New EUR 500 billion fund for infrastructure and climate • City of Leipzig expands district heating network • Read more about the developments in sustainable heating and cooling in this month's news update from Germany
Germany’s coalition government, led by CDU/CSU leader Friedrich Merz has secured a parliamentary approval for a €500 billion special fund dedicated to infrastructure and climate projects. At least 100 billion euros will go to the Climate and Transformation Fund (KTF), earmarked for emissions reduction, grid expansion, building modernisation, hydrogen infrastructure, and heating sector decarbonisation. Green politicians and NGOs stress the need for the remaining 400 billion to also prioritize sustainable energy and climate projects—warning against misuse on projects like road expansion or diesel subsidies.
The fund is structured as a special fund, meaning it is exempt from debt restrictions and allows predictable, long-term planning until 2037. It gives federal and state governments an average of 42 billion euros in extra annual spending, including at least 8 billion per year for climate action.
As Germany’s industrial output, particularly in energy-intensive sectors, declines, the fund is seen as a potential tool to revive economic growth and accelerate the clean energy transition—if properly directed toward modern, sustainable infrastructure.
Read more in article from Clean Energy Wire
Leipzig is concretizing its heating transition by launching a pilot project to connect an entire district in the city’s western southern suburb to the municipal utility company Stadtwerke Leipzig’s district heating network. First announced in January, the project marks a major step in expanding the existing network from 500 to 800 km, a key part of the city’s plan to move away from fossil fuel heating. The pilot will begin with around 600 buildings—serving thousands of households—and aims to bring the first homes around Fichtestrasse online by spring 2026, with full completion expected from 2029 onwards.
To make this vision a reality, the city council approved €100 million in capital for the municipal utility as part of the 2025/2026 budget, despite resistance from the CDU and BSW factions. The funding offers vital support to move the project forward. The city’s broader heating plan was discussed at the February 12 council meeting and emphasizes a medium-term phase-out of fossil fuels.
While the pilot project itself is long-term—stretching well into the 2030s—it responds to urgent demand. With CO₂ pricing expected to drive up fossil fuel costs, homeowners are increasingly seeking sustainable, cost-stable alternatives. According to Hartwig Kalhöfer, co-project lead, the utility has already received around 6,000 inquiries citywide. Especially in densely populated inner-city areas, district heating is becoming the most attractive path forward.
Read more in article from Leipziger Zeitung
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