By Holger Hansen and Riham Alkousaa
BERLIN (Reuters) – Germany’s cabinet on Wednesday agreed to earmark 57.6 billion euros ($63.2 billion) for green investments next year, up 60.2% from a 2023 target, the Finance Ministry said, as Berlin ramps up subsidies to help the country become net zero by 2045.
The lion’s share of next year’s Climate and Transformation Fund will go to Germany’s building sector, with 18.9 billion euros for subsidies in renovations and new construction in 2024, the ministry said in a statement.
Renewable energy subsidies will be around 12.6 billion euros, while 4.7 billion euros will go towards expanding the country’s e-mobility charging infrastructure.
To cut the country’s reliance on Chinese imports, Germany aims to develop local production capacity for raw materials and transformation technology such as solar power components with 4.1 billion euros of subsidies next year.
Supporting renewable energy production in Europe has become more urgent since the United States introduced generous subsidies through its Inflation Reduction Act which could lure manufacturers away from Europe.
Some 4 billion euros in subsidies will go to support semi-conductors production next year as part of a 20 billion euro support package for the industry, including 5 billion euros for Taiwan’s TSMC to build a factory in Saxony.
“We are laying the foundations so that future opportunities can arise from decarbonisation and digitisation,” Finance Minister Christian Lindner said in a statement.
Total investments in the Climate and Transformation Fund, a supplementary budget to push ahead the economy’s green transition dubbed in German KTF, would amount to 212 billion euros between 2024 and 2027, the ministry added.
The Fund will be partly financed from increasing national CO2 pricing and European emissions trading expected revenue of 10.93 billion euros and 8.19 billion euros respectively.
“We have to proceed with a sense of proportion when pricing CO2, especially in view of the current weakness in growth,” Lindner said.
Germany plans to raise CO2 prices by 10 euros to 40 euros per ton in 2024, two government sources told Reuters. This would increase petrol and diesel prices by around four euro cents per litre, according to industry calculations.
Railway operator Deutsche Bahn would get around 24 billion euros from the government in the next four years, of which 12.5 billion would come from KTF.
The lower house of parliament must discuss the plan, in addition to the 2024 federal budget draft, in September and a final decision on the financial plan is not expected before December.
($1 = 0.9111 euros)
(Reporting by Holger Hansen and Riham Alkousaa; Editing by Rachel More and Christina Fincher)
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