Renewable power industry welcomes first draft for design of Germany’s 500-billion euro fund

Germany's renewable energy industry has welcomed a draft detailing the design of the country’s 500-billion euro special fund for infrastructure and climate neutrality. The special fund is sending “an important signal for future-oriented investments”, said Simone Peter, head of Renewable Energy Federation (BEE), despite the draft being too vague on key aspects to guarantee the money will be effectively distributed to help Germany’s goal of achieving net-zero emissions by 2045.

The new coalition government has set up a debt-financed special fund worth 500 billion euros for infrastructure and climate projects. One fifth of the package was earmarked especially for the country's climate and transformation fund. Economists warned the fund must not turn into a horn of plenty for the next government, but instead boost long-term growth prospects.

Peter said that “clear definitions of terms and a modern understanding of economic viability” are needed to ensure that the funds are spent on-target. The draft did not spell out what is meant by infrastructure investments in Germany’s federal states which have the power to decide how parts of the fund are spent. At the federal level, terms like “energy infrastructure” and “digitalisation” remained too vague to ensure investments are targeted, the BEE head argued. 

At the same time, the planned financial supervision of the infrastructure investments would not be sufficient to ensure targeted spending. “Those who invest in infrastructure today must consider the transformation to climate neutrality, the scale of potential climate change effect costs, the buildup of new key industries like renewable electricity and heat generation, electric mobility and the hydrogen and green gas industry,” Peter said.

The Federation of German Water and Energy Industries (BDEW) said the special fund should be used by Germany’s states to achieve progress in municipal heating decarbonisation. This could be done, for example, through guarantees for private investors to expand and transform the heating grid, said BDEW head Kerstin Andreae. “To make all cogs work together for a heating transition, the legal framework, support programmes and continuity must be brought into alignment,” Andreae said.