Germany’s financing plans for climate action on shaky ground despite special fund - auditors
Die Zeit / Handelsblatt
Germany is at serious risk of running out of money for climate action, and it remains unclear to what extent current spending plans will reduce emissions, government auditors have warned. The country’s Federal Audit Office (Bundesrechnungshof), which scrutinises budget implementation, warned against a “considerable risk” that the country’s central climate financing mechanism - the climate and transformation fund (KTF) - is not a reliable funding instrument, reported newspaper Die Zeit.
“Furthermore, it is not yet sufficiently clear to what extent and with what budgetary resources the climate and transformation fund will lead to a reduction in greenhouse gas emissions,” the auditors said in the report for the parliament’s finance committee, adding they saw “little financial leeway” for 2025 and the following years.
The climate fund is projected to have revenues of 36.7 billion euros in 2025, significantly less than in previous years, while it carries forward fixed obligations of around 25 billion euros, according to the report. These obligations stem largely from already approved programmes, including building renovations, heating system replacements, and subsidies for industrial transformation projects.
The fund is Germany’s key instrument for financing climate action and the energy transition, making it a crucial tool for reaching the country’s 2030 climate targets. Private households also receive subsidies from the fund, for example for replacing windows or insulating facades. The auditors factored into their assessment the 100 billion euros that the government plans to make available from its debt-financed special fund worth 500 billion euros until 2034.
The fund’s resources may come under even more pressure from significant additional expenditures, such as compensation payments related to Germany’s coal phase-out and mechanisms to stabilise gas storage levies, the auditors warned.
In addition to budgetary risks, the report highlights a lack of transparency regarding the actual climate impact of the fund’s investments. Of the 190 measures listed in the 2024 funding report, only 38 included quantifiable data on emissions reductions, it criticised.
