NGOs urge German gov't to scrap plans for gas price subsidies from climate fund

A group of environmental NGOs has appealed to the German government to scrap plans that would allow using the country's federal "Climate and Transformation Fund" (CTF) to decrease gas prices. As part of draft budget legislation, the government has proposed to allow using the fund to finance Germany's gas storage levy, which is meant to help finance filling German storage facilities. “This would erase the basis for an effective and socially just climate action programme that is supposed to be adopted later this year,” the group argued. The levy is currently paid by gas customers.

The CTF is only one of several special-purpose funds outside of the regular state budget, which also exists for other areas such as defence spending. Its funds can currently be used to “promote measures that serve to achieve the climate targets” under the country’s climate legislation, especially measures to advance Germany’s transformation to a climate neutral economy.

The NGOs also said that money from the country’s planned 500-billion-euro special fund for infrastructure and climate neutrality should not finance activities that might increase emissions. “We see it with great sorrow that the current draft of the law does not provide for adequate climate protection investments and opens the door for investments that are diametrically opposed to the climate targets,” the group that includes umbrella organisation Deutscher Naturschutzring (DNR), WWF, BUND, NABU, DUH, and others said in an open letter to the government. 100 billion euros of the special fund will be transferred to the CTF. 

The NGOs stress that effective climate action has been made a constitutional requirement for the special fund, which could not be turned into a “general infrastructure pot” and finance measures, such as new gas-fired power plants or motorways. “This would run counter to the aim of climate neutrality” and jeopardise the constitutionality of upcoming federal budgets, the group said.

Energy policy think tank Agora Energiewende said that the current draft that could soon be adopted by the government comes with a funding gap for achieving the climate targets of about 24 billion euros. “The funding requirements for climate neutrality exceed the currently available means,” the think tank said in a separate statement. The CTF is planned to be filled with ten billion euros per year from the special fund and another roughly 23 billion euros from the proceeds of carbon pricing. “Within the framework of a socially just transformation, about 57 billion euros would be needed to incentivise private investment in climate neutral technology and to protect the budget from excessive costs,” Agora argued.

Augmenting the means earmarked for the CTF or funding measures directly from the government’s core budget could fill the gap, while money currently planned for fossil fuel subsidies should be rededicated, the think tank said. Using the fund to finance gas price compensation, on the other hand, would further increase the funding gap. “Putting climate protection money into fossil energy subsidies contradicts the climate targets,” said Agora industry expert Julia Metz. Priorities for the CTF should be the further expansion of renewable energy sources, investments in a climate neutral industry, a socially just heating transition and building modernisation strategy, and strengthening climate friendly transport options, the think tank said.