COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Germany Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Germany
Date: 2021-06-22
Institutions: European Commission, Secretariat-General
Subjects: EU aid, Germany, coronavirus disease, economic and social cohesion, economic recovery, economic reform, epidemic, investment, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 22.6.2021  SWD(2021) 163 final  COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Germany Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Germany {COM(2021) 341 final}  
 
 
Table of contents 
1. 

Executive summary ............................................................................................................................... 2 

2.  Recovery and Resilience challenges: scene setter ................................................................................ 5 

2.1  Macroeconomic outlook and developments ................................................................................ 5 

2.2 

Challenges related to sustainable growth, resilience, and cohesion ............................................ 8 

2.3 Challenges related to the green and digital transition ..................................................................... 10 

2.3.1 

2.3.2 

Green dimension ................................................................................................................. 10 

Digital dimension ................................................................................................................ 15 

3.  Objectives, structure and governance of the plan.............................................................................. 21 

3.1.  Overall strategy of the plan ........................................................................................................ 21 

3.2. 

Implementation aspects of the plan ........................................................................................... 24 

4. 

Summary of the assessment of the plan ............................................................................................ 28 

4.1. 

Comprehensive and adequately balanced response to the economic and social situation ...... 28 

4.2. 

Link with country-specific recommendations and the European Semester ............................... 36 

4.3.  Growth potential, job creation, economic, institutional and social resilience, European Pillar of 
Social Rights, mitigating the impact of the crisis, and social territorial cohesion and convergence ...... 44 

4.4. 

The principle of ‘do no significant harm’ .................................................................................... 51 

4.5.  Green transition .......................................................................................................................... 53 

4.6. 

Digital transition .......................................................................................................................... 58 

4.7. 

Lasting impact of the plan ........................................................................................................... 63 

4.8.  Milestones, targets, monitoring and implementation................................................................ 64 

4.9. 

Costing ........................................................................................................................................ 66 

4.10.  Controls and audit ....................................................................................................................... 67 

4.11.  Coherence ................................................................................................................................... 69 

Annex: Climate tracking and digital tagging table  ..................................................................................... 72 

References .................................................................................................................................................. 75 

1 

 
 
 
 
 
 
1.  EXECUTIVE SUMMARY 

Germany’s  economy  was  hit  hard  by  the  COVID-19  pandemic  and  the  repeated 
lockdowns, but sizable policy support mitigated job losses. The economy contracted by 4.8% 
in 2020. After a renascent economic recovery in the second half of 2020, soaring new infection 
numbers  in  autumn  brought  new  lockdown  restrictions  as  of  November  2020,  which  were 
gradually tightened and  extended in  the following months. As a  result,  gross  domestic product 
shrunk by 1.8% in the first quarter of 2021, but a marked recovery is expected from the second 
half of 2021, as vaccinations progress and the economy reopens. Substantial government support 
for the economy, in particular the extensive short-time work scheme (Kurzarbeit), protected the 
labour market throughout the crisis and limited the losses in employment to 1.1% in 2020, while 
unemployment increased relatively moderately (to 3.8% in 2020 from 3.1% in 2019).  

The measures to cushion the consequences of the crisis reversed the budget balance into a 
sizeable deficit. After years of fiscal surpluses, the measures to support the economy during the 
pandemic  caused  a  budget  deficit  of  4.2%  of  GDP  in  2020,  which  is  likely  to  increase  even 
further in 2021. General government debt had fallen below the Maastricht threshold of 60% of 
GDP  in  2019  after  a  steady  downward  path  in  the  years  before,  but  it  jumped  up  to  69.8%  in 
2020 and is expected to peak at 73.1% in 2021, before declining again in 2022. Despite higher 
deficits and increasing debt, risks to fiscal sustainability are limited so far, thanks to the sound 
starting position of public finances. 

Germany can expect up to EUR 25.6 billion in non-repayable support from  the Recovery 
and Resilience Facility. The recovery and resilience plan amounts to EUR 27.9 billion (0.81% 
of  2019  GDP)  and  does  not  include  a  request  for  loans.  Excluding  value-added  tax,  it 
corresponds to a net amount of at least EUR 26.5 billion, slightly above the maximum financial 
contribution  of  EUR  25.6  billion  (0.74%  of  2019  GDP)  that  Germany  can  expect  from  to  the 
Recovery and Resilience Facility Regulation1.  

