Climate money is not dead

Berlin It is probably the height of anger over the possible industrial electricity price that emerged over the weekend. “Don’t be fucking serious,” mocked Fridays for Future activist Luisa Neubauer. The economist Klaus Adam spoke of “real satire”. And Brigitte Knopf from the Expert Council for Climate Issues said: “That’s unbelievable.”

The reason for the accumulated frustration was a Handelsblatt report from Friday. He described that the Federal Chancellery and the Ministry of Economic Affairs were fundamentally prepared to finance an industrial electricity price from the Climate and Transformation Fund (KTF).

The fund could be the way out in the months-long traffic light dispute over a discounted electricity tariff for industry, in which there is still no decision on the direction. However, the critics of the KTF solution are not necessarily concerned with the industrial electricity price. Rather, they fear that climate money will die because the funds are already being used elsewhere.

From the perspective of climate money fans, that would be a serious blow. The payout comes from the CO2 pricing in the transport and buildings sectors, which was decided by the previous government. The CO2 price and climate money are two sides of the same coin: Citizens are burdened by the CO2 price when heating and refueling, but receive compensation through climate money.

The highlight is that the climate money is paid out in the same amount per capita, but the burden of the CO2 price depends heavily on consumer behavior. Frequent flyers pay more, and those who live frugally benefit. The climate money is to be financed from the KTF, which, in addition to CO₂ pricing, is also fed by trading in CO2 certificates in the European Emissions Trading System.

It is unclear when the climate money will come

Climate money has a long history of suffering. The traffic light had stipulated in the coalition agreement that the income from CO₂ pricing would be returned to the citizens – but without setting a date. But even programming the payment method is difficult. According to current status, it should not be ready until the beginning of 2025.

>> Read also: Government before a solution – This is how the industrial electricity price can be financed

But even then it is not certain that the climate money will come. Chancellor Olaf Scholz (SPD) recently made remarks at the cabinet meeting in Meseberg at the end of August that made people sit up and take notice. The traffic light only agreed to create the technical possibilities for the payment of climate money. His statements made it clear: This does not mean that the climate money will then be paid out straight away.

Finance Minister Christian Lindner (FDP) is in the process of creating the technical requirements. The traffic light has already decided on a legal basis. The Federal Central Tax Office is now building a database that links citizens’ tax identification numbers and bank account details. From the end of 2023, family health insurance funds should provide data, followed by credit institutions and citizens in 2024.

“However, the technical method is not decisive for the disbursement of climate money,” says the Ministry of Finance. It’s about a political decision. The finance minister is definitely willing to act. The income from CO2 pricing should “if possible be used as early as 2025 to pay out climate money,” says those around him. The question now arises: Is the money actually there if an industrial electricity price is to be financed from the same pot?

Lindner’s environment supported the critics who consider financing the industrial electricity price from the KTF to be absurd. It is almost ironic to use the income from carbon pricing to subsidize electricity. The background is that a reduced electricity tariff for industry could increase consumption and thus emissions.

Expert Knopf warns against “overexpanding” the fund

In general, Lindner’s environment explained: “If parts of the SPD and the Greens want to plan the money elsewhere, they are actually taking a lot of money away from the families.” The fear cannot be dismissed when looking at the raw numbers. The KTF is already overbooked.

Traffic in Berlin

Those who use less CO2 have to pay less taxes. However, everyone receives the climate money in the same amount.

(Photo: imago images/Dirk Sattler)

The idea that in the end there might not be enough money in the KTF to pay out climate money to all citizens alarms experts like the environmental economist Andreas Löschel. It’s about taking the right approaches now. “This will hardly succeed if there is no comprehensive relief through climate money,” said Löschel. Löschel is convinced that the rapid implementation of simple relief should be a priority.

You may not even have to choose between industrial electricity prices or climate money; in the end there could be enough money available for both projects. According to Handelsblatt information, only 50 to 60 percent of the planned expenditure of 36 billion euros will flow from the KTF this year due to administrative bottlenecks. This would mean that at least around 15 billion euros in funds would be available for additional projects.

It is difficult to imagine that outflows will increase suddenly in the next few years. This means that additional reserves could accumulate in the fund year after year. In total, that could be enough for climate money and a modified industrial electricity price. Economics Minister Robert Habeck (Greens) had originally estimated the costs at a total of 25 to 30 billion euros. However, downsizing work is underway in his house. The costs could ultimately be significantly lower.

>> Read also: Greenhouse gases – The price that leads to revolt

In addition to the debate about numbers, legal questions are also open. It is not clear whether the KTF is allowed to finance a general industrial electricity price. Those around Lindner point to the earmarking of the fund.

Expert council member Brigitte Knopf also sees a problem here. She warns against “overstretching” the KTF. A fundamental political decision is required: “The federal government should, in principle, integrate climate protection as a state task into the core budget and therefore accommodate all expenditure for the corresponding public infrastructure there,” says Knopf. Only through such a step would there be enough money available in the climate fund for social compensation – for example through climate money – and to support investments by private households.

More: The traffic light guts the climate fund

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