Watchdog warns Germany’s climate and infrastructure fund lacks clear targets

Germany's national Court of Auditors has called for a clear focus and a narrow definition of what constitutes investments in the country’s 500 billion euro special fund for infrastructure and climate neutrality, Table Media reported. In a letter sent to the parliament’s budget committee ahead of an expert hearing on the government’s spending plans, the auditors said payments from the fund must be limited to “real investments” and not include running costs such as wages.

While the fund was set up with climate neutrality as an aim, no clear criteria or targets exist of what this means in practice, the auditors said. “The federal government must clearly define the targets it wants to achieve with the special fund,” they argued.

The auditors also stressed that there must be clear mechanisms to ensure investments are additional to existing plans, with effectiveness measured against actual disbursements rather than only budgeted figures. As the aims are still poorly defined, controlling for the fund’s effectiveness would not be possible, the auditors added.

In a draft law to regulate the special fund, the government promised accompanying economic feasibility studies and final performance reviews to verify the impact and whether investment targets are met.

The special fund and changes to Germany’s debt brake, the ceiling on new government borrowing that was partly suspended for defence spending, will be discussed by experts on Monday (25 August). The coalition parties pushed the reforms through parliament before taking office, in response to geopolitical challenges and domestic investment needs. This followed the collapse of the previous government after its budgeting plans were upset by a court ruling upholding the debt brake. The government must present a scheme to ensure that spending from the fund is counted as additional to the core budget. According to the draft law, investment expenditure in the federal budget should amount to at least ten percent of adjusted total expenditure.

It will also have to implement changes to the country’s separate Climate and Transformation Fund (KTF), which will receive 100 billion euros out of the special fund to supplement existing funds until 2034. Another 100 billion euros will be provided to Germany’s states while the federal government will receive 300 billion euros to finance investments in transport, energy, healthcare, education, research, digitalisation and civil protection, according to a parliament report.