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06 Sep 2019, 13:38
Freja Eriksen

German subsidies for environment and energy rise in 2018

Clean Energy Wire

German financial aid in the fields of environment and energy is "rising significantly," with 4.6 billion euros that were planned for 2018, shows a report examining government subsidies published by the Kiel Institute for the World Economy. Of this, 3.7 billion euros were earmarked from the country's Energy and Climate Fund to finance building renovations, energy efficient construction, electromobility and heating optimisation. Hydrogen and fuel cell technology also contributed to the rise in financial aid through the federal budget. In 2015, financial aid in the sector totalled 1.5 billion euros. 

Additional subsidies for environment and energy "can only be justified for research and development," commented institute president Gabriel Felbermayr. He argued that "climate policy requires an effective pricing of CO2 emissions as part of an emissions trading system." German government subsidies have overall reached a new high for the fifth year in a row. Total federal financial aid increased by 7.5 percent to 56.4 billion euros in 2018. Out of 500 million euros spent on financial assistance for agriculture in 2018, 340 million euros went to drought aid due to an extremely dry summer.

The most recent Kiel Subsidy Report pointed out that once introduced, subsidies often burden the state budget for decades. Germany is under pressure to streamline its economy with its climate targets. The German finance ministry (BMF) is pondering a screening of the federal budget based on sustainability criteria in order to prepare for the issuance of green state bonds.

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