The parliamentary arm of the Free Democratic Party (FDP) wants to abolish state subsidies to channel the income from Germany’s carbon price to citizens, throwing a wrench into industrial policy ambitions.
Germany started seriously pricing CO2 emissions from heating and driving in 2021, with a price gradually increasing. The price hit €45 in 2024 and will increase to €55 per tonne of emissions next year, sparking calls for channelling revenues back to citizens to soften the social impact.
Amid the German budget crunch, the liberal FDP – a junior partner in the government – has devised a radical proposal to free €50 billion for return to citizens: slashing state support for microchip producers, industrial decarbonisation, and natural climate protection.
“With our concrete proposals, we will be able to pay people in Germany a climate bonus of almost €100 from 2025 onwards,” Lukas Köhler, deputy FDP whip, told BILD.
According to a list of proposed budgetary cuts seen by Euractiv, the FDP is looking to cut back on state support to industry in particular.
Chipmakers who won state support through an EU-wide call for bids – the framework known as “Important Projects of Common European Interest” – would see their promised support of some €20 billion slashed to zero.
German heavy industry would also lose out on €23 billion that should have supported its decarbonisation as a consequence. The FDP wants to slash the money towards a “carbon contracts for difference” scheme that should have been launched in 2024.
These contracts are designed to front-load the high carbon prices necessary for costly industrial decarbonisation investments to create an investment case.
Other proposed cuts coming in at €3 billion would affect the restoration of natural habitats, re-wetting peatland and the like. Cuts to energy efficiency programmes, climate-neutral flight and heat pump subsidy schemes would round out the €50 billion in cuts.
The proposal, which is unlikely to be fully adopted, comes at a time when the German government is once again fighting over spending policy. While the Greens favour support to attract “clean” industries, the FDP favours an approach of minimal state intervention.
“So cuts are to be made in the country’s economic future,” asked Lida Badum, a Green MP, who said the cuts should start with “dirty technologies.” These, the FDP traditionally resists.
A government spokesperson said the mechanism to disburse the money should be in place by the end of the year on Wednesday. “Then you have to decide in the budget where this money should come from,” they added. (Nikolaus J. Kurmayer | Euractiv.de)
Jonathan Packroff contributed to reporting
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Source: euractiv.com
