North Rhine-Westphalian Plan for Good Infrastructure and the NRW Infrastructure Act 2025 to 2036 – Special Fund for Infrastructure and Climate Neutrality – Noerr Insight No. 5

The North Rhine-Westphalian Plan for Good Infrastructure 2025-2036 (in German only) (“NRW Plan”) is the largest infrastructure and investment programme in the history of the state of North Rhine-Westphalia. It provides for a total of €31.2 billion to be invested in the state’s public infrastructure over the next twelve years. Around €21.3 billion is earmarked for investments by local authorities, while around €8.4 billion for state projects in areas such as transport, energy-efficient renovation and climate protection, digitalisation, and research and science.

The NRW Plan was implemented under state law in the (in German only) (“NRW Infrastructure Act”), passed by North Rhine-Westphalia’s regional parliament on 17 December 2025. The plan is motivated by the considerable need for investment and modernisation of public infrastructure in North Rhine-Westphalia, which must be addressed quickly in view of the additional demands of digitalisation, energy transition and demographic change. The NRW Infrastructure Act establishes the legal framework for this at regional level, enabling the funds allocated to the state from the national financial framework to be deployed practically and for their intended purposes.

The NRW Plan is essentially financed from two sources:

On the one hand, the state is using its share of around €21.1 billion from public debt used to create the Special Fund for Infrastructure and Climate Neutrality (“Special Fund”). The federal government is providing up to €500 billion for additional credit-financed investments in infrastructure and climate protection via this special fund. Of this, €100 billion is designated for the individual states and local authorities. In relation to the share earmarked for the states, the German Act on the Financing of Infrastructure Investments by Federal States and Local Authorities (Gesetz zur Finanzierung von Infrastrukturinvestitionen von Ländern und Kommunen) (in German only) (“Local Infrastructure Investment Act”), which came into effect in October 2025, governs the distribution of the €100 billion from the Special Fund to the federal states and local authorities. Under the Local Infrastructure Investment Act, NRW will receive a share of around 21.1%, i.e. approximately €21.1 billion.

On the other hand, added to this are funds from the NRW state budget, bringing the total to €31.2 billion. In addition, the state guarantees the local authorities the general investment allowances under the German Local Authority Financing Act (Gemeindefinanzierungsgesetz) (“Local Authority Financing Act”) for the same period, promising a further €27.6 billion in resources. These investment allowances are restricted funds allocated by the federal state to local authorities that can be used to promote investment measures and are paid out in accordance with the distribution rules in the Local Authority Financing Act. This means that they are not directly governed by the NRW Infrastructure Act but are included in the total value of the NRW Plan.

In our first Noerr Insight dated 6 October 2025 in our series of articles on the Special Fund for Infrastructure and Climate Neutrality, we took a detailed look at the legal basis for the Special Fund, the planned distribution of funds to the federal states as well as key 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 German Act on the Financing of Infrastructure Investments by Federal States and Local Authorities (Gesetz zur Finanzierung von Infrastrukturinvestitionen von Ländern und Kommunen), which sets out the details of the procedure for implementing the Local Infrastructure Investment Act.

The third Noerr Insight in our series of articles on the Special Fund for Infrastructure and Climate Neutrality dated 23 November 2025 reviews the 2025 economic plan, which came into force retrospectively on 1 January 2025. This contains funds of €37.2 billion and prioritises investments in transport, energy and digital infrastructure.

The fourth Noerr Insight on the Special Fund for Infrastructure and Climate Neutrality presents the 2026 economic plan adopted by the Bundestag in November 2025 and the key investment priorities, particularly in transport and rail infrastructure, energy and hospital infrastructure, digitalisation, and measures in education, research and housing construction.

In the following sections, we set out the key contents of the NRW Infrastructure Act (see A), explain how the additional funds for the individual states are integrated into the budget (see B) and identify the groundbreaking opportunities for the public sector and businesses (see C).

A. Main contents of the NRW Infrastructure Act

I. Financial framework and distribution of funds

The NRW Infrastructure Act revolves around the implementation of North Rhine-Westphalia’s share of the Special Fund. The share allocated to the state is to be invested in specific real assets, such as construction projects, renovations, technical equipment or digital infrastructure. Of this amount, around €12.7 billion is earmarked for local authorities, with €8.4 billion retained by the state of NRW.

