Germany does not know how it will fund its green hydrogen plans after court removes €60bn from federal budget
The government is ‘working together to find ways of continuing with the measures we are seeking to implement’, ministry tells Hydrogen Insight
The status of the German government’s green hydrogen plans is unclear after the country’s constitutional court ruled earlier this month that the transfer of €60bn to the Climate and Transformation Fund (KTF) — which was due to finance a range of clean energy initiatives — was unconstitutional.
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“Given the complexity of the task, this will take time and care. Please understand that we are not yet in a position to make precise statements about individual programmes and investments. We will let you know as soon as we have more information. The Federal Government is working intensively on solutions.”
In August, the German cabinet agreed to allocate €18.6bn from the KTF to hydrogen initiatives between 2024 and 2027, with €3.8bn of that due to be spent next year, as part of the federal budget for 2024.
However, a parliamentary vote to approve next year’s budget was cancelled last week, with the Bundestag budget committee arguing that a new national budget must now be drawn up due to the court ruling, with potential repercussions for hundreds of billions of euros of previously planned spending commitments across every government department.
And now it is not clear which hydrogen programmes will be able to go ahead as planned.
What was the court’s decision and why was it taken?
Germany’s constitutional court issued its ruling on the €60bn from the KTF on 15 November, around 18 months since the case was first filed by the former Chancellor Angela Merkel’s party, the Christian Democratic Union (CDU).
The problem was that the €60bn had originally been authorised for emergency measures to fight the Covid-19 pandemic and its economic fallout, but it had not been needed for that purpose, so was then diverted into the new climate fund.
The court ruled that the €60bn of finance could legally only apply to Covid-related spending, not energy transition funding — effectively wiping the entire sum from the federal climate budget in one swoop.
This money had also been earmarked for subsidies to expand renewable energy, insulate buildings, electric-vehicle charging, and help with funding fossil-free heating.
But perhaps the biggest problem facing the governing coalition in the short term is that its most junior partner is the Free Democratic Party (FDP), which sees itself as opposed to any policies that raise taxes or costs for the middle classes.
Many in Germany have speculated that the court’s ruling will lead to increase government in-fighting as the FDP is likely to attempt to block policies from its larger partners — the Social Democrats of Chancellor Olaf Scholz and Habeck’s Greens — that aim ro raise €60bn of new funding. This could in turn lead to the collapse of the so-called “traffic light” coalition.
“Because some industries will say, ‘okay, Germany is obviously not an interesting place [to do business] anymore, let’s go directly to Mauritania or Namibia and build our projects there. That’s the consequence. But it also affects wind, it affects solar, it affects everybody, all clean tech.”
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