Climate fund: Germany is planning billions for social equalization from 2026!

Climate fund: Germany is planning billions for social equalization from 2026!

On June 30, 2025, the EU member states will be under pressure: They must submit plans for the implementation of the new climate social fund to the EU Commission. The Federal Environment Ministry explains that Germany and many other countries in particular need more time to coordinate with environmental, social and consumer protection associations. The federal government's goal is clear: to present the plan this year and thus receive approval from the EU Commission as quickly as possible. This is part of a larger initiative to combat climate change, in which Germany will have EU funding worth 5.3 billion euros.

But how does it work exactly? The Climate Social Fund is designed as a solidarity mechanism to socially cushion the burdens from the pricing of emissions trading for heat and transport (ETS 2). In total, up to 65 billion euros will be available from 2026 to 2032, of which Germany can receive 8% and an additional 1.77 billion euros in national co-financing. That amounts to a total of around 7.1 billion euros for the country over seven years. It is important to note that the funds are “performance-based” and only flow if certain milestones are reached, which increases the responsibility and mobilization of countries.

The path to socially just climate policy

A central point of the Climate Social Fund is to help households, transport users and especially small businesses to switch to fossil-free alternatives and to prepare for rising CO2 prices. Germany has stretched the financial resources with foresight and will later receive them back from the EU. However, this requires careful planning and implementation of social support programs from 2026.

At the same time, there is a new study that addresses the planned expansion of European emissions trading (ETS II) to transport and buildings for 2027. This will potentially lead to higher and fluctuating CO2 prices. The study, commissioned by the Climate Alliance Germany, therefore recommends raising the national CO2 price path before the introduction of ETS II and introducing a national minimum price. This should not only ensure more planning, but also create social balance for low-income households and support them.

Expert opinions and demands

The results of the study were commented on by various experts. Stefanie Langkamp from the Climate Alliance Germany emphasizes the need for an overall package for the transition to CO2 pricing. Oldag Caspar from Germanwatch points out the urgent need for action to prepare for the rise in CO2 prices. Dr. Jan-Dirk Döhling from the Institute for Church and Society calls for the implementation of climate money in order to offer targeted support to low-income households. Maria Loheide from Diakonie Deutschland is also clearly in favor of a national climate social plan to alleviate the burdens.

All in all, it shows that the implementation of the Climate Social Fund and the planned expansion of emissions trading face major challenges, but also opportunities. How the federal government and the EU will overcome the challenges remains to be seen, but one thing is certain: social balance must be a central component of any climate protection strategy.

For a comprehensive overview and further information, it is worth taking a look at the original sources and studies: BMUV, Klima-Allianz, Diakonie.