The NRW Plan combines these federal funds with additional state funds and compensation payments, creating a significantly larger financial framework. The compensation payments include extra government compensation funds that will be paid out to NRW for expected tax revenue shortfalls from the immediate tax investment programme, which will flow into the plan together with federal and state funds. This means that a total of €31.2 billion will be available for infrastructure investments up to 2036. Since local authorities and the state will be awarding many construction, supply and service contracts through public procurement, companies can expect a predictable and economically promising flow of funds over many years.

II. Local authority share: lump-sum budgets and support programmes

At the local level, the law provides for a lump-sum support budget and supplementary subsidy programmes targeting specific sectors. The local authority’s share for the entire funding period is communicated once by formal notice and the funds can then be accessed as needed to settle outstanding invoices.

1. Two pillars of local authority funding

Under section 2(1) of the NRW Infrastructure Act, financial resources for local authorities from the Special Fund will be provided in two pillars:

• €10 billion as a lump-sum budget allocated directly to local authorities.
• the remaining €2.7 billion creating new subsidy programmes for the state and topping up existing ones, starting with budget year 2026.

Section 2(2) of the NRW Infrastructure Act states that the lump-sum €10 billion budget for subsidies is intended for infrastructure-related investments in real assets:

• education and care infrastructure,
• renovating properties, for example to be energy efficient, and measures supporting the goals of climate protection, climate impact adaptation and ecological sustainability,
• transport infrastructure,
• digital resilience and digitalisation,
• sports infrastructure and
• public safety and crisis resilience

Guidelines on the sectors covered are provided in section 2(2), second sentence of the NRW Infrastructure Act: 50% of the lump-sum resources allocated to local authorities are to be invested in education and childcare infrastructure and 20% in energy and climate protection measures. The remaining 30% is earmarked for transport, digitalisation, sports infrastructure and public safety measures. It is possible to deviate from this if an authority does not need funding in certain areas, granting towns and districts a certain room for manoeuvre. Any deviations have to be accompanied by a statement by the chief administrative officer.

2. Distribution key and focus on financially weak authorities

Section 7 of the NRW Infrastructure Act specifies the key according to which the lump-sum investment resources are distributed. 80% of funds are allocated according to the number of inhabitants, and a further 10% according to floor space. The remaining 10% flows directly to local authorities identified as particularly financially weak under local authority financing legislation for 2021 to 2025 when determining the need for financing by local areas; districts receive an additional 20% of the sum calculated for their boroughs. By taking this approach, the legislature is setting a socio-political priority in favour of structurally disadvantage towns, cities and boroughs.

The largest sums allocated to local authorities include the cities of Cologne (approximately €523 million), Dortmund (approximately €358 million), Essen (approximately €335 million), Duisburg (approximately €301 million) and Dusseldorf (approximately €281 million).

3. Basis in budget law

To prevent investments from failing due to delayed budget decisions, section 9 of the NRW Infrastructure Act contains special rules for boroughs and districts in the provisional management budgets.

Section 9 (1)(1) of the Act states that boroughs and districts that are subject to provisional budget management at the beginning of the budget period in accordance with section 82 of the Bylaws for the State of North Rhine-Westphalia (Gemeindeordnung für das Land Nordrhein-Westfalen) (“NRW Bylaws”) may finance investments from the investment resources provided under the NRW Infrastructure Act and, where applicable, from supplementary investment-related subsidies until their budget statute comes into force, without the restrictions of section 82 NRW Bylaws applying. Section 82 of the NRW Bylaws governs provisional budget management, i.e. which expenditure and obligations a borough or district may incur at the start of a budget year without a budget statute having been passed. It also specifies the conditions under which local authorities may take out loans and when they require approval from the local government supervisory authority. Since the NRW Infrastructure Act envisages that the measures will not require additional borrowing and will be financed from the investment resources allocated, the usual approval requirements for loans in section 82 of the NRW Bylaws do not apply.

Under section 9(1)(2) of the NRW Infrastructure Act, the exception also applies to a local authority’s own funds, provided that they are used on a supplementary basis and the competent local authority representative body has given its consent beforehand. This is intended to prevent practices in which measures under the NRW Infrastructure Act are financed solely from the funds provided under the Act.

In addition to this, section 12 of the NRW Infrastructure Act provides clarification on budgetary law, enabling initial investment measures to be financed. For boroughs and districts, expenditure and payments for investment measures funded under the Act for the 2025 budget year pursuant to section 12(1) are considered “absolutely necessary” under section 83(1) of the NRW Bylaws but require council or district council resolution beforehand.