The plan promotes the Union’s economic, social and territorial cohesion and supports the 
recovery  of  Germany’s  economy  and  contributes  decidedly  to  a  more  green,  digital, 
inclusive,  and  resilient  future2.  The  six  priorities  of  the  plan  center  on  the  green  and  digital 
transitions,  but  also  strengthen  social  resilience.  They  are:  1  Climate  policy  and  energy 
transition,  2  Digitalisation  of  the  economy  and  infrastructure,  3  Digitalisation  of  education,  4 
Strengthening  social  inclusion,  5  Strengthening  a  pandemic-resilient  healthcare  system,  and  6 
Modern public administration and reducing barriers to investment. The 40 measures included in 
the  plan  cover  all  the  seven  European  flagship  areas,  with  a  particular  focus  on  Recharge  and 

1 The final maximum financial contribution will be calculated in June 2022. 

2 Germany submitted its National Reform Programme on 13 April 2021. The information provided in the National 
Reform  Programme  is  being  considered  and  jointly  assessed  in  this  Staff  Working  Document  together  with  the 
Recovery and Resilience Plan. 

2 

 
 
                                                           
Refuel,  Modernise,  and,  for  the  hydrogen-related  elements,  Power  Up.  The  plan  has  a  strong 
cross-border dimension with  three planned  Important  Projects  of Common European  Interest  – 
on renewable hydrogen, microelectronics, and cloud.  

The  recovery  and  resilience  plan  responds  to  the  most  relevant  structural  challenges 
Germany  faces,  as  identified  in  the  context  of  the  European  Semester.  Together  with  the 
extensive measures from the national stimulus package of June 2020, the plan gives impetus for 
a short-term economic recovery and provides a long-term strategic response to the most pressing 
economic  policy  challenges.  These  relate  mainly  to  the  need  to  boost  public  and  private 
investment,  in  particular for the  green  and digital  transitions,  in  sustainable transport, in  clean, 
efficient  and  integrated  energy  systems,  in  the  digitalisation  of  the  public  administration  and 
health  services,  in  education,  and  in  research  and  innovation.  Further  challenges  addressed  to 
some  extent  include  the  need  to  reduce  disincentives  to  take  up  work,  including  the  high  tax 
wedge,  in  particular  for  low-wage  and  second  earners,  and  the  long-term  sustainability  and 
adequacy  of  the  pension  system.  The  reforms  and  investments  included  in  the  plan  address  a 
significant subset of the recent country-specific recommendations addressed to Germany by the 
Council and are also in line with the most recent Draft Council Recommendation on economic 
policy in the euro area3. 

The  plan  refers  to  the  six  policy  pillars  in  Article  3  of  the  Regulation  establishing  the 
Recovery and Resilience Facility4. Germany’s recovery and resilience plan has a strategic focus 
on  the  challenges  of  the  green  and  digital  transitions.  Investments  and  reforms  address 
administrative  bottlenecks  and  foster  smart,  sustainable  and  inclusive  growth,  while  also 
benefitting small and medium-sized enterprises. Social cohesion is promoted through measures 
to support disadvantaged groups, cap social security contributions, and strengthen education and 
skills,  in  particular  by  supporting  the  digitalisation  of  education.  Efforts  to  accelerate  planning 
procedures, to help municipalities manage investment subsidies, and digitalise their schools are 
expected  to  help  areas  with  infrastructural  challenges,  thus  contributing  to  territorial  cohesion. 
Cross-border initiatives in the plan are expected to contribute to cohesion and convergence in the 
EU.  Public  administration  reforms  and  investments  to  strengthen  the  healthcare  system  are 
expected to contribute to increased resilience, as do measures to digitalise and modernise public 
services  and  to  reduce  barriers  to  investment.  Various  skills-related  measures  benefit  the  next 
generation. 

The  reforms  and  investments  included  in  the plan have  the  potential  to  contribute  to  the 
green transition of Germany’s economy and to the protection of the environment. They are 
expected  to  support  Germany’s  decarbonisation  and  energy  objectives  and  are  thus  a  step 

3  Pending  final  adoption  by  the  Council,  after  endorsement  by  the  European  Council.  The  text  agreed  by  the 
Eurogroup  on  16  December  2020  is  available  at:  https://data.consilium.europa.eu/doc/document/ST-14356-2020-
INIT/en/pdf  
4 Regulation  (EU) 2021/241 of the European Parliament and of the  Council of 12 February 2021 establishing the 
Recovery and Resilience Facility 

3 

 
 
                                                           
towards  achieving  climate  neutrality  by  2050  –  or  even  earlier,  considering  that  the  target  is 
expected to be advanced to 2045. Measures in the area of climate action and the energy transition 
include  significant  efforts for  the  development  of  a  well-functioning  hydrogen  economy, 
measures  to  promote  climate-friendly  mobility,  and  sizeable  investment  in  energy-efficient 
building renovation. At least 42.4% of the financial contribution is expected to  go to measures 
supporting climate change objectives5. All measures in the German plan have passed the ex-ante 
assessment of the ‘do no significant harm’ principle. 

