Germany Subsidies

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Germany—Between 2014 and 2016, Germany provided fiscal support valued at €33.3 billion and public finance of €2.4 billion per year

Germany is one of the countries in the EU region that reports its subsidies on fossil fuels on a biannual basis in a transparent manner (Gençsü and Zerzawy, 2017). Fossil fuel subsidies are financial support incentives in the production and consumption of carbon-intensive fuels such as coal, oil and gas (Bast and Doukas, 2016). Such financial investment discourages the production and consumption of renewable energies e.g. wind, solar and geothermal energy (Bast and Doukas, 2016). Germany provides subsidies to fossil fuels i.e. coal mining, oil, gas and electricity. Between 2014 and 2016, Germany provided fiscal support valued at €33.3 billion and public finance of €2.4 billion per year (Gençsü and Zerzawy, 2017). Outside the European region, Germany provided about €2.3 billion in the period between 2014 and 2016 per year to support oil, gas and fossil fuel-powered electricity projects. To demonstrate, the production and consumption fossil fuel subsidies for the period between 2014 and 2016 per year are as shown in table 1 on the following page:

On the production side, coal receives the highest subsidies. This is because Germany is the largest producer of coal in the EU region and the largest lignite/brown coal producer in the world. Thus, to phase-out coal subsidies the amended Hard Coal Funding, Act, 2011 has been put in place. This Act regulates coal subsidies e.g. the Federal Government and the Land of North Rhine-Westphalia (NRW) coal subsidies for the period between 2014 and 2019 are as shown in table 2 below.

As such, the coal mining support for the period between 2014 and 2016 was about €2.7 billion per year and about 76% of this amount was used to support energy transition from coal to ease the phase-out process. The process of phasing out coal subsidies require financial support. For instance, in 2007, a 10 year-hard coal phase-out package was introduced in the North Rhine-Westphalia state (Gençsü and Zerzawy, 2017).

Figures in table 2 above show that by 2019 Germany will still be providing coal subsidies. It intends to phase-out its fossil fuel subsidies by 2025 as per its commitment to the Paris Agreement and to the EU. As a result, it may be difficult to meet the subsidies phase-out deadline unless drastic measures are undertaken. For instance, increase renewable energy subsidies and investments to reach the 80 % renewable energy targets by 2050. Germany should also set a clear date on when to exit from coal mining as intended in its Climate Action Plan, 2050.

Learn More

http://www.caneurope.org/docman/fossil-fuel-subsidies-1/3174-germany-brief-phase-out-2020-monitoring-europe-s-fossil-fuel-subsidies-pdf/file
https://www.boell.de/sites/default/files/uploads/2016/11/g20_themes8_eng.pdf
https://www.bmwi.de/Redaktion/EN/Artikel/Energy/coal.html