No German plan for Social Climate Fund + Sánchez government mired in scandals + Monitoring China’s direct investments

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Germany has still not sent a social climate plan to Brussels. The EU Commission claims that, without one, payments from the Social Climate Fund — which is designed offset any social hardship caused by rising CO₂ prices from next year — will also be delayed. This has led to criticism of the German government. The deadline for the social climate plan has long since passed and, with it, confidence in the German government has dwindled, says Katrin Uhlig, a member of the German Bundestag for the Green Party.

Member states were required to send their social climate plans to the Commission by June 30 of this year. This was a requirement set out in the EUR 86.7 billion Climate Social Fund, which is due to start distributing funds to member states before the start of emissions trading for buildings and transport (ETS 2). Their plans, which must be approved by the EU Commission, must detail how they intend to use the money. Brussels has also defined detailed criteria on measures that are eligible for funding. Fund can be used, for example, to promote the replacement of heating systems or leasing programs for electric cars.

The plan is apparently not a priority within the German government. In response to a written question from Green MP Katrin Uhlig, which Table.Briefings has exclusive access to, the relevant ministry (the Ministry for the Environment) simply stated that they are working on one. “The federal government is working to ensure that measures included in the German social climate plan meet the requirements of the regulation.” Ongoing consultations with the German government will determine the measures to be included, it wrote. At the end of June, the government had previously stated that it would present its proposals for funding programs in the near future.

So far, among EU member states, only Sweden’s plan has been deemed to be adequate. Latvia, Lithuania and Malta have submitted their plans, and more than half of member states have at least presented drafts. According to the EU Commission, Germany is not among them. Without a social climate plan, no money can be disbursed from the Social Climate Fund, the Commission confirmed in response to a question from Table.Briefings.

This is a serious lapse on the part of the German government, says Uhlig. “Without the German government’s plan, no new specific funding programs can be launched and no funds can be requested from the EU Commission.” It is precisely these funds that would finance new programs, which in turn would benefit those who are most urgently in need of support, she says.

The German Environment Ministry disagrees, claiming that Dec. 31 of this year is not a final deadline for submitting plans. Member states must ensure that projects are pre-financed in full anyway, according to the ministry. Money from the fund will not be paid out until national budget resources have been allocated to any social climate measures, it claims, and these programs can therefore start without the approval of the EU Commission. According to the ministry, it does not expect to receive any resources from the Social Climate Fund until 2028 at the earliest.

While there is no danger of financial penalties, the Commission still urges member states to submit their plans in good time. Payments would be made as soon as milestones and targets agreed in the plans have been achieved — an incentive to implement the plans quickly, said a Commission spokesperson. Although the funds will remain available even if plans are submitted late, Brussels is putting pressure on laggard member states to hand in their plans so that disadvantaged groups can receive support as quickly as possible.

A lack of funding is slowing down the transformation. So far, social issues have not be adequately taken into account as part of the Climate and Transformation Fund (CTF), criticizes the German think tank Zukunft Klimasozial. “A large part of expenditure is directed into programs without a social focus and into non-earmarked support that favors higher-income households and companies,” says Brigitte Knopf, founder and director of the think tank. The CSF has not yet sufficiently utilized its potential for a socially fair transformation, she says. That is why Zukunft Klimasozial is calling for funding programs, such as heating subsidies, that are only available to specific income groups.

Anti-corruption and feminism were the two main issues on which Pedro Sánchez came to power in 2018. Today, it is precisely these principles that have become his Achilles’ heel. The corruption probe now involves up to five ministries and has led to the pre-trial detention of two former high-ranking officials in the Spanish Socialist Workers’ Party (PSOE) — Santos Cerdán and José Luis Ábalos. In recent weeks, further arrests have followed in the inner circle of Sánchez, Cerdán and Finance Minister María Jesús Montero.

