Two years ago, Thyssenkrupp AG, the nation’s biggest steelmaker, was awarded €2 billion ($2.1 billion) in subsidies to help pay for a hydrogen furnace. It was the biggest-ever commitment of its kind, and a high point in Germany’s planned transition to clean fuel. Yet plans to burn hydrogen are now on hold. Since the government collapsed late last year, funding for key energy transition programs have been frozen, and the leading political parties have made clear that their priorities lie elsewhere.
Germany has spent billions in subsidies to cut carbon emissions by two-thirds by the end of the decade. But at a time when climate concerns remain largely unresolved, Europe’s biggest economy is set to scale back those efforts – and cede its position as the bloc’s frontrunner in the energy transition.
With the US under Donald Trump retreating from global climate efforts, countries across the world are looking to Germany to help close the gap. That may be wishful thinking, say people familiar with state workings. Meeting climate-related commitments had already been a challenge for the outgoing government of Social Democrat Olaf Scholz – whose coalition included the Greens and the pro-business Free Democrats — because of budget constraints, and the people said it’s very likely that climate-related funding will be cut further after the elections.
Given the reduced role of the US and the immediate social and economic risks posed by climate change, “the comprehensive embedding of climate policy measures in an overall political strategy is now more important than ever,” said Hans-Martin Henning, who heads a government climate advisory group. His organization recently released a report on the targets that still have to be met for Germany to reach its 2030 climate goals. Another report published this week by the foreign office and intelligence service ranked climate risk as among the top five threats to the country.
This new approach to climate funding will represent a major break from the current government’s strategy. Under Scholz, Germany drastically accelerated its renewables buildout and broke ground on a 9,000-kilometer hydrogen network. Last year, credit rating agency S&P Global Ratings named Germany as “the most advanced” country in Western Europe in terms of hydrogen adoption.
Key to government efforts to get a hydrogen economy off the ground was a €23 billion ($23.8 billion) global program to help decarbonize energy-intensive industries. Several smaller companies were awarded contracts in an initial auction in October, and plans for a second auction were in the works. After the government’s collapse, however, that never happened.
This plan and others will likely be scrapped as conservatives have stated their intention to reallocate money from the main climate fund and cancel climate subsidies. Instead, they have proposed that payments be made directly to households and businesses to relieve the burden of energy costs – which are expected to rise even more after a new European Union pricing plan for heating and transport fuels goes into effect in 2027.
Source：FINANCIAL POST
