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29 Oct 2021, 13:30
Sören Amelang

Environmentally damaging subsidies in Germany cost 65 billion euros

Clean Energy Wire

Germany spent 65.4 billion euros on environmentally harmful subsidies in 2018, with the majority going into energy and transport, the country's Federal Environment Agency (UBA) has said. Almost half are spent on road transport and aviation, and they rose by 8 billion euros compared to 2012, UBA said. The transition to a new government presents a unique opportunity to reduce these payments and instead use the savings for climate-friendly investments, UBA president Dirk Messner said. "It is paradoxical when the state promotes climate protection with many billions and at the same time subsidises production and behaviour patterns that are harmful to the climate," he said.

In the agreement that forms the basis for the ongoing coalition negotiations, the Social Democrats (SPD), Greens and pro-business FDP state they "want to gain additional budgetary leeway by reviewing the budget for superfluous, ineffective and environmentally and climate damaging subsidies and expenditures." FDP head Christian Lindner told regional newspaper Rheinische Post the prospective coalition partners will take a close look at cutting subsidies. "For example, we spend a billion euros on subsidies for plug-in vehicles that have no assured ecological benefit," Lindner said. "However, subsidy reduction must not become a tax increase for the working middle class, as would be the case with the commuter tax allowance."

UBA says that around half of environmentally damaging subsidies – around 30 billion euros – could be "cut or ecologically transformed." In the energy sector, UBA lists tax breaks on power prices for industry and power generation as some of the largest harmful subsidies. In the transport sector, the tax break on diesel fuel, which costs more than eight billion euros alone, and support for commuters (six billion euros) are among the largest items. UBA notes that some environmentally harmful subsidies can only be reformed at EU level, such as the tax breaks on aviation fuel and international flights, which add up to a combined 12 billion euros. 

Environmental NGOs called on the prospective coalition partners to finally axe harmful subsidies in order to fund the transition to a climate-neutral economy. "This report shows there is enough money – if it is put to better use," said the head of Greenpeace Germany, Martin Kaiser. "Instead of fuelling the climate crisis with more than 60 billion euros a year, the coming federal government needs this money to invest in a secure future and the protection of the climate and nature. The estimated need of 50 billion per year for climate protection and a modern infrastructure would be covered very quickly"

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