Institutes decry energy transition research cuts as Germany's difficult budget talks continue

Cuts in public funding for energy research could lead to a "massive decline in German industry's ability to innovate in technologies for the energy transition," said several institutes of the Fraunhofer Gesellschaft applied research organisation. The institutes said that funding for new energy projects in 2024 is projected to be 30 percent below last year’s figure, and warn of possible further cuts in 2025. "The decline in funding is the most drastic in the history of the federal government's energy research programmes," they said. Public research funding is essential for the implementation of the energy transition, said Hans-Martin Henning, director of the Fraunhofer Institute for Solar Energy Systems (ISE). "The cuts undermine critical innovations that Germany urgently needs in order to achieve its climate targets and to maintain and expand its leadership position in the field of important future technologies."

The German constitutional court's ‘debt brake’ ruling on limits to government borrowing rocked the three-party government coalition in late 2023, and led to budget reshuffling and also some cuts for this year. The government is now in difficult negotiations for the 2025 budget. Chancellor Olaf Scholz's SPD already said it would not agree to a budget which "endangered social cohesion," while the FDP continues to call for making cuts instead of allowing new debt. The coalition has said it wants to present a budget draft in cabinet on 3 July.

"We are working hard and will continue to work towards this date," finance minister Christian Lindner (FDP) told public broadcaster Deutschlandfunk. Talks are making progress, but a forward-looking solution is more important than a quick fix, he said. "It's not just about 2025, but also about an economic turnaround," said the minister. "We need measures in the labour market, in bureaucracy, in energy policy, in infrastructure and in tax law, which will put our country back on the road to economic success." Once the government has presented a draft budget, negotiations will continue in parliament. 

The Mercator Research Institute on Global Commons and Climate Change (MCC) said that Germany's special budget for climate policy programmes – the Climate and Transformation Fund (CTF), which was cut by 60 billion euros as a result of the constitutional court ruling – is overburdened. An MCC report showed that the funds depended on fluctuating revenues from national and EU carbon pricing, which made planning difficult. Without additional funds from the country's core state budget, "it is increasingly unlikely that many support programmes will continue to be financed, let alone new programmes," said the report. The government's decision for such additional funds was also uncertain and "not a convincing long-term solution in terms of financial policy," MCC said. It called for either integrating climate programmes into the core budget or discussing options such as reforming debt rules, introducing a debt-financed special budget for climate, abolishing fossil fuel subsidies, or reforming taxes.