Germany's cabinet has given its approval for an ambitious green investment plan totaling €57.6 bn ($63.2 bn) for the upcoming year, marking a substantial 60.2% increase from the previous year's target, as per a statement released by the Finance Ministry. The move underscores Germany's commitment to accelerating its transition to a carbon-neutral economy by 2045.
The majority of the funds allocated from the Climate and Transformation Fund will be directed towards the nation's building sector, with a substantial €18.9 bn earmarked for renovations and new construction projects in 2024. Aiming to fortify the renewable energy sector, approximately €12.6 bn has been set aside for renewable energy subsidies, while an additional €4.7 bn will be channeled into expanding the country's electric mobility charging infrastructure.
In a strategic effort to reduce reliance on Chinese imports and foster domestic production capabilities, Germany is poised to inject €4.1 bn into local production capacity for raw materials and transformation technologies, notably including components for solar power.
The recent introduction of generous subsidies by the United States through its Inflation Reduction Act has heightened the urgency of strengthening renewable energy production in Europe. To counter the potential shift of manufacturers away from the continent, Germany has positioned itself to support its renewable energy sector even further.
A significant portion of the funding, approximately €4 bn, will be directed towards supporting semiconductor production, as part of a broader €20 bn package aimed at fortifying the industry. Notably, €5 bn of this sum has been allocated to Taiwan's TSMC, intended to facilitate the establishment of a factory in Saxony.
Finance Minister Christian Lindner emphasized the broader implications of the investment plan.
"We are laying the foundations so that future opportunities can arise from decarbonization and digitization," the minister stated.
The plan envisions a total investment of €212 bn between 2024 and 2027 within the Climate and Transformation Fund, an initiative aptly dubbed KTF in German.
The financing for the ambitious green investment plan will be sourced from a combination of increased national CO2 pricing and revenues from European emissions trading. The Finance Ministry anticipates revenues of €10.93 bn and €8.19 bn from these respective sources. Despite these efforts, Lindner urged a balanced approach to CO2 pricing, considering the current economic circumstances.
In line with its commitment to combat climate change, Germany is preparing to implement a €10 increase in CO2 prices, raising them to €40 per ton in 2024. This is projected to lead to a minor increase of approximately four euro cents per liter in petrol and diesel prices.
Additionally, Germany's renowned railway operator, Deutsche Bahn, is poised to receive substantial government support. Over the next four years, approximately €24 bn will be allocated, with €12.5 bn originating from the Climate and Transformation Fund.
The proposal is now slated for discussion in the lower house of parliament, alongside the 2024 federal budget draft, in September. A final decision on the financial plan is anticipated in December. This comprehensive green investment plan signifies Germany's steadfast dedication to forging a sustainable and environmentally conscious future.
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