Germany's highest court ruling on budget planning has deemed current financing methods for multibillion-euro climate policies unconstitutional.
The verdict asserts Chancellor Olaf Scholz's coalition government cannot repurpose funds, initially intended for a coronavirus response, to bolster the country’s long-term "Climate and Transformation Fund."
Even if this does not impact preexisting commitments to climate action, the court decision has thrown the government's future energy and climate policy plans into chaos. This also risks heightening existing disagreements within the coalition regarding the financial means of climate policies, potentially forcing Olaf Scholz to make austere moves in either spending cuts or tax hikes.
The removal of €60 billion from the "Climate and Transformation Fund" presumably signals a return to more restrictive budget policies in Germany which will inevitably have impacts on other European countries, especially those most in debt like France and Italy.