III. Regional investments in transport, hospitals, universities and digitalisation

Section 3 of the NRW Infrastructure Act designates the areas in which the €8.4 billion in funds allocated to NRW will be invested. The funds are distributed as follows:

• renovation of the state’s roads and bridges and replacement of existing structures: €1.5 billion,
• investments in digital resilience and digitalisation: €1.3 billion,
• investments in early childhood education and care infrastructure: €700 million,
• investments in sports infrastructure: €200 million,
• investments in the renovation of the state’s properties, for example to improve energy efficiency: €400 million,
• investments in university hospitals: €1 billion,
• investments in universities: €1 billion,
• investments in hospital infrastructure: €1 billion, and
• investments in economic transition, research and innovation: €1.3 billion.

As outlined above, the Act brings together priority areas that are crucial to NRW’s future: mobility, healthcare, science and digitalisation. Its explanatory memorandum notes that the state’s investments will focus on renovating and renewing state roads and bridges, including their cycle paths.

IV. Eligible projects, procedures and deadlines

Provision of investment resources is based on the eligibility requirements set out in section 4 of the NRW Infrastructure Act. These are linked to the national requirements within the Act on the Financing of Infrastructure Investments by Federal States and Local Authorities and the related administrative agreement between the German government and the states in relation to this and define which spending will be recognised as eligible investments in real assets when implementing the NRW Plan.

1. Eligible investments

According to section 4(1) of the NRW Infrastructure Act, investments by infrastructure operators in real assets are eligible for funding providing they fulfil the tasks of the state or local authorities and involve investments worth at least €50,000. Should investments fall below this threshold, this will only have an adverse effect on funding under section 4(8) of the Act if this was foreseeable at the time approval was granted or work commenced. Eligible investments include not only traditional construction work or the acquisition of land, buildings and technical equipment, but also acquisitions of permanent and temporary rights of use in the field of digitalisation. This also extends to the development and commissioning of digital processes, even if these are not considered investments under budgetary law. Allocations and subsidies to third parties for such projects may also be financed from the funds.

In addition to this, section 4 of the NRW Infrastructure Act allows for joint financing of any necessary related and follow-up measures, such as ancillary construction costs, planning and engineering services or any necessary expert opinions. These costs may be subsidised up to 50% of a project’s eligible expenditure. However, ongoing administrative and personnel costs and the subsequent operation and maintenance of the infrastructure are not covered.

Section 4(7) of the Act will be especially relevant in practice: it explicitly permits investment models in which the public sector engages private partners to perform tasks, for example in the context of long-term contract structures or public-private partnerships.

2. Time frames: project launches, approval, completion

The cut-off dates in section 5 of the NRW Infrastructure Act also reflect the national subsidy period as stipulated in the administrative agreement for implementing the Special Fund.

The time frame is as follows:

• No work may be started before 1 January 2025. Any preparatory studies and planning carried out before this date do not affect eligibility.
• Approval must be granted by 31 December 2036.
• The work must be completed and accepted in full by 31 December 2042.

If it is not possible to complete a project by the end of 2042 due to unforeseen external circumstances, section 5(1)(3) of the Act allows for an assessment of the status quo instead, provided that a self-contained part is completed after 31 December 2042 to achieve the investment goal. From 2043, funds may only be used for projects that have already been completed or will be completed by the end of 2042. By the end of 2029, at least one third of resources should be committed to approved measures. The Act itself only applies for a limited time, expiring on 31 December 2054.

3. Digital processes, reporting requirements and checks

For procedural aspects, section 6(1) of the NRW Infrastructure Act (and section 11 of the Act for boroughs and districts) relies on a largely digital approach:

• Boroughs and districts must record planned, commenced and completed investment projects in a digital procedure based on a standard template and update these entries promptly, but no later than ten working days after the event occurs.
• From 30 June 2026, they also have to indicate the value of the budgetary funds likely to be required in the coming year and annually by 30 June of each year during the financial planning period.
• Alongside this, under section 11(2)(3) of the Act, from 1 January 2026 estimated financial requirements must be reported in accordance with the provisions of the General Administrative Regulations (Allgemeine Verwaltungsvorschriften) relating to section 43 of the Federal Budget Code (Bundeshaushaltsordnung) (“Federal Budget Code”) in such a way that the German government can take them into account in its liquidity planning in good time. The General Administrative Regulations for section43 of the Federal Budget Code specify how and when federal agencies have to report their expected cash requirements, allowing the national government to plan and provide the necessary funds in good time.

