Germany will stick to climate and energy transition plans despite budget challenges – chancellor

Germany's chancellor Olaf Scholz said his government would continue to pursue its green transition plans even in the face of a budget crisis resulting from a landmark ruling by the constitutional court. Negotiating Germany’s 2024 budget would be a key goal in modernising the country against the backdrop of intense global competition. “Countries around the world are investing in modern and digital infrastructure, clean energy supplies and climate-friendly technologies,” the chancellor told parliament during a government announcement on its response to the budget crisis. “I want Germany to be at the forefront” on “innovation and prosperity in a climate-neutral world,” he added. “We must now invest heavily in modernising Germany.” The government would stick to its goals of transforming the economy for Germany to remain a competitive industrial country while advancing the energy transition across Europe.

Debates in the fallout of last week’s shock constitutional court ruling on Germany’s state budget borrowing rules are in full swing, as the government faces difficult decisions on how to plug funding gaps, for energy and climate programmes as well as other areas. The coalition froze future spending commitments and decided to declare an emergency situation for 2023 to allow for more debt than is constitutionally permissible in non-emergency times. This is meant to retroactively ensure the constitutional legality of the billions of euros in planned support to citizens and companies to keep energy prices in check this year. However, parliament must first approve the plan.

In the debates about the 2024 federal budget and beyond, the ruling coalition would now “sound out existing room for manoeuvre in the budget, set priorities and, of course, limit expenditure,” said Scholz in parliament. News service Table.Media reported that the coalition was unlikely to end budget talks this year. In a letter to the Free Democratic (FDP) parliamentary group, finance minister Christian Lindner and party leader, said the court ruling made “far-reaching changes” to the budget for 2024-2027 necessary.