At the same time, a “Me Too” scandal within the PSOE is shaking the credibility of the government’s feminist agenda. Recently, there has been a wave of sexual harassment claims against leading PSOE politicians. The scandal began with claims that allegations of sexual harassment against Francisco Sálazar, a close advisor to Sánchez, were initially concealed and ignored. Meanwhile, there are seven known cases of harassment by leading PSOE politicians in various regions of Spain.

The Socialists’ affairs are now having an impact at the ballot box. In snap regional elections in Extremadura on Sunday, the PSOE lost 14 percentage points, finishing far behind the conservative PP with 26%. Many PSOE voters turned to the far-right Vox party, which doubled its share from 8% to 16%.

The elections were overshadowed by the case of David Sánchez. The prime minister’s brother has been charged with alleged abuse of office after claims that he never held a post created especially for him in a provincial authority in Extremadura.

Despite the gravity of the accusations, Sánchez has rejected calls for fresh elections. He justified remaining in office by citing Spain’s strong economic growth compared to the rest of the EU. At the same time, he claimed to have no knowledge of the corruption scandals in his closest circle.

He has distanced himself from Cerdán, Ábalos and Koldo García — despite the fact that all three men had facilitated his rise to power since 2014. Former transport minister Ábalos and his advisor Koldo Garcia are in pre-trial detention due to a risk of evading custody. They could face prison sentences of up to 24 years. The investigations were triggered by alleged bribe payments for the sale of face masks during the COVID pandemic.

Sántos Cerdán, a close confidant of Sánchez, is suspected of having led a criminal organization at the top of the PSOE. The focus is on illegal commission payments in the awarding of public construction contracts. According to a report by a special unit of the national police force Guardia Civil, Cerdán and Antxon Alonso’s company Servinabar received kickbacks of two percent of the value of contracts for each manipulated order — which were mediated by Ábalos, the then transport minister. Most of the kickbacks are said to have come from the energy company Acciona which, according to the report, paid around EUR six million between 2015 and 2024.

The police have also uncovered a suspected corruption network centered on the state investment company SEPI. On December 11 and 12, the special unit of the Guardia Civil carried out 19 searches at public and private companies and requested documents from the Spanish Post Office and the Ministries of Finance and Ecological Transition.

The focus is on suspected manipulated tenders and subsidies. This led to the arrest of former SEPI President Vicente Fernández, a close advisor to Finance Minister Montero, Antxon Alonso and Leire Díez, who are accused of fraud, forgery, embezzlement, influence peddling and abuse of office. Further arrests are considered likely. Díez, a close confidante of Cerdán, is also being investigated on suspicion of discrediting the anti-corruption police with the aim of obstructing investigations into Sánchez.

In the so-called “caso Hidrocarburos”, investigators are examining a suspected fraud network surrounding the PSOE leadership. According to the Guardia Civil, around EUR 231 million were embezzled through the company Villafuel in a systematic VAT fraud scheme in the hydrocarbon sector. According to the investigation, around EUR one million was used to bribe the then transport minister Ábalos and other PSOE officials in order to secure political backing.

Since November, the Audiencia Nacional has also been investigating cash payments made by the PSOE to party members, including Pedro Sánchez. The PSOE has so far refused to provide any explanation regarding payments of around EUR 32,000 to Ábalos and Koldo García between 2017 and 2021. According to the probe, large sums of cash were also brought to PSOE party headquarters in Madrid in bags. The businesswoman Carmen Cano stated that she had personally transported EUR 90,000 there in plastic bags. Due to the seriousness of the allegations, the presiding judge ruled that key documents be kept under seal for a minimum of one month.

The European Commission wants to expand its monitoring of China’s economic policy. To this end, it has published an EU-wide tender for a project focused on observing Chinese economic policy and its impact on EU-China relations. The contracting authority is the Commission’s Directorate-General for Trade and Economic Security (DG Trade). The Brussels-based authority published the call for tenders on Monday.

The tender covers the operation of a China Observatory. Over a period of up to four years, it is to deliver regular analyses of China’s economic development and to develop and maintain a database on mutual foreign direct investment (FDI) between the EU and China. The project is designed to provide EU policymakers with data and analysis to support trade and investment policy decisions.