Section 11(3) of the Act contains a transitional provision: until the digital procedure is established, boroughs and districts have to report their projects on a quarterly basis using a standard template. They must also continue to submit details of their annual funding needs and the estimated financial resources required punctually, as set down in section 11(2)(2) and (3) of the Act.

Furthermore, under section 11(4) a final report must be submitted within six months of a project being completed, detailing the contents of the project, its time frame, infrastructure sector, investment value and financing structure. This has to be accompanied by confirmation from the local audit office that the funds were used for their intended purpose.

Section 11(1) of the Act states that requests for funds are only permitted for invoices due within three months, with the county government checking whether the substantive eligibility requirements have been met in each case. In addition, the Act’s section 11(7) stipulates that at least 5% of completed measures at local authority level must be randomly checked by the supra-local audit office (Gemeindeprüfungsanstalt), while section 6(2) requires economic efficiency studies for all measures which have financial implications.

B. Integration of additional state funds in the budget

The original state share in the NRW Plan that exceeds the funds under the Act on the Financing of Infrastructure Investments by Federal States and Local Authorities is integrated into budgetary law independently of the Special Fund and outside the NRW Infrastructure Act.

In its supplementary provisions to the 2026 Budget Act (Ergänzung zum Haushaltsgesetz 2026) the state government describes the NRW Plan as a three-pillar strategy. In addition to the federal share, it additional state funds that are primarily intended to consolidate existing investment programmes for local authorities and regional infrastructure over a twelve-year period. For 2026, extensive commitment appropriations amounting to €11.1 billion will initially be set up in new chapters of the individual plans. Politically, these budget estimates and lump sums are thus part of the NRW Plan, but their legal basis is in the Budget Act.

C. Practical significance and perspectives: public sector and companies

The NRW Infrastructure Act will come into force on the day after its promulgation. The plan provides an additional financial catalyst to promote the modernisation of infrastructure and economic growth. Below, we provide an overview of the key potential scenarios and new perspectives that both the public sector (see I) and private sector players (see II) should adapt to at an early stage in order to successfully manage the broad incentives for investment and follow them through in a business context.

I. Federal states and local authorities: investment planning and administrative organisation

For the public sector in North Rhine-Westphalia, the NRW Plan opens up additional scope for investment to address the long-standing infrastructure and investment backlog in public infrastructure, especially in areas where there has been pressure to renovate for years: in schools and daycare centres, bridges and roads, digitalisation in administrative authorities, and sports and health facilities. The lump-sum budgets enable local authorities to adapt their projects to local needs within defined quotas.

In practice, local authorities will have to align their existing infrastructure strategies and investment programmes closely with the statutory funding periods and reporting requirements. It makes sense to identify important projects at an early stage, review planning and procurement capacities, and organise construction, supply and service contracts in such a way that funds can be channelled quickly into specific local projects.

In this context, public contracting authorities should make optimum use of the scope for flexible, accelerated and innovative procurement resulting from the draft  German Procurement Acceleration Act (Vergabebeschleunigungsgesetz) (see our Noerr Insight series, most recently dated 20 October 2025), which is currently going through the parliamentary process.

II. Businesses: new opportunities in construction, energy, digitalisation and health

The NRW Plan presents businesses the chance to get involved in important economic activities across various public infrastructure areas:

• The plan opens up predictable business opportunities for the construction and infrastructure industry as well as planning and engineering services, for example bridge and tunnel renovations, school and nursery construction, hospital and university projects, and local road and cycle path networks.
• The energy and building services sectors will be able to implement infrastructure projects involving energy-efficient refurbishment and climate adaptation measures.
• Providers of IT and digitalisation services will gain groundbreaking business opportunities areas such as administrative modernisation, digital resilience, and broadband and mobile communications projects.

With regard to public procurement law, the funds will be deployed in a large number of public construction, supply and service contracts. Companies should monitor the investment plans of large and financially weak local authorities and prepare for the tendering procedures at an early stage. By involving lawyers with all-round expertise – starting with tailored preparation for the project in question and continuing until the tender has been completed and anticipating and making intelligent use of the commercial potential presented by the draft Public Procurement Acceleration Act – companies can benefit from the strong upturn in investment by participating in targeted public tenders.

We will be monitoring the Special Fund as it is rolled out at regional state level and will keep you informed about the latest developments. In other Noerr Insights within this series of articles on the Special Fund, we will analyse North Rhine-Westphalia’s forward-looking investment programme in greater detail. 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.