Klingbeil to cut climate fund by two to three billion euros per year

Impacts on Heating Subsidies

The black-red coalition had already hinted at cuts to subsidies as part of the reform of the Heating Act. SPD parliamentary group leader Matthias Miersch had spoken out in favor of more socially graduated subsidies. The Finance Ministry stated that investments in climate protection were secured in the long term.

At the same time, the Finance Ministry defended the plans. There should be no subsidy stops for financial aid, the Finance Ministry said. Already approved subsidies are not to be touched. The KTF could make a „maßvollen Beitrag" to consolidation, the ministry said. Funds should be used more efficiently where they have the greatest impact. Significantly more money is to go to the Bundeswehr in order to „so rasch wie möglich herzustellen" defense capability.

Funding of the Fund

The fund is fed as a special pot primarily through revenue from emissions trading and federal subsidies. Expenditures for the expansion of renewable energies amounting to 16 billion euros were financed from the KTF through 2025 – but since then from the regular federal budget. According to the draft, starting next year, an additional 2.7 billion euros from emissions trading that previously flowed into the KTF are to be partially used for the core budget.

Klingbeil is also drawing on reserves, from which he wants to take 6.8 billion euros to close budget holes. After this withdrawal, around 3.9 billion euros will remain in the reserve for subsequent years. In addition, the additional federal subsidy to the pension insurance is to be cut by one billion euros.

Green Party budget expert Sebastian Schäfer sharply criticized the plans. „Die Regierung opfere den Klimaschutz, indem sie Milliarden aus dem Klimafonds zweckentfremde, um Haushaltslöcher zu stopfen", Schäfer said. This means „weniger Klimaschutz, mehr Hitze, mehr Dürre und mehr Kosten in Folge der Klimakrise". The Greens accused the coalition of CDU, CSU and SPD of using tricks to make the budget look better.

Opposition Criticism

Overall, Klingbeil is planning expenditures of 555.4 billion euros in the 2027 federal budget, significantly more than in the current year. New debt in the core budget amounts to 118.7 billion euros according to the draft. Together with borrowing from the special funds for the Bundeswehr and infrastructure, this results in new debt of 203.7 billion euros.

The federal government wants to take on new debt of over 200 billion euros for 2027 – while simultaneously cutting expenditures massively. Accordingly, the planned consolidation course is to consist of savings of one percent in all ministries, the reduction of tax exemptions and financial aid, as well as fundamental reforms in the social insurance systems. Defense and security expenditures are subject to the debt brake only up to a limit of one percent of gross domestic product.

Additional Burdens and Tax Plans

Higher revenue is to come from a plastic tax as well as taxes increased by 20 percent on alcohol, sparkling wine and alcopops. The tobacco tax is also to be adjusted. Starting in 2028, a sugar tax is to be levied on beverages such as lemonades and cola, though details remain open.

Despite the measures, there remains a „haushaltspolitischer Handlungsbedarf" of initially around 22 billion euros for the years from 2028 onward. Interest expenditures are expected to rise from 41.9 billion euros in 2027 to a projected 80.7 billion euros in 2030.

The budget will be passed by the Bundestag at the end of November. The economic and financial plan for the Climate and Transformation Fund is to be passed by the cabinet on July 15.