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Germany set to spend €40bn in next four years to combat climate change

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
German Chancellor Angela Merkel speaks at the Frankfurt Motor Show as a Greenpeace activist holds a "climate killer" poster in the background, September 12, 2019. Credit: Reuters/Ralph Orlowski

The German government is focused on its climate strategy this week, as it knuckles down to work out a multi-billion-euro package to tackle climate change and help the country hit its climate goals by 2030.

The climate package is due to be unveiled on Friday. According to media reports, the Conservative-Social Democrat coalition could agree to spend €40bn (£35bn, $44bn) by 2023. The Transport Ministry has also reportedly proposed spending up to €75bn by 2030.

Friday’s climate-protection package is expected to include higher subsidies and tax breaks to boost electric car sales, investment in e-car charging stations and trains, the construction of better cycle-paths, and subsidisation of eco-friendly real estate projects.

The package would need to be “socially acceptable” Merkel’s spokesman Steffen Seibert told journalists on Monday in Berlin.

READ MORE: Climate protests and economic clouds force changes at Frankfurt motor show

Vice-chancellor Olaf Scholz told the Bild daily newspaper on Monday that a tax on petrol was not the way forward, but that a tax should be added to domestic flight tickets.

Chancellor Angela Merkel spoke out last week about the need to tackle climate change now, or pay the price in the years to come.

She told the Bundestag that doing nothing was “not an option,” adding that an expansion of renewable energy and carbon emissions pricing was the right approach to reducing CO2 emissions.

Speaking at the opening of the Frankfurt motor show last week, Merkel told carmakers they faced a “Herculean task” moving towards more sustainable mobility—there’s a long way to go, considering that electric and hybrid cars accounted for under 2% of total car sales in Germany in 2018.

Demonstrators outside the Frankfurt motor show on September 14, 2019, with signs demanding the end to combustion engine. Credit: Daniel Roland/AFP/Getty Images)

The mood at Frankfurt motor show was markedly more somber this year, with manufacturers presenting electric vehicles and touting plans for CO2-neutral production. On Saturday, more than 15,000 protestors gathered outside the showgrounds to demand car companies stop putting ever more gas-guzzling SUVs on the streets.

READ MORE: Volkswagen rebrands and wheels out its new mass-market car

Some proposals on how to tackle climate change have been hotly contested, doing more for newspaper sales than the environment: such as the idea of imposing an autobahn speed limit, which drove many Germans into a rage and was dropped.

Germany is aiming to reduce its CO2 emissions by 55% from 1990 levels by 2030. Last June, it admitted that it would miss its 2020 goal of a 40% reduction, coming in at just 32%, blaming higher transport emissions among other things.

The issue of climate change is fragmenting the political landscape in Germany, resulting in a surge in support for the Greens on one hand, and the right-wing Alternative for Germany on the other. The AfD has tapped into fears of job losses due to Germany’s planned exit from coal mining in eastern German states like Brandenburg and Saxony, surging to second place in both state elections recently.

READ MORE: Far-right AfD becomes second-biggest party in two eastern German states