Close to one third of German climate and transformation fund is counterproductive – association

Almost a third of the planned expenditures in Germany’s dedicated Climate and Transformation Fund (CTF) hinder progress on climate action, according to a “special fund tracker” by the Association for Sustainable Economy (BNW).

Germany’s CTF is the country’s central instrument to finance energy transition measures. Its revenues come from the national price on emissions from transport and heating, the sale of EU emission allowances under the Emissions Trading System (ETS), and from the debt-financed 500-billion-euro special fund on infrastructure and climate neutrality.

Around 31 percent of the money in the CTF has a negative climate impact, according to the tracker, which provides an overview of the climate impact of public spending. For 2026, this resulted in around 11.6 billion euros that contradict national climate targets, according to BNW calculations. The association classified public investments as contributing to climate goals, neutral, or counterproductive.

Public support for transmission grid fees to the tune of 6.5 billion euros in 2026 in particular was marked as slowing down Germany’s climate targets. This was followed by 4 billion euros in subsidies to energy-intensive companies to compensate for electricity price increases due to emissions trading, and 3.2 billion for the conservation of bridges and tunnels on Germany’s motorway network.

BNW labelled as negative fossil fuel infrastructure subsidies, as well as infrastructure subsidies where more efficient alternatives exist. Positive investments included efficiency measures, technologies such as heat pumps and solar power, protection of ecosystems, and infrastructure to promote carbon reduction. Investments in infrastructure such as hospitals, schools and sports facilities were assessed as neutral.

Parliament is set to discuss the 2026 draft budget this week. Earlier this year, environmental associations warned that Germany’s draft budget for 2026 will do little to boost the country’s shift to a climate-friendly economy. Especially the government’s spending plans in the housing and transport sector, where current emission reductions are far too slow to reach climate targets, drew criticism from activists.