German government to announce $40 billion over 4 years to halve emissions

german government climate fund
Photo: Picture Alliance/Patrick Pleul

The German government will release a $45 billion climate change package today, outlining spending over the next four years to reduce greenhouse emissions by 55% by 2030.

The plan is expected to touch on a range of issues, including extending grants for electric car buyers, expanding a network of charging stations, raising road taxes for polluting vehicles, improving heating systems for buildings and raising a green surcharge for plane tickets.

Germany has seen frequent protests demanding faster action on climate change. But the ruling coalition—including Chancellor Angela Merkel’s Christian Democrats, their Christian Social Union sister party and the centre-left Social Democrats—remains divided on how to deliver without damaging the slowing German economy.

While the government has suggested it may take on more debt to boost public investment, the main obstacle to the spending package remains financing the measures without abandoning the government’s goal of a balanced budget. The CDU/CSU has said they aim to ensure the well-being of German businesses, but they risk losing ground to more liberal parties if they are seen as lagging behind on calls to fight climate change. One source of funding could come in the form of an emissions certificate trading system or CO2 tax, something that Finance Minister Olaf Scholz has floated as a possibility.

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