On Wednesday, Germany's Federal Constitutional Court annulled the national government's decision to reallocate 60 billion euros from a COVID-19 relief fund to be used for measures combatting climate change.
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The law under which the funds were retroactively shifted to the Climate and Transformation Fund (CTF) at the beginning of 2022 for the previous year's budget "does not meet the constitutional requirements for emergency borrowing," the court ruled.
With its so-called debt brake, Germany has an instrument that prevents the government from taking on new debt, except in crises such as the COVID-19 pandemic. The court found that transferring the funds for another purpose circumvents this regulation.
The "de facto unlimited" continued use of emergency-related credit authorizations in subsequent financial years is "inadmissible," the ruling added.
Since the 60 billion euros will now be withdrawn from Germany's climate fund, financed projects will have to be covered by other budget resources.
"The Federal Government will pay close attention to this ruling by the Federal Constitutional Court," Chancellor Olaf Scholz said on Wednesday. However, the 2024 budget meetings scheduled for Thursday are to take place as planned.
The CTF has a total budget of 211.8 billion euros for the next four years. The German government wanted to invest 57.6 billion euros from the fund into green projects in areas such as transport, buildings and the switch to renewable energies in 2024.
Germany is aiming to achieve climate neutrality by 2045, five years ahead of the European Union (EU) target. As part of this process, Germany wants to achieve an 80 percent share of renewable energies in its electricity supply by 2030, up from around 53 percent currently.
"This ruling is a bitter setback for climate protection," said Martin Kaiser, managing director of Greenpeace Germany, adding that all budgetary leeway must now be used on the path to climate neutrality, "because we are already in the midst of the climate crisis."