According to the tender documents, the Observatory is to produce four comprehensive China Observatory reports per year, along with four shorter reports known as FDI Flash Reports. These publications will be complemented by presentations to the European Commission. Another core component of the project is the creation and continuous updating of a database that records EU-China investment flows at the company level.

The database is to include information on greenfield investments, acquisitions, joint ventures and the roles of state-owned and private investors. Investments routed via Hong Kong, Macau and Taiwan are also to be taken into account. The data must be updated at least on a monthly basis. Amelie Richter

China will impose provisional tariffs ranging from 21.9 percent to 42.7 percent on certain dairy products from the European Union starting Dec. 23. The measures stem from an anti-subsidy investigation that was launched more than a year ago.

A spokesperson for the European Commission criticized the move. “The Commission’s assessment is that the investigation is based on questionable allegations and insufficient evidence, and that the measures are therefore unjustified and unfounded,” said spokesperson Olof Gill on Monday. According to Chinese customs data, the EU was China’s second-largest supplier of dairy products after New Zealand. EU figures from 2023 also show that China was the second-largest buyer of skim milk powder and the fourth-largest buyer of butter and whole milk powder from the EU.

China’s Ministry of Commerce justified the tariffs by citing provisional evidence indicating that imported EU dairy products are subsidized and cause significant harm to China’s domestic industry. All EU companies that did not participate in the anti-subsidy investigation will be subject to the highest tariff rate of 42.7 percent, including FrieslandCampina Belgium N.V. and FrieslandCampina Nederland B.V. Around a dozen French companies will face tariffs of 29.7 percent, while roughly 50 additional firms from Italy, France and Germany will be charged 28.6 percent. The lowest rate, 21.9 percent, was applied to the Italian company Sterilgarda Alimenti SpA.

At the same time, the European Commission is considering minimum price commitments for Chinese electric vehicles as an alternative to tariffs. A Commission spokesperson described the proposal on Monday as a “viable alternative”. “In recent weeks, we have seen initial positive signs regarding price undertakings for battery-electric vehicles,” he said. The EU currently imposes countervailing duties of up to 35 percent on electric cars from China, in addition to the existing general import tariff of 10 percent. These measures affect not only Chinese manufacturers such as BYD and SAIC, but also German automakers, including Volkswagen and BMW.

The EU launched its anti-subsidy investigation into Chinese electric vehicles in 2023. In response, Beijing initiated its own investigations into EU imports of brandy, pork and dairy products. Yi Ling Pan / rtr

Japanese researchers will in future be able to lead and coordinate their own research and innovation projects under the Horizon Europe program. They will also be eligible to apply for and receive funding, as well as to establish closer cooperation with partners in the EU and other associated countries. The European Commission and the Japanese government have successfully concluded negotiations on Japan’s association with Horizon Europe.

The agreement is expected to be signed in 2026. It represents the closest form of cooperation the EU offers its global partners in the field of research and innovation. Horizon Europe is the EU’s flagship research and innovation program, with a total budget of EUR 93.5 billion. The deal follows the expansion of the program to other key global partners and scientific powers, including South Korea earlier this year and, more recently, Switzerland, Egypt, Canada, the United Kingdom and New Zealand.

Japan is a key strategic partner for Europe. Bilateral relations in research and innovation have steadily deepened over the past two decades, building on the 2011 Agreement on Scientific and Technological Cooperation, a joint vision adopted in 2015, and a memorandum of understanding signed in May 2020.

The agreement focuses in particular on the second pillar of Horizon Europe. This pillar addresses major societal challenges through multinational collaborative projects, including digital transformation, food security and climate-neutral energy. Corinna Visser

The Conference of Ministers of Labor and Social Affairs (ASMK) in German federal states expects the German government to develop approaches for the integration of EU citizens looking for work in Germany and for “their orderly, voluntary return.” This has emerged from the minutes of its latest 2025 meeting. Rhineland-Palatinate abstained from the resolution. To be successful, it would require a plan for funding on the one hand and, in particular, agreements with the relevant Eastern European countries on the other.

