German special climate fund remains untapped to large extent

Germany’s Climate and Transformation Fund (CTF), a multi-year federal budget set up to finance climate and energy transition policy measures, again fell significantly short of spending targets in 2023, Tagesspiegel Background reported. Last year, Germany’s Constitutional Court stopped the government from rededicating 60 billion euros in unused pandemic debt authorisations for the CTF, which resulted in cuts for dozens of climate programmes going forward. Yet, only about half of the earmarked CTF funds were spent in 2023 – a particularly glaring fact in view of the government’s budgetary struggles, Tagesspiegel noted. According to the finance ministry, of the 36 billion euros designated for spending in the CTF last year, only 20.1 billion were spent, with 45 percent of the funds remaining unused. In 2022, 51 percent of the designated funds were left untapped.

The Federal Court of Auditors (Bundesrechnungshof) has in the past criticised the German government for not using funds designated for climate action to their full extent, and called for better planning and more targeted spending. Among the high-profile programmes that used significantly less CTF funding than originally planned was the Decarbonisation of Industry (DDI) initiative. Originally budgeted at 2.2 billion euros, the DDI programme spent only 36 million euros, due in part to revised EU state aid guidelines and the development of a new concept for green industry subsidies, said the finance ministry. Support for the modernisation of buildings to make them more energy efficient was also heavily underused, because "major systemic refurbishment measures were delayed and only some of the funding applied for was utilised," the ministry said.

The finance ministry said it expects significant additional spending in 2024, compared to current plans, for example on programmes regarding renewables support and building renovations. The CTF is largely funded via German and EU emissions trading revenue, and income this year is set to be lower than initially expected, due to a decrease in CO2 allowance prices in the EU Emissions Trading System (EU ETS), said the ministry.