German government breaks promise to abolish climate-damaging subsidies – federal auditors

A report by the Federal Court of Auditors has slammed the German government over its failure to reduce subsidies as promised, including those that are harmful to the climate, reported business-daily Handelsblatt. The government is failing to implement its own plans and is instead sticking to inefficient tax subsidy regimes, according to the auditors in a report seen by the newspaper. In addition, the government failed to have the whole subsidy system externally audited, as it had promised to do. Germany’s subsidy regime includes a number of tax breaks for climate-damaging products and activities, such as on kerosene for aviation, or diesel for trucks and cars. The government itself said the subsidies lower tax revenues by 18.4 billion euros annually. However, the auditors criticised the definition of subsidies, arguing that it "ignores other tax breaks with significant revenue shortfalls, some of which are harmful to the environment or climate. This burdens the environment and climate as well as government revenue.”

In their coalition agreement, the governing parties said they aimed to reduce "superfluous, ineffective and environmentally and climate-harmful subsidies," yet have so far failed to do so. Last year, the coalition decided to cut benefits in the agriculture sector, such as on diesel fuel, but partly backtracked on the plans following widespread farmers' protests.