BVerfG Judgment: E-Mobility at Risk - Fossil Subsidies in the Spotlight

After the Federal Constitutional Court (BVerfG) declared the credit authorizations of 60 billion euros from the Climate and Transformation Fund (KTF) unconstitutional, the debate about reducing fossil subsidies is reignited. This reduction is actually also agreed upon in the coalition agreement, which the Green faction in the Bundestag has now reminded us of. From the FDP came an immediate categorical rejection; FDP leader and Finance Minister Christian Lindner warned vaguely that the devil is in the details and once again painted the gloomy vision of industry migration due to the reduction of subsidies. According to calculations by the Federal Environment Agency, various benefits for diesel, company cars, or kerosene amount to 65 billion euros. The agreement literally states:

"We want to gain additional budgetary leeway by reducing unnecessary, ineffective, and environmentally and climate-damaging subsidies and expenditures in the budget."

A specific review mandate was also issued for this purpose, for example, in relation to the treatment of diesel vehicles in vehicle tax.

"Reducing climate-damaging subsidies is also a way to create leeway," explained Green parliamentary group vice-chairman Andreas Audretsch.

The reduction of this type of subsidy must not be taboo, emphasized Green party leader Omid Nouripour. Solutions will be found together in the coalition. Conceptually, the state should save money while accelerating the development of renewable energy by no longer preferring fossil energies. The Federal Environment Agency had already calculated the sum of environmentally harmful subsidies in Germany to be 65 billion euros two years ago. This includes, for example, fuel subsidies for farmers, energy-intensive industries, or tax advantages for diesel.

"The recent ruling by the Federal Constitutional Court, which stopped the reallocation of 60 billion euros into the Climate and Transformation Fund, once again puts the financing of the transition to climate neutrality on shaky ground. At the same time, the state's investment and action needs are growing: Public funds are needed to build climate-neutral infrastructure, transform the economy, and support citizens in the transition. In such an environment, we can no longer afford environmentally harmful subsidies," concluded the Bertelsmann Foundation in a recent calculation.

Bertelsmann Study: Fossil Subsidies Sociable and Environmentally Harmful

In these calculations, conducted by Prognos AG on behalf of the Forum for Ecological-Social Market Economy (FÖS) for the areas of transport and industry, the foundation arrived at considerable sums. For example, the elimination of the diesel privilege would bring in an additional billion euros in revenue, while taking into account truck diesel would yield even 6.8 billion euros per year. Added to this is the tax benefit for company cars, which currently costs the state 5.7 billion euros. The study shows that the reliefs can be redesigned to achieve positive ecological impacts with only slight reductions in production. The fiscal additional revenues from the subsidy reform can be used to significantly increase the financial backing of climate protection contracts, thereby further improving the ecological and economic impact of the reform.

"In the transport sector, nearly half of all environmentally harmful subsidies are granted in terms of volume. The diesel and company car privileges, for example, hinder the transition to electromobility and favor high car mileage. They are socially unjust because, on the one hand, the diesel and company car privileges primarily benefit higher-income individuals, and on the other hand, the promotion of electromobility, which is disproportionately high due to the subsidies, also predominantly benefits financially better-off individuals," the authors criticize once again.