Germany’s coalition government has agreed on a draft federal budget for 2025 that reduces funding for climate action. The draft plan for the Climate and Transformation Fund (CTF), Germany’s special federal budget vehicle for climate initiatives like heating transition support and green industry subsidies, shows reduced expenditures for key climate measures next year.
Of the 34.5 billion euros allocated for 2025, 15.9 billion euros are designated for climate-friendly heating transitions—about 2 billion euros less than in the 2024 budget. Funding for compensating electricity-intensive industries, expanding the hydrogen economy, and natural climate action initiatives is also reduced.
The draft budget will now be debated in parliament, where amendments may be made before final approval later this year.
This agreement follows months of tough budget negotiations after Germany’s constitutional court ruled in November 2023 that the use of 60 billion euros in the CTF was unlawful due to debt limit violations. This ruling led to disputes within the coalition government—comprising the Social Democrats (SPD), the Green Party, and the Free Democrats (FDP)—over how to redistribute and cut funding across various sectors.