With reference to EU law, German federal states distinguish between working and non-working people. The former have a material right to freedom of movement, while the latter only have a formal right. Non-working people are not entitled to regular social benefits or health insurance, but only to limited “temporary support.” In fact, this is only intended to help people from other EU countries until they leave the country after an unsuccessful job search. According to the ministers, a recent ruling by the German Federal Social Court has greatly expanded the group of people entitled to state benefits. This includes, for example, the cost of healthcare.

The ministers call for providing those affected with advice at an early stage. The aim is to “prevent people falling into destitution and a life on the streets.” This also includes using awareness campaigns in other EU countries to prevent people who are not sufficiently qualified to find a job in Germany from emigrating in the first place.

German federal states argue that homeless EU citizens should continue to receive social benefits from their home countries. This should apply until they acquire regular benefit entitlements in the country where they are located, which would require an amendment to the Regulation on the coordination of social security systems (Regulation 883/2004). They propose settling the costs of treatment with the country of origin, but could also conceive of reimbursement through a joint EU fund. Okan Bellikli

The German Ministries of Research and Agriculture consider the planned relaxation of EU genetic engineering legislation to be appropriate. This was announced jointly by the two ministries. Plants and products with modifications that could also have occurred naturally or through conventional breeding methods should be exempted from EU genetic engineering laws in future (category 1/NGT-1).

Both ministries refer to the coalition agreement. This envisages promoting biotechnology as a key technology and facilitating its regulatory application, including so-called new genomic techniques (NGTs).

The German Environment Minister Carsten Schneider (SPD), on the other hand, believes that relaxing the current law is a “serious mistake.” The majority of people want to be able to decide for themselves whether to buy food with or without genetically engineered ingredients. “If the EU Parliament does not correct this mistake, it will be a matter of limiting the damage for Germany,” said the SPD politician. GMO-free agriculture must remain possible and affordable in Germany, he said, adding that politicians must not now leave farms that want to continue producing GMO-free products alone. In addition, he said there must be new GMO-free supply chains and new detection methods that enable genetically modified and GMO-free plants and products to be distinguished from one another.

The German government abstained from the vote on Friday. This was because the German Environment and Justice Ministries had objected to approving the amendment. It was the first German Vote in Brussels of the conservative/social democrat coalition under Chancellor Friedrich Merz. Despite this, the Committee of Permanent Representatives (COREPER) adopted the trilogue result with a qualified majority.

German Agriculture Minister Alois Rainer (CSU) welcomed the decision from Brussels, saying that it creates a clear framework for modern plant breeding and opens up new opportunities for greater sustainability, resilience and competitiveness. At the same time, the minister takes the concerns that still exist among many farmers and consumers “very seriously.” It is right that the EU Commission is assessing the impact on organic farming and access to genetic resources, he said. Henrike Schirmacher

The EU Commission has approved the extension of the French capacity mechanism for a further ten years. The mechanism will apply from November 2026, with EUR two billion planned to fund annual auctions each year. Initially, participation will also be open to providers from Belgium, but France wants to enable other neighboring countries to take part as soon as possible, the Commission announced on Monday.

Tenders have been opened for power plants, load management and storage. The agreed capacity only has to be available between November and March. The Commission points out that France will use the capacity mechanism that has now been approved to promote the development of storage and load management in order to achieve the indicative national target for non-fossil fuel flexibility from the amendment to the internal power market regulation. However, France is able to set the target itself. Manuel Berkel

Energy 1: European Resource Adequacy Assessment 2025 by ENTSO-E. To the documents

Energy 2: Europe’s largest transmission system operators for natural gas have reported less than one percent of their greenhouse gas emissions, according to a study by the IEEFA. To the study

Council Presidency: The Cypriot program for the first half of 2026. To the program

BEREC: Input by the Body of European Regulators for Electronic Communications to the Digital Decade program. To the input