German government approves a €212 billion climate fund

The German government approved a budget for its flagship climate and transformation fund, which would provide €212 billion to diverse initiatives in building rehabilitation, decarbonization, and industry between 2024 and 2027.

The special fund, exempt from Germany’s typically rigorous spending laws, has become one of the government’s principal vehicles for financing significant projects.

The government has set aside €57.6 billion for various initiatives in 2024 alone, which is more than €20 billion more than in 2023.

The fund’s primary goal is to finance energy-efficient building renovations, industrial decarbonization, and the expansion of renewable energy, electromobility, and charging infrastructure.

The most significant part of the new funding will be devoted to renovation, with €27 billion designated for replacing current oil and gas heating systems with climate-friendly substitutes such as heat pumps.

The German government intends for any heating system erected after 2024 to be at least 65% powered by renewable energy, thus outlawing natural gas-fired boilers. The plan threatened the government’s alliance, as the liberal Free Democratic Party strongly rejected a previous version of the law.

The German government intends to spend €27 billion to reduce the financial burden on households to transition to environmentally friendly alternatives.

The fund also intends to put the Deutsche Bahn back on track with a €12.5 billion investment in the coming years to refurbish and extend its railway network. Deutsche Bahn has been hit by delays for years, with approximately one-third of all trains being delayed.

In addition, the German government intends to spend €4.7 billion in 2024 on expanding e-vehicle charging infrastructure and €3.8 billion on developing the hydrogen industry.