Concerns are emerging over significant reductions in funding for climate protection agreements, a program designed to support industries transitioning to climate neutrality. The cuts, implemented by Federal Economics Minister Katarina Reiche (CDU), have drawn criticism from the Social Democratic Party (SPD).
SPD parliamentary group spokespersons Sebastian Roloff and Jakob Blankenburg voiced their concerns in a statement to Politico, questioning the rationale behind the substantial decrease in commitment authorisations included in the 2026 budget draft. These authorisations provide the budgetary framework for ongoing projects.
The agreements, known as Contracts for Difference, are viewed as a proven mechanism to assist industries such as steel, chemicals, cement, glass and paper with the costs associated with decarbonization. The initial funding round in 2024 saw overwhelming demand and the SPD representatives express worry that these drastic funding cuts jeopardize the long-term planning certainty for businesses that were unsuccessful in securing support during that initial phase.
Under the previous budgetary planning within the coalition government, €22.6 billion was earmarked for the period 2025 to 2041. The revised plans under Minister Reiche now allocate just €6.9 billion between 2027 and 2047, a substantial reduction impacting the viability of these climate protection initiatives.
Contracts for Difference operate on a principle of shared risk. The state offsets increased costs incurred during the transition to climate-neutral production. Once the investment proves profitable, the company is obligated to repay the assistance received. The SPD’s critique highlights the potential negative consequences for industries striving to achieve climate neutrality amid these significant funding changes.