In June 2020, Germany was the first EU country to present a large recovery package (€130bn). This was supplemented by additional measures for the mobility sector agreed in November 2020. In April 2021, the German government presented its official Recovery and Resilience Plan (RRP) for the use of funds from the EU Recovery and Resilience Facility (RRF). Notably, large parts of the RRP cross-finance measures that were already announced as part of the domestic package, so that altogether, Germany’s recovery measures add up to €140.3bn (4% of domestic GDP). Our analysis covers all of these packages.
Altogether, Germany’s recovery measures unlock some necessary progress, especially in the energy sector, but are not fully transformative. Measures for the mobility sector are particularly ambiguous: while the politically influential automotive industry did not succeed with its calls for a general purchase premium for new vehicles, the agreed measures are not fully supportive of the green transition, as, for instance, plug-in hybrid vehicles and trucks with internal combustion engines are still being supported. At the same time, the government used the recovery debate to intensify planning processes for the transition of regions that are currently dependent on the traditional automotive industry.
The Recovery and Resilience Plan’s lack of additional ambition beyond previously agreed measures is concerning. Our analysis shows that, instead of enabling additional projects, RRP measures cross-finance existing measures to a large extent. Only about one third of the RRP’s funding is used for new measures, especially for cross-border projects. The lack of additionality has been criticized, among others, by the trade union DGB and all major environmental organisations. Moreover, the German government itself has called for coupling funding from the EU Recovery and Resilience Facility to countries’ commitments to reforms. However, the German draft RRP has been criticized by the European Commission for not delivering sufficiently ambitious reforms. Lastly, civil society actors have also criticized a lack of public participation in the development process of the RRP.
We find that Germany’s recovery plan (RRP) achieves a green spending share of 38%, above the EU’s 37% benchmark. However, when assessing all recovery measures including those only included in the domestic recovery package from June 2020, Germany reaches a green spending share of just 21%. In contrast, 17% (€24.1bn) of all measures have a negative impact. Furthermore, we find that 20% (€28.5bn) may have a positive or negative impact on the green transition depending on the implementation of the relevant measures, illustrating the importance of further scrutiny during the further planning, review and implementation of the recovery measures. Notably, the RRP carries over a high share of the green measures that were previously spelled out in the domestic recovery package and does not substantively increase the share or amount of green recovery spending.
Our calculation of the green spending share aims to mirror the approach used for the official assessment of national recovery plans (find more information here).
*Our analysis covers the domestic recovery package presented in June 2020, as well as additional measures for the mobility sector agreed in November 2020 and the RRP presented in April 2021. This report was written by Alexander Reitzenstein, Felix Heilmann (E3G) and Antonia Brand (Wuppertal Institute). We are grateful to Lisa Fischer and Rebekka Popp (E3G) as well as Helena Mölter (Wuppertal Institute) for providing valuable inputs.
Germany’s recovery package does include little direct support measures for fossil fuel industries, even though the traditionally powerful car lobby had mobilized to achieve an unconditional support for new car purchases. However, there are some exceptions to this, as the package provides support for gas engines in shipping and new airplane purchases, as well as for plug-in hybrid vehicles.
Germany’s measures are largely not linked to any concrete long-term targets or (climate) conditions, which creates a significant risk of investments appearing green but ultimately not contributing to the green transition. Our analysis also shows that funds from the EU Recovery Facility are mostly not used to enable additional transformative measures.
The German government decided to spend significant funds on hydrogen (€10.5bn) while investing relatively less in green recovery solutions that are already available at scale and capable of creating many jobs even within short time frames, such as energy efficiency measures (which only receive €2.5bn in funding).