German economy minister defends climate policy cuts as only option after debt brake ruling

German economy and climate action minister Robert Habeck defended the German government’s decision to cut government support payments for energy transition and climate action projects as well as energy cost reduction schemes for citizens. “I understand that there’s resentment. But [the cuts were] the only conceivable answer,” Habeck said in an interview with public broadcaster ZDF. The constitutional court ruling that invalidated billions of euros earmarked for a climate and transformation fund forced the government coalition to seek savings across the board, and place a greater burden of the costs for decarbonising the economy and dealing with the fallout of the energy crisis on customers, he argued. As a result, the government cut funds reserved for these projects by 45 billion euros until 2027, decided to raise the national carbon price faster than initially planned, and close several programmes for supporting citizens and companies in the transition away from fossil fuels, such as the purchase premium for electric vehicles or taking over grid fees.

Habeck said he acknowledged that the decision could be seen “as an imposition" by parts of the population and economic sectors. However, if the government is not allowed to take on any additional debt and if there is a political agreement not to raise taxes, there are only few options left for responding, the minister said. Habeck said the deal showed that the government coalition is capable of acting in concert even under difficult circumstances. “Nobody dodges their responsibility here,” he argued.

On Wednesday, the government announced an agreement on the 2024 budget, which had been complicated enormously by the court ruling in November. The range of measures to make savings and increase revenue for the government has been widely received as a difficult step that could make Germany’s economic recovery and energy transition targets and harder to achieve. However, the decision has also been welcomed for providing clarity after the court’s verdict threw the government’s budget planning into disarray and caused significant irritation among potential investors which projects would be affected by the response.