31 Jan 2024, 13:32
Julian Wettengel

NGOs and industry union call on govt to rethink public financing for energy transition

Clean Energy Wire

Several NGOs and industry trade union IG BCE have called on the government to make fundamental changes to how the state uses its financial powers to push the transition to climate neutrality. The government was forced to cut, or put on hold, a number of important projects amid a budget crisis sparked by a constitutional court ruling on Germany's debt limit rules, said WWF Germany, Germanwatch, DNR and IG BCE in a joint statement. "This further increases uncertainty among companies and households alike and means that urgent investments in climate neutrality - especially in energy-intensive industries - are not being made," they said.

The alliance calls on the government to consider reforming the debt limit to allow for more investments, establishing a special budget for climate action, or creating more budget for the state. Germanwatch's policy director Christoph Bals proposes to consider changes to the tax regime and abolishing fossil fuel subsidies. Viviane Raddatz, of WWF, says that investments in a climate neutral future must first and foremost come from the private sector, but the state has to "massively" invest in infrastructure and education, and help mobilise private capital.

Germany's ruling coalition of Social Democrats (SPD), Green Party and Free Democrats (FDP) spent months negotiating the federal budget for 2024, after the constitutional court ruling in November threw the coalition's funding plans through a special "Climate and Transformation Fund" into disarray. The ruling opened a 60 billion euro gap in the special fund and caused major uncertainty among policymakers, industry and citizens waiting to implement new projects. While parliament is this week in the final stages of agreeing the budget for this year, tough negotiations are set to resume soon as the deficit in next year's federal funding could be even bigger than in 2024. Many experts and lawmakers have called for a reform of the country's strict borrowing rules to allow for additional debt when it concerns investments in the transition.

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