The new German government is planning extensive subsidies to provide significant funding for the economy, innovation and future technologies in Germany.
Although the coalition agreement lays out a total of EUR 1 billion in savings on funding programmes to consolidate the budget, the new federal government has set itself the goal of effectively promoting growth and innovation in Germany. At the same time, the new coalition is planning to reform the German Federal Budget Code (BHO) to make the federal government's funding efforts more efficient, targeted and simpler as well as to reduce bureaucracy.
"Excessive subsidy regulations" are to be significantly reduced and simplified, as are the formalities in the application and verification procedure in line with the principle of "as much as necessary and as little as possible". More funding is to be allocated on a flat-rate basis, and decisions on funding commitments are to be accelerated. The CDU, CSU and SPD are relying on fully standardised and electronic processing as well as a central federal funding platform. The municipal funding programme structure is also to be evaluated and concentrated in order to simplify and optimise it.
In terms of content, the new government is focusing primarily on investment in and funding for the economy, research and education. The key component of the investment initiative is to be the Germany Fund, which is to be endowed with at least EUR 10 billion in equity and increased to at least EUR 100 billion through private equity investments and warranties. This is intended in particular to close financing gaps in the SME sector and in companies that have already gone through the start-up phase ("scale-ups").
Long-term funding for future technologies and projects is to be guaranteed by stabilising the Future Fund beyond 2030. In addition, an amendment to Solvency II is intended to reduce the capital requirements for infrastructure projects and venture capital.
In the area of economic development, the coalition agreement provides for a large number of sector-specific support measures: The future focus of economic subsidies is to be on promoting innovation and digitalisation as well as supporting start-ups and SMEs. The commitment to Germany as an automotive centre is to be accompanied by funding for e-mobility, hydrogen fuelling infrastructure and other support measures. In addition, the coalition is focusing on actively promoting foreign trade, which is strategically oriented and should be linked to development cooperation.
In March 2025, the German federal parliament and council (Bundestag and Bundesrat) created new financial scope for the green transformation of the economy with the establishment of a new special fund and the planned gradual contribution of EUR 100 billion to the Climate and Transformation Fund (KTF). With the introduction of Article 143h German Basic Law (GG), the goal of "climate neutrality by 2045" has found expression in the German constitution for the first time. The new government has announced in the coalition agreement that it will review existing investment funds to determine whether they are necessary. At the same time, it wants to focus the Climate and Transformation Fund on the key challenges on the path to climate neutrality. To this end, the new government plans to increase the efficiency of funding allocation and align it more closely with the criteria of CO₂ avoidance and social equalisation. In this context, the new government is planning to phase out micro-programmes with a prospective funding volume of less than EUR 50 million.
Funding programmes for the decarbonisation of industry
Existing funding programmes for the decarbonisation of industry are to be continued. Here too, the coalition wants to modernise funding rules and practices and reduce bureaucratic hurdles. At the same time, state funding is to be linked to additional criteria such as keeping production within Germany.
The coalition agreement explicitly mentions the continuation of the Carbon Contracts for Difference, which are an example of a targeted state funding measure for the decarbonisation of industry. As climate-friendly production methods to date have often been associated with considerable additional costs and price risks, the instrument of Carbon Contracts for Difference provides targeted support for companies from emission-intensive sectors to invest in appropriate technologies.
The Carbon Contracts for Difference concluded between companies and the state not only help to save considerable amounts of greenhouse gases; they are also intended to provide an incentive to drive forward the urgently needed market transformation and build up the infrastructure and expertise needed for decarbonisation. Under the new government, Carbon Contracts for Difference therefore remain a key funding instrument for climate change mitigation and for Germany as a centre of industry and innovation.
A first round of tenders was successfully completed in 2024, in which 15 companies were awarded funding of up to EUR 2.8 billion over a period of 15 years. In July 2024, the Traffic-Light Coalition Government initiated a preliminary procedure for the second round, but the tender for the second bidding procedure could no longer be initiated after the coalition broke down in November 2024.
Based on the evaluation of the first round, the German Federal Ministry for Economic Affairs and Energy has comprehensively revised the funding guidelines for Carbon Contracts for Difference to make it easier to access funding by introducing more flexible rules and opening up the programme to other technologies such as CCU/S, among other things. With the approval of the revised funding principles by the European Commission on 24 March 2025, the formal requirements for the second round of tenders have now been met. The new federal government will decide when they will ultimately be launched.
State aid projects
The new government emphasises that state aid law must be more closely aligned with transformation requirements and Europe's global competitiveness in future. In line with the mission letter to Commissioner Ribera, the new government therefore intends, among other things, to advocate for faster and leaner state aid procedures and the removal of hurdles. The overall aim is to modernise state aid law.
The new government is endeavouring to strengthen, simplify and speed up procedures in the context of Important Projects of Common European Interest (IPCEI) in particular, with these goals also putting it in line with the IPCEI Design Support Hub recently announced by the Commission, which is intended to support the Member States with implementing IPCEI projects. In the context of IPCEI, the new government is particularly emphasising Germany's interest in the Med4Cure IPCEI. This project also involves companies from five other Member States in addition to German companies. This IPCEI should contribute in particular to the objectives of the European Health Union by promoting innovation related to diseases for which there are no satisfactory prevention or treatment methods yet and by better preparing the EU for new health threats. The coalition agreement also envisages developing Germany as a leading location for microelectronics and continuing to promote investment under the European Chips Act and the corresponding IPCEI framework.
In addition, the new government plans to continue to provide support in the form of state aid. This is emphasised in the coalition agreement particularly with regard to energy prices and hydrogen.
Continuing tried and tested funding programmes and specifying details for new ones
Under the new government, companies will continue to be able to benefit from subsidies to a considerable extent. Tried and tested programmes such as the Carbon Contracts for Difference will be continued, and new funding programmes will be added. An emphasis will be on funding in the context of innovation, industry and future technologies. At the same time, modernisation and de-bureaucratisation of state subsidies is to be expected.
