Germany Earmarks EUR 177.5 Billion for Climate and Transformation Until 2026

July 2022

The governing cabinet agreed to launch a massive, nine-figure “Climate and Transformation Fund” (KTF) for the coming four years. The fund is included in the national budget and encompasses EUR 177.5 billion, EUR 35.4 billion of which will already be made available in 2023.

The KTF’s will focus on:

  • government assistance in the area of buildings
  • further development of electro-mobility, including expansion of the charging infrastructure
  • the build-up of the hydrogen economy
  • the promotion of energy.

The fund will be financed from government-generated revenues and reserves, including the trade in emissions certificates and CO2 pricing.

At the same time the government is also reforming state assistance for building renovations or BEG to allow more property to apply for help financing energy efficiency improvements. Under the BEG, EUR 13-14 billion will be on the table, EUR 12-13 billion of which will go toward building renovations. Assistance in this area totaled EUR 8 billion in 2021 and EUR 5 billion in 2020.

The move comes as Germany seeks independence from Russian imports of natural gas and other power sources.

“Using less energy is the cheapest and most efficient contribution to greater independence and climate protection,” said Minister for Economic Affairs and Climate Action Robert Habeck. “Renovating buildings now – replacing windows or gas heating – helps save costs and goes hand in hand with climate protection. The effect in terms of energy savings and climate protection of energy-focuses building renovations is four-and-a-half times what it is with new buildings.”

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