The country’s top court banned the use of pandemic funds on energy transition initiatives

The German Finance Ministry has imposed an emergency spending freeze after the country’s top court banned the use of pandemic aid to finance green initiatives, Bloomberg reported on Tuesday.

The Constitutional Court ruled last week that the shifting of €60 billion ($65.2 billion) of unused debt authorizations earmarked to tackle the Covid-19 pandemic into the government’s Climate and Transformation Fund violates constitutional law.

On Monday, the Finance Ministry “froze virtually all new spending authorizations for this year as it tries to identify the broader and longer-term implications,” government officials told Bloomberg.

Under the ruling, existing liabilities will continue to be honored, but no new ones are allowed to be undertaken. New commitments can only be unblocked in exceptional cases, the court stated.

The move will have “massive implications” for Germany’s energy transition and green manufacturing plans, according to Vice Chancellor and Economy Minister Robert Habeck, as it will affect projects such as the expansion of hydrogen infrastructure and charging stations for electric vehicles.

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Government support for green manufacturing, including the steel industry, and the development of solar power are among the initiatives under threat, he added.

The ruling throws into question the use of hundreds of billions of euros of financing in special funds that are not part of the federal budget, including those that pay for measures to ease the burden from high energy prices on households and companies, according to Habeck. Germany has 29 such non-budget funds worth around €870 billion.

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