| By Petra Sorge Germany this week is discussing a new government budget with the largest green spending program in the country’s history — supporting everything from upgraded power grids and geothermal energy to more climate-friendly public transport. Yet buried within the more than 3,000 pages of text are some surprising setbacks for climate action. One of the items causing controversy is a plan to use the nation’s climate and transformation fund — set to be bolstered with €100 billion ($117 billion) — to help pay some of the costs for natural gas storage. The nation’s backup supply has been traditionally funded through a gas storage levy, paid by domestic traders or utilities with costs rolled on to customers. The idea of using climate money — in total €3.4 billion — to support natural gas is drawing ire from climate advocates. Tapping a green fund for fossil fuel is a “plunder,” said Sascha Müller-Kraenner, executive director of Environmental Action Germany. With the move, the government is “prolonging fossil dependencies and literally burning through money,” and it won’t help the “modernization of the economy,” warned Katharina Reuter, managing director of the German Sustainable Economy Association, which represents 700 companies. Yet for the government, this is not a fossil fuel promotion but a “a measure to reduce energy prices and to relieve the burden on consumers and the economy,” an economy ministry spokesperson said. Chancellor Friedrich Merz’s new ruling coalition government is keen to provide tax relief to industrial companies, which have been suffering from high energy prices ever since Moscow’s attack on Ukraine meant a loss of cheap Russian pipeline gas. Read More: German Lawmakers Back Merz’s €46 Billion Tax-Breaks Package Still, some of the other climate schemes rolled back in the budget would have offered cleaner domestic energy alternatives for industrial companies. Among the cuts, the government is planning to slash by two-thirds the funding the previous administration allocated to green hydrogen. The amount being set for now until 2030 is €1.2 billion, compared with the original €3.7 billion, according to the draft budget. In addition, the funds for a clean industry program — which was developed to support everything from hydrogen to carbon capture — are under proposal to be reduced from €24.5 billion to €1.8 billion. These “drastic cuts” for hydrogen projects will “damage the industry and the competitiveness of the industrial location,” Kerstin Andreae, head of energy group BDEW, said in a statement. During her first public grilling in parliament on Wednesday, economy minister Katherina Reiche said previous governments had a chance to give hydrogen better support. “If we had started earlier with gas and blue hydrogen, we would have made more progress by now,” she said, referring to a term for decarbonized hydrogen. Last week, ArcelorMittal Europe scrapped its plans for green steelmaking in two German cities, and said it will now return a €1.3 billion subsidy it received for that purpose. Referencing an earlier statement, the company put the blame on “policy, energy and market environments” that “had not moved in a favorable direction.” To be sure, green advocates note there are many positive moves for climate action in Germany's budget spending plans, such as tax cuts for company electric vehicles and a railroad investment booster. While it's “an important step,” a funding gap remains, said Julia Metz, director of green think tank Agora Industry. “This must be closed so that investments can flow into the climate-neutral modernization of the economy,” she said. | 