The plan is ambitious in its aim to catalyse the digital transition and address the challenges 
related  to  it.  Six  out  of  the  ten  components contain measures to  support  the digital transition. 
These include investments in key advanced technologies, but also in the digital transformation of 
the automotive industry, and in the digitalisation of the healthcare sector, of education, and of the 
public  administration.  The  digital  target  of  20%  is  clearly exceeded  with  at  least  52.6%  of  the 
expected financial contribution serving digital objectives.  

The recovery and resilience plan has the potential to make a lasting impact on Germany’s 
economy and society by inducing structural changes to its administration, institutions, and 
policies. The most relevant measures in this respect include the support for the digitalisation of 
the public administration and health services, the assistance to municipalities in their investment 
projects,  the  expected  improvement  of  support  outflows  for  public  investment,  and  the 
acceleration  of  planning  and  approval  procedures,  which  should  improve  the  uptake  of  the 
significant  public  and  private  funds  for  investment  in  infrastructure.  All  these  are  expected  to 
accelerate  the  structural  changes  related  to  the  green  and  digital  transition,  which  are  present 
across  all  parts  of  the  plan.  Most  importantly,  removing  investment  barriers  is  one  of  the 
priorities of the plan. An adequate monitoring of the plan’s implementation is enabled by clear 
and comprehensive milestones and targets  that track the adoption of key  legislation, budgetary 
execution and delivering changes on the ground, such as the creation of childcare places. 

The  overall  strategy  and  the  measures  contained  in  the  plan  are  coherent.  Within  each 
component,  measures  support  and  reinforce  each  other  and  reforms  and  investments  across 
components  are  well  aligned.  For  example,  the  investment  and  research  support  for  the 
economy’s  digital  transformation  is  complemented  by  reforms  on  data  infrastructure  and 
investments  in  digital  education and skills,  which are  closely linked to  the digitalisation of the 
public administration and the health sector. The measures’ objectives are also well embedded in 
European and national initiatives.  

Germany  has  provided  cost  estimates  for  all  investments  included  in  the  plan  and  put  in 
place strong control systems. Based on the costing information provided, the cost estimates and 
supporting  documents  broadly  comply  with  the  principles  that  costs  must  be  justified, 
reasonable, plausible, commensurate, and in line with the principle of cost-efficiency. The cost 

5 The effective climate contribution may be slightly higher, see footnote to table 6. 

4 

 
 
                                                           
breakdowns  are  generally  satisfactory,  yet  they  show  varying  degrees  of  detail  and  depth  of 
calculation.  Germany  has  demonstrated  that  the  measures  in  the  plan  will  be  subject  to  strong 
governance  and  control  systems  and  has  given  assurances  that  the  measures  funded  under  the 
German recovery and resilience plan will not receive funding from other existing or planned EU 
financing. 

(1) 
Balanc
ed 
Respon
se 
A 

(2) 
CSRs 

(4) 
DNSH 

(3) 
Growth
, jobs… 

(5) 
Green 
target 

(6) 
Digital 
target 

(7) 
Lasting 
impact 

(8) 
M & T 

(9) 
Costing 

(11) 
Cohere
nce 

(10) 
Control 
System
s 

A 

A 

A 

A 

A 

A 

A 

B 

A 

A 

2.  RECOVERY AND RESILIENCE CHALLENGES: SCENE SETTER 

2.1 Macroeconomic outlook and developments  

The pandemic has led to a sharp decline in economic activity. GDP declined by 4.% in 2020, 
reflecting the global recession and severe limitations on travel, social, and leisure activities. Over 
the year, there were large swings in economic activity, declining by 2% in the first quarter and 
by  an  unprecedented  9.8%  in  the  second.  In  the  third  quarter,  GDP  rebounded  by  8.5%, 
benefiting  from  the  partial  lifting  of  confinement  measures  and  the  normalisation  of  foreign 
trade. This resulted in a partial resumption of activity in both industry and services. The fourth 
quarter  of  2020  saw  infection  numbers  soar,  which  required  restrictions  to  be  reintroduced  on 
various  services,  prompting  them  to  curtail  activity.  A  contraction  was  nevertheless  avoided, 
with  GDP  increasing  by  0.5%  as  industry  posted  robust  growth,  while  consumer  spending 
partially switched from services to goods. 

