The Climate and Transformation Fund 2025: Proposed Financial Revisions Sees a Slash by Half

The financial blueprint for the Climate and Transformation Fund (CTF) outlines a proposed income and expense sum for 2025, amounting to just €25.47 billion. By comparison, projections for the preceding year amounted to a staggering €58.22 billion. The bulk of the projected revenue looks to emerge from CO2 pricing under the Fuel Emissions Trading Act, estimated to account for €15.41 billion (comparatively, €12.25 billion in 2024). Meanwhile, proceeds from auctioning allowances under the Greenhouse Gas Emissions Trading Act are projected to contribute €6.74 billion (versus €6.58 billion in 2024). Federal allocations intended to finance program expenditures will not be made in 2025 according to the draft. In the year prior, a total of €10.4 billion was granted. Further, the “withdrawal from the reserve” will only drive almost €317 million into the CTF in 2025, whereas in the same year, approximately €29 billion was procured.

Electrical Subsidies Eliminated, Building Energy Programs Reduced

In 2024, subsidies to offset high electricity costs accounted for approximately €19.37 billion. By 2025, they are predicted to become defunct. This turns the focus of attention to funding measures towards energy efficiency and renewable energies in the building sector, earmarked at an impressive sum of €14.35 billion, notwithstanding the proposed cutbacks. In comparison, €16.74 billion was set aside for this purpose in 2024.

There is a slight increase, with €4.92 billion (compared to €4.82 billion in 2024) devoted to “microelectronics for digitalization.”A considerable increase of cash injections is anticipated for the transformation of heat networks in 2025, specifically €979 million (compared to €750,000 in 2024).

Sadly, there will no longer be subsidies for the purchase of electric cars. These had already dropped to nearly €210 million in 2024 from a significant €2.6 billion in 2023. Nonetheless, more funds will be available for the procurement of commercial vehicles and buses with alternative drives (Commercial vehicles: €375.29 million instead of €328.08 million, buses €462.08 million instead of €459.62 million). Additional support for infrastructure is also promised.

BDEW Raises Concerns Over the Dependability of CTF Budget

Kerstin Andreae, Chairwoman of the BDEW Management Board, identifies a potential issue within the “global additional revenue” of three billion and “global cost saving” of nine billion euros. "Only two-thirds of the planned budget can reliably be met," she criticizes, highlighting that this creates unnecessary uncertainty regarding whether established funding pots can be fully accessed. “[Any] suspension of the CTF in the event of an overdraw would hinder the energy transition and recklessly destroy trust,” Andreae warns.

On a brighter note, Andreae welcomes the government’s plan to fund the EEG account via the core budget instead of the CTF, saying it heightens financial security within the CTF. The Solarserver had already reported this plan.

Andreae considers the larger budget for heat networks as "right and important, but still not sufficient." She calls for any underspending in the federal funding efficient buildings to be redirected to the funding of heat networks.

Power Plant Strategy Lacking Funding

The power plant strategy has drastically succumbed, previously budgeted at €7.55 billion until 2035 under the existing financial plan. The new plan positions it with a modest €250,000 each for 2024 and 2025. Andreae urges for swift budgetary security as the first tender round for hydrogen-ready power plants have been announced for the end of 2024/start of 2025.

She also flags that the cuts in the hydrogen ramp-up are significant and that reducing support sends the wrong signal. Particularly at the start of the ramp-up, consistent funding for both domestic production and imports is crucial.

According to Andreae, the government should promote E-cars - these are currently crucial, whereas there is already an abundance of charging infrastructure.

The draft for the economic plan of the CTF is attached to the draft for the Budget Law 2025. The full document can be found here, with the economic plan for the CTF on page 3275.

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