Federal budget 2027 | Future quota in the core budget is falling

Funding for energy-efficient building renovations should also be cut. Photo: dpa/Armin Weigel The Climate and Transformation Fund (KTF) is actually intended to finance the conversion to a climate-neutral economy. But critics warn that the central financing instrument of German climate policy is increasingly at risk of failing to fulfill its original purpose. The government's draft for the 2027 federal budget envisages expenditure of almost 40 billion euros and therefore, on paper, a little more money than the previous financial planning. At the same time, however, money is being redirected to the normal budget, investment programs are subject to financing restrictions and ever larger sums are being used to reduce energy costs for companies.

On the occasion of the budget discussions in the Bundestag, an alliance of 13 environmental, social and youth associations, trade unions and development policy organizations is now calling on the government factions to make corrections. Investments in climate protection, social security and development cooperation protect people from heat, reduce dependence on oil and gas imports and support particularly vulnerable countries in dealing with droughts and other climate impacts, according to the joint appeal signed by the Climate Alliance, Verdi and Caritas, among others.

The focus of the criticism is the planned reallocation of 2.7 billion euros from the European CO2 emissions trading. While the proceeds previously flowed entirely into the KTF, they will now be used to consolidate the regular federal budget. The alliance demands that the fund not be tapped.

In addition, funding for heat pumps and energy-efficient building renovations must not be reduced. The organizations are also demanding an annual “renovation billion” for the energetic and heat-resistant modernization of daycare centers, nursing homes, hospitals and other social facilities. The aim is to retrofit shading options and air conditioning systems.

They receive support from an analysis by the scientific think tank Future Climate Social. According to this, in 2027 there will be a gap of 7.8 billion euros between the fund's estimated income and its program expenditure. It should be closed, among other things, through a so-called global reduction in spending. This means that higher expenditure will initially be included in the budget, but part of it will have to be saved later. Exactly where the cuts will be made remains unclear.

According to the think tank, this makes the KTF's financing appear better than it actually is. Funds that have not yet been committed, and thus support programs for private households or the public sector, came under pressure in particular. Investments that could permanently reduce energy consumption and costs are at risk of being subsequently curtailed.

“This means that the original transformation idea of ​​the KTF is lost,” criticized Brigitte Knopf, founder and director of the think tank. A large part of the money now flows into energy cost relief for industry instead of into investments by companies or socially oriented support programs for households. Overall, according to the analysis, the KTF's investment rate falls from 78 percent before including funds from the infrastructure and climate neutrality special fund to 57 percent. If the outstanding savings targets are implemented, it could even fall to around 50 percent.

A calculation of the future quota in the 2026 federal budget, which was carried out by WWF Germany and economic researchers from ZEW Mannheim, goes one step further. Accordingly, the federal government's future spending in the 2026 budget has reached a new high of 140.2 billion euros, but the increase is almost entirely coming from the temporary special funds. And the share of spending on future topics such as education, nature conservation and climate protection in the core budget has fallen to its lowest level since the time series began in 2018. “This means that the federal government’s future spending is on shaky ground instead of on a stable foundation,” says ZEW economist Friedrich Heinemann.

The trend continues in the 2027 federal budget: It provides for cuts in key future areas, such as climate protection, education or democracy promotion. This is also problematic in view of the recent state elections: “A well-fortified democracy needs reliable investments in the long term. However, the future quota makes it clear that this continuity does not exist," says Gernot Golka, state spokesman for the Partnerships for Democracy in Saxony-Anhalt, and adds: "Anyone who wants to strengthen Germany's future viability must reliably finance not only the material infrastructure but also the democratic infrastructure of our country, which also includes our work with civil society in the municipalities." 

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