Nearly a third of Germany's climate fund spending runs counter to climate goals, critics say

According to an analysis by the Association for a Sustainable Economy, around a third of planned spending from Germany's Climate and Transformation Fund is at odds with climate policy goals. The biggest problematic items include subsidies for transmission grids, compensation for energy-intensive industry and infrastructure investments that critics say do not lead to decarbonisation.

According to the tracker by the Association for a Sustainable Economy (BNW), which provides an overview of the climate impact of public spending, 31% of planned spending from Germany's Climate and Transformation Fund (CTF) is considered counterproductive to climate goals. BNW calculations put this at approximately 11.6 billion euros in 2026, an amount that runs counter to national climate goals.

The CTF is the government's main tool for financing measures related to the energy transition. It is funded by revenue from the European Union Emissions Trading System (EU ETS), Germany's carbon pricing on transport and heating, and a special 500 billion euro fund for infrastructure and climate neutrality.

Public support for transmission grid charges, amounting to 6.5 billion euros in 2026, was singled out in particular as slowing Germany's progress towards its climate goals. Other items include 4 billion euros in subsidies for energy-intensive businesses to compensate for electricity price rises resulting from carbon pricing, and 3.2 billion euros for maintaining bridges and tunnels on Germany's motorway network, which BNW considers to have weak climate justification.

The BNW tracker classifies public investment as:

·      contributing to climate goals – e.g. investments in energy efficiency, renewable energy or ecosystem protection,

·      neutral – e.g. investments in schools, hospitals or sports facilities, and

·      counterproductive – e.g. subsidies for fossil fuel infrastructure where more effective alternatives are available.

The German parliament is due to debate the draft 2026 budget this week. Earlier this year, environmental associations warned that Germany's draft 2026 budget would do little to move the country towards an environmentally friendly economy. Activists have particularly criticised the government's spending plans for housing and transport, where emissions are currently falling too slowly to meet climate goals.