The  economy  is  expected  to  recover  in  2022.  Economic  activity  declined  again  in  the  first 
quarter of 2021, by 1.8%. With confinement measures in place in Germany and in neighbouring 
countries,  consumer  spending  and  exports  are  expected  to  remain  depressed  in  early  2021. 
However,  as  more  people  get  vaccinated  and  infection  rates  fall,  restrictions  are  set  to  ease  in 
subsequent quarters. A number of other factors should also favour a resumption of the economic 
rebound.  Strong  industrial  sentiment  suggests  that  export  growth  is  set  to  remain  robust. 
Government support for businesses is expected to avert a wave of insolvencies, and employment 
growth  should  resume  in  2022.  In  the  2021  Stability  Programme6,  the  unemployment  rate  in 
2022  is  projected  at  3.5%,  down  from  expected  3.9%  in  2021  and  4.0%  in  2020,  although 
somewhat  higher  than  in  2019.  Accumulated  savings  should  spur  a  recovery  in  consumer 
spending, which will also benefit contact-based service sectors.  In the meantime, investment is 

6 The recovery and resilience plan refers to the 2021 Stability Programme for issues related to the macroeconomic 
and fiscal outlook. 

5 

 
 
 
                                                           
expected to start picking up. Real GDP is forecast to rebound by 3.0% in 2021 and continue to 
grow by 2.6% in 2022 returning to its pre-crisis level in the course of the year.  

Inflation is set to increase moderately. HICP inflation fell from 1.4% in 2019 to 0.4% in 2020 
(from 1.4% to 0.5% for the national CPI). CPI inflation is expected to rise to 1.5% in 2021 and 
2022,  according  to  the  Stability  Programme.  The  economy  still  operates  below  capacity; 
however  energy  prices  are  expected  to  drive  inflation  up,  also  in  light  of  adjustments  in  CO2 
pricing.  So  are  the  reinstatement  of  the  regular  VAT  rates  and  the  high  housing  demand  in 
metropolitan areas.  

The labour market has been cushioned by the government-backed short-time work scheme 
(Kurzarbeit) but faces structural challenges. The COVID-19 crisis led to a sizeable reduction 
of hours worked, although most of this was absorbed by expanding the short-time work scheme, 
used  by  almost  6  million  workers  (14%  of  the  labour  force  in  April  and  May  2020).  Support 
measures  have  been  extended  to  non-standard  workers  (those  not  covered  by  full-time  open-
ended contracts) such as temporary agency workers, seasonal workers and apprentices, who tend 
to be more exposed to labour market shocks. Employment loss was limited to 1.1%. Participation 
in  training  and  adult  learning  was  incentivised  and  additional  financial  resources  have  been 
committed  to  increase  the  number  of  apprenticeships.  Structural  transformation  is  expected  to 
keep unemployment at a somewhat higher level than in the past, requiring support measures for 
training and reallocation of resources. 

Table 1. Comparison of macroeconomic developments and forecast 

2019 
2023  2024  2025 
COM  COM  RRP  COM  RRP  COM  RRP  RRP  RRP  RRP 

2020 

2021 

2022 

Real GDP (% change) 

0.6 

-4.9 

-4.9 

3.4 

3.0 

4.1 

2.6 

1.2 

1.2 

1.2 

Employment (% change) 

0.9 

-1.1 

-1.1 

-0.2 

0.0 

0.9 

0.6 

-¼ 

-¼ 

-¼ 

Unemployment rate (%) 

3.1 

3.8 

4.0 

4.1 

3.9 

3.4 

3.5 

3¾ 

3¾ 

3¾ 

HICP inflation (% change) 

1.4 

0.4 

n.a. 

2.4 

n.a. 

1.4 

n.a. 

n.a. 

n.a. 

n.a. 

1.5 

-4.2 

General government 
balance (% of GDP) 
Gross debt ratio (% of 
GDP) 
Source: Commission Spring Forecast 2021 (COM), recovery and resilience plan (RRP)Note: end April the national 
statistical institute revised the GDP decline for 2020 from 4.9% (that was also relayed in the Spring Forecast) to 
4.8%. 

72.2  74.0  73¼  72.0  69¼ 

69.8  69.8 

73.1  74½ 

59.7 

-7.5 

-1½ 

-4.2 

-9.0 

-2.5 

-3.0 

0.0 

-½ 

6 

 
 
  
The  COVID-19  pandemic  is  likely  to  increase  social  vulnerability.  Overall,  Germany 
performs  well  in  the  Social  Scoreboard7,  which  supports  the  European  Pillar  of  Social  Rights 
(see also Box 3). There have been improvements in living conditions, poverty, and labour market 
conditions  in  recent  years.  The  share  of  people  at  risk  of  poverty  or  social  exclusion  declined 
from its peak of 20.6% in 2014 to 18.7% in 2018 and fell further to 17.4% in 2019. In 2020, the 
country also took measures to alleviate the social consequences of the crisis beