On Wednesday, the Federal Cabinet adopted the proposed ‘Climate and Transformation special fund’, which was included in the 2023 economic plan and financial plans up to 2026. Both are part of the Federal Budget.
Tools to finance the energy transformation and climate protection
Germany must be able to respond better and more flexibly to its climate protection targets and accelerate the transformation to climate neutrality. For this reason, the Federal Government has expanded the Energy and Climate Fund (EKF) to create the Climate and Transformation Fund (KTF). As a Federal Government special fund, the new fund represents an essential tool to finance the energy transformation and climate protection.
Over 170 billion euros up to 2026
The Climate and Transformation Fund will be used to provide wide-ranging additional funding to make energy supplies environmentally friendly, reliable and affordable, as well as promoting climate protection. Around 177.5 billion euros have been budgeted for the period between 2023 and 2026, with 35.4 billion euros available for 2023 alone.
The biggest single items in the Climate and Transformation Fund are made up by the following programmes:
- Federal Funding for the Building Sector (BEG)
- Developing electric mobility, including the expansion of charging infrastructure
- Expanding the hydrogen industry
- Promoting energy efficiency
Relief for electricity bills
The rising cost of electricity is putting pressure on prices and increasing the burden on businesses and private households. In response to this, the Fund includes provisions for relief for particularly energy-intensive businesses through electricity price compensation. In turn, since 1 July 2022 electricity customers have no longer had to pay the Renewable Energy Sources Act (EEG) levy. Energy price relief for consumers is being funded entirely through the special fund.
How will the Climate and Transformation Fund be paid for?
The special fund will pay for itself in 2023 out of its own income and reserves. This includes income from national emissions trading and CO₂ pricing. The fund also anticipates additional global income of six billion euros. The Budget Schedule does not include plans for allocations from the Federal Government. This also helps to consolidate the Federal Budget.