Northern German states insist on climate project funding in spite of budget crisis

The governments of Germany's coastal northern states have insisted on federal funding for agreed climate projects, and ensuring that these do not become subject to cuts caused by the federal government’s budget crisis. At an industry meeting in major port city Hamburg, the governments of city states Hamburg and Bremen, as well as those of Lower Saxony, Schleswig-Holstein and Mecklenburg-Western Pomerania called on the federal government to uphold agreed investments in sustainable industry transformation, for which northern Germany today was “a frontrunner.” A court ruling from November declared 60 billion euros earmarked for a federal climate and transformation fund unconstitutional, forcing the government to rethink its budget plans and triggered a halt to the financing of new projects.

The constitutional court’s ruling “must not become a setback for innovation and the energy transition,” the northern states said in a joint declaration. “With wind power, innovative hydrogen technologies and a capable port infrastructure, the north is a centre for technological development, the generation and the import of regenerative energies,” said Hamburg’s mayor, Peter Tschentscher. A successful energy transition was thus a prerequisite for maintaining the region’s economic stability, he added. Bremen’s mayor, Andreas Bovenschulte, said that both the state and companies will have to make major investments in the next years. “The states alone won’t be able to do it,” he argued. Stephan Weil, state premier of Lower Saxony, said the industry needed an affordable power price to continue basic material production in the region. The states’ appeal was backed by representatives of local industry and labour unions.

The court ruling that strengthened the role of Germany’s so-called debt brake for limiting new government borrowing has triggered great uncertainty regarding the viability of climate and energy transition projects among industry and policymakers in the country. However, chancellor Olaf Scholz and economy minister Robert Habeck have stressed that important projects would not be at risk due to the verdict. The government postponed its adoption of a budget for 2024 and is considering declaring a new emergency situation, similar to that of the coronavirus pandemic, to suspend the debt rule and enable more borrowing.