Germany approves $180 billion fund to reduce Russia’s energy dependence

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  • The German cabinet on Wednesday backed a $180 billion fund plan to boost energy efficiency.
  • The funding comes as Germany and other EU countries seek to reduce their dependence on Russian energy.
  • The funding will go in part to energy-efficient retrofits of existing buildings, but subsidies for electric vehicles will end.

Germany’s cabinet on Wednesday approved funding plans worth around $180 billion aimed in part at reducing the country’s dependence on Russian energy, as Moscow continues to cut gas flows to Europe.

About 177.5 billion euros ($179.7 billion) will be invested in the German Climate and Transformation Fund between 2023 and 2026, the economy ministry said in a statement translated into English. The plan will be sent to parliament for approval.

The special fund is essential for the modernization of the German economy as well as for financing climate protection, the government said. It will support the conversion of Germany’s energy supply, decarbonization efforts and the development of the hydrogen sector, among others.

Expanding renewable resources is “even more topical and urgent” after Russia invaded Ukraine, Finance Minister Christian Lindner told a news conference, according to Bloomberg.

Moscow has cut natural gas flows to Europe since it launched its war against the former Soviet republic in late February, as the moves are seen as retaliation against Western countries for imposing related sanctions on Russia.

Russian energy giant Gazprom cut flows again this week, days after resuming deliveries. The European Union, ahead of Russia’s decision on its Nord Stream gas pipeline, on Tuesday approved plans to cut gas consumption by 15% by August 1. The EU has warned that cuts could be made mandatory if the region’s energy crisis worsens.

Germany’s special fund will also deal with building renovations, with €16.9 billion earmarked to make buildings more energy efficient. The government will allocate 5.6 billion euros to the development of electromobility, including the expansion of charging infrastructure. But subsidies for electric vehicles will end, the economy ministry said.

“Given the billions in automaker profits, such subsidies are no longer necessary,” Lindner told reporters.

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