO₂ pricing, under pressure from the Greens, the KTF receives ten billion euros every year from the special fund for infrastructure and climate neutrality (SVIK). These funds are actually only intended for additional investments. However, additionality is in question “if part of another source of income is moved into the core budget at the same time as the ETS 1 funds are shifted,” criticizes the think tank. Especially since the amount postponed to the federal budget is expected to increase to four billion euros by 2030.
In an unusual alliance, 16 associations and organizations protested against the maneuver in an incendiary letter a few days ago. They demanded that the payments made by the energy sector and industry be returned in full to the companies affected.
It's not just the relocation of the 2.7 billion euros that will tear a hole in the actually well-filled KTF next year. The federal government's decision to freeze the national CO₂ price for buildings and transport at 55 to 65 euros per tonne will result in an additional reduction in revenue of four billion euros. Actually, the national CO₂ price should be linked to the price in ETS 1 next year; this is currently 83 euros. Overall, there will be a gap of 7.7 billion euros next year.
It should be partially plugged by bringing forward the auction of emissions rights. In addition, a global reduction in expenditure of 4.4 billion euros is planned. This savings target should take effect at the end of the year where funds have not been drained. Last year that was 28 percent of planned expenditure. Last Wednesday, a report commissioned by environmental associations raised legal concerns about this approach. This means that the decision as to where exactly the sum should be saved is increasingly shifting from the Bundestag, which is actually supposed to oversee the budget, to the government.
With a total of 13.3 billion euros from the KTF, the federal government wants to provide energy price relief for companies in particular in the coming year: around 5.5 billion euros are planned for subsidies for electricity transmission network fees (one billion euros less than this year), five billion euros for electricity price compensation for energy-intensive companies and 2.5 billion euros for industrial electricity prices. The largest expenditure item in the fund is 13 billion euros for federal funding for efficient buildings, with which the federal government supports the purchase of new heating systems and energy-efficient renovations. It is to be cut by 2.8 billion euros by 2030.
Overall, the investment rate in the KTF will fall to 57 percent next year. “The focus of the fund is increasingly shifting from investments to relief, which primarily benefits companies and does not have a transformative effect,” criticizes Zukunft Klimasommer. “Without investments that structurally improve the situation, subsidies and relief will continue to arise but do not contribute to a fundamental solution to the problem.” A final decision on the formation of the KTF next year is likely to be made at the adjustment meeting in mid-November.
