2026 economic plan – Special Fund for Infrastructure and Climate Neutrality – Noerr Insight No. 4

Over the coming years, the federal government, regional states and local authorities will need to secure substantial financing. This is due to the existing investment backlog in public infrastructure and a host of new challenges that will have to be met despite the economic situation. The need for funding will mainly relate to the maintenance and expansion of transport infrastructure, the upgrading and modernisation of energy infrastructure, and investments in digitalisation and economic transformation aiming to reach climate neutrality by 2045.

To master these tasks, a special debt fund for infrastructure and climate neutrality (“Special Fund”) of up to €500 billion laid down in Article 143h of the German constitution, or Basic Law (Grundgesetz), has been set up to facilitate additional investments in infrastructure and help achieve net-zero goals by 2045. The fund is administered by the Federal Ministry of Finance (Bundesministerium der Finanzen) (“Finance Ministry”). This was preceded by the adoption of the Act on the Establishment of a Special Fund for Infrastructure and Climate Neutrality (Gesetz zur Errichtung eines Sondervermögens Infrastruktur und Klimaneutralität) (“Special Infrastructure Fund Act”) on 18 September 2025 by the German lower house of parliament, the Bundestag, which came into force on 2 October 2025 and applies retrospectively from 1 January 2025.

A sum of €300 billion from the Special Fund is allocated to the federal government and €100 billion to the regional states. Another €100 billion will be allocated to the climate and transformation fund (“Climate and Transformation Fund”) in ten equal tranches up to 2034 and is earmarked for additional investments to achieve climate neutrality by 2045. The Finance Ministry also recently reported on the Special Fund and outlined the government’s “innovation offensive” in more detail in its FAQs.

The German Act on the Financing of Infrastructure Investments by Federal States and Local Authorities (Gesetz zur Finanzierung von Infrastrukturinvestitionen von Ländern und Kommunen) (“Local Infrastructure Investment Act”) came into force on 24 October 2025. This relates to the share for the federal states provided for in Article 143h(2), first sentence of the German Basic Law. The Act will govern the distribution of the €100 billion from the Special Fund to the federal states and local authorities.

In our first Noerr Insight dated 6 October 2025 in the series of articles on the Special Fund for Infrastructure and Climate Neutrality, we took a close look at the legal background of the Special Infrastructure Fund Act and the Local Infrastructure Investment Act, the planned distribution of funds to the federal states as well as individual eligibility requirements and reporting obligations.

Our second Noerr Insight in the series on the Special Fund for Infrastructure and Climate Neutrality dated 21 November 2025 dealt with the administrative agreement pursuant to section 9(1) of the Local Infrastructure Investment Act, which regulates the details of the procedure for implementing the Local Infrastructure Investment Act.

In the third Noerr Insight in the series of articles on the Special Fund for Infrastructure and Climate Neutrality dated 23 November 2025, we explained some key aspects of the 2025 economic plan and highlighted the substantial prospects for infrastructure development and groundbreaking business opportunities in transportation, energy and digital infrastructure.

Use of the investments designated for the federal government is determined annually in the economic plan as an annex to the federal budget. The 2026 economic plan adopted on 28 November 2025 determines how resources will be spent from the special fund in 2026. It authorises expenditure of just under €58.9 billion for the 2026 budget and commitment appropriations (ceilings for items of expenditure) of around €80.4 billion for future yearly budgets.

We start by presenting the main elements of the 2026 economic plan below (see A) before going on to identify the infrastructure-related potential and economic prospects offered by the special fund (see B).

A. The 2026 economic plan

Total expenditure for 2026 amounts to €58.9 billion, with planned commitment appropriations of €80.4 billion enabling the federal government to take measures in which it commits to spending in future yearly budgets. This represents a significant year-on-year rise in total expenditure, which stood at €37.2 billion for 2025. The next annual tranche of €10 billion will be made available for the Climate and Transformation Fund, as required by section 4(2) of the Special Infrastructure Fund Act. Regular allocations to the Climate and Transformation Fund are a key instrument for implementing the objectives set out in the Act. Appropriations under the Local Infrastructure Investment Act have also remained steady at €8.3 billion.

