German Government to Approve Climate Fund Boost to €212 Billion

(Bloomberg) — Chancellor Olaf Scholz’s government will on Wednesday approve a top-up of Germany’s special Climate and Transformation Fund by more than €30 billion to about €212 billion ($233 billion), according to a draft of the financing plan through 2027 seen by Bloomberg.

The mechanism, which is known by its German acronym KTF and is not part of the regular federal budget, is designed to help speed Germany’s transition to an emissions-free economy. It will fund climate-protection measures, investment in semiconductor production and expansion of railway infrastructure, among other things. Following cabinet approval, the financing plan will be sent to parliament for ratification.

Spokespeople for the finance and economy ministries did not immediately respond to a request for comment outside regular business hours.

Here is a breakdown of the approximate funding allocations for the years 2024 through 2027, as set out in the draft document:

€63.5 billion to ease the burden on citizens and companies
€60.7 billion for building modernization
€18.6 billion for ramping-up hydrogen industry
€13.8 billion to help expand electro-mobility
€12.5 billion for railway infrastructure
€12.2 billion for semiconductor manufacturing

The fund is partly financed from revenues from European emissions trading — with expected income of €8-€13 billion per year — and via the national carbon price — with projected revenue of €11-€22 billion per year.

According to the draft document, the government also plans to use €19.2 billion in 2024 from a separate fund for military spending and €46.8 billion from the Economic Stabilisation Fund, which was created to help mitigate the impact of the Covid-19 pandemic.

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