The increase is primarily reflected in central infrastructure areas that have already received funding. In 2025, the focus of funding was on investments in transport infrastructure (€11.3 billion) and digitalisation (€4 billion). These sectors will continue to receive the most support in the current year, with €21.3 billion earmarked for transport infrastructure and €8.5 billion for digitalisation.

Against this background, we provide a detailed overview of the infrastructure sectors receiving funding, funding priorities and how resources will be allocated to them below. The spotlight here is on transport infrastructure (see I), including the expansion, maintenance and modernisation of bridges and tunnels as well as hospital infrastructure (see II), where investments are aimed at modernising and transforming hospitals to ensure robust medical care in the future. In the area of energy infrastructure (see III), the focus is on action to convert and expand climate-neutral networks. Finally, research and development (see IV) and likewise digitalisation and the development of modern digital infrastructure are to be boosted (see V).

I. Transport infrastructure

Transport infrastructure remains one of the key funding priorities in the economic plan for the current year, benefiting from a significant boost in funding compared to the previous year. This year’s spending of €21.3 billion is practically double last year’s figure of €11.3 billion from the 2025 economic plan. A sum of €2.5 billion has again been put aside for the maintenance of bridges and tunnels, which also includes road resurfacing on the existing federal motorway network. Added to this are commitment appropriations of just under €3.3 billion.

Spending of around €16.3 billion and commitments of around €46.6 billion are planned an infrastructure contribution covering construction costs for maintaining the national railway network. The aim of the spending (which is much higher than in the 2025 economic plan) is to ensure that the railway network continues to be modernised at a high, sustainable level.

II. Hospital infrastructure

Another integral part of the 2026 economic plan is investment in hospital infrastructure, for which outlays of €6 billion are planned this year. A sum of €2.5 billion is to be used for immediate transformation costs for hospitals and €3.5 billion for the first allocation to the transformation fund relating to the hospital sector. The transformation fund is an essential component of the current hospital reforms and aims at comprehensively modernising hospital structures in Germany. The fund will have a total value of up to €50 billion by 2035 and will support projects designed to make healthcare structures fit for the future. Examples include concentrating acute inpatient care capacities, restructuring locations into cross-sector care facilities, establishing telemedicine network structures, creating specialised centres and integrating regional hospital networks.

As shown above, the field of hospital infrastructure has been singled out for high investments, bringing a significant rise in funding. This increase and the allocations now made in the transformation fund mean that the 2026 economic plan is encouraging efforts to make hospitals sustainable and well-equipped for the future. This will result in more opportunities for companies and institutions in the healthcare sector to get involved in hospital-related projects and lead to reliable planning for long-term investments.

III. Energy infrastructure

There has also been a notable increase in spending on energy infrastructure: while outlays of €850 million were approved in the 2025 economic plan, spending of just under €2.1 billion is now planned. Of this, around €1.4 billion is assigned to conversion and construction for climate-neutral heating networks, something that was not considered at all in the previous year. Funding will be provided for transforming, upgrading and constructing new heating networks and operating facilities in decarbonised heating infrastructures. The funding covers both investments in constructing new networks and modernising existing ones but also supports the development and implementation of transformation plans and feasibility studies for switching to renewable energies. Moreover, the operating costs for renewable heat generation plants will be financed if they lead to profitability gaps compared to heat generated with fossil fuels. This opens up new prospects for companies, especially in relation to heat supply and innovative grid technologies.

The 2026 economic plan also finances Deutsche Energy Terminal GmbH and the operation and sites of floating storage and regasification units, which store liquefied natural gas and are equipped with an LNG regasification plant so that it can be fed into the natural gas network.

IV. Research and development (e.g. investments in national space infrastructure and establishment of AI real-world labs)

The 2026 economic plan also sets new priorities in the field of research and development and significantly broadens the funding framework. There is a clear year-on-year top-up of funding and a targeted focus on R&D. The plan creates real incentives for innovation and technological development by doubling funds to more than €1 billion and introducing new areas eligible for funding. These include investments worth €50 million in national space infrastructure and worth €65 million for the establishment of AI real-world laboratories and infrastructure for health data sovereignty.

Space infrastructure includes all technical and organisational facilities such as launch and ground stations, control centres and test facilities for satellites that are necessary for operating and using space systems. Support for this infrastructure is an important part of the current space safety and security strategy and underlines the goal of strengthening Germany’s position as a leading space location in international competition (see our Noerr Insight dated 12 December 2025).

There is also a special focus on the expansion of “AI real-world laboratories”. These enable companies and research institutions to test innovative AI technologies under practical conditions and with the support of regulators before they are generally approved. This allows opportunities and risks to be identified at an early stage, the legal framework to be adapted and innovations to be put into practice more quickly. Thus AI real-world labs make an important contribution to digital and sustainable transformation and to the social acceptance of new technologies. By offering targeted support for these laboratories, the 2026 economic plan provides further impetus to keep Germany internationally competitive in the field of artificial intelligence and enable sustainable technological developments. At the same time, it creates a financial basis for implementing the relevant provisions of the AI Regulation (Regulation (EU) 2024/1689). According to Article 57(1) of the Regulation, Member States are required to establish at least one AI real-world laboratory at national level, which must be operational by 2 August 2026.

All this will provide companies and research institutions with fresh opportunities to take part in forward-looking projects and actively shape digital and scientific progress.

V. Digitalisation

Digitalisation is now the second-highest area of funding, with expenditure growing from €4 billion to €8.5 billion. The largest share of this is accounted for by microelectronics for digitalisation, which is being funded with expenditure of €5 billion and commitment appropriations of €9.3 billion.

Funds for investment in nationwide broadband expansion are also earmarked in the 2026 economic plan. Spending of approximately €2.3 billion is planned. Alongside this, commitment appropriations of just under €1.4 billion are available.

As we can see, the focus remains on laying the foundations for digital infrastructure, opening up major market and investment opportunities for companies in the IT, telecommunications and technology sectors. In this way, government investment is helping to promote innovation and strengthen digital competitiveness on a long-term basis.

B. Assessment and outlook

The 2026 economic plan once again demonstrates the legislature’s ambitious levels of investment in infrastructure and climate neutrality. The funding initiatives and investment projects are expected to pick up speed at the beginning of 2026, generating a wealth of new investment opportunities for companies, ranging from project-related planning and construction to operations, maintenance, digitalisation and climate transition.

The overall surge in total expenditure and commitment appropriations means that public procurement is likely to grow in the coming years, with a noticeable expansion in the size of investments. Companies focusing on upcoming projects at an early stage and tailoring their corporate structures, financing strategies and procurement expertise to the new environment will be in a prime position to benefit from this upturn.

The ongoing modernisation of procurement law continues to play a major role. The planned German Procurement Acceleration Act (Vergabebeschleunigungsgesetz) (“Procurement Acceleration Act”) (see our Noerr Insight series of articles – most recently on 20 October 2025) is intended to give greater leeway to public contracting authorities and suppliers during procurement processes on a long-term basis. The simplified legal requirements and additional scope for action will enable government infrastructure projects to be implemented faster and more efficiently. Business owners and public contracting authorities are strongly advised to monitor these changes and adjust their organisational and bidding strategies to reflect this.

Final adoption of the Procurement Acceleration Act by the Bundestag has been delayed until spring 2026, meaning that once the new provisions have been approved by the Bundesrat they are not expected to come into force until later in 2026. This development in the German houses of parliament gives legislators the opportunity to make any necessary revisions to the draft bill involving primary legal protection under public procurement law. At the same time, it gives companies the opportunity to thoroughly prepare for the welcome changes in procurement procedures and the greater flexibility now existing.

We will be keeping an eye on the continued process and monitoring how state law on the special fund is implemented so that we can keep you updated on the current developments. In another Noerr Insight in this series of articles on the special fund, we will examine the forward-looking investment programme in the state of North Rhine-Westphalia. For more information and strategic guidelines on growth drivers and barriers for energy and infrastructure investors in Germany, please refer to our Noerr Briefing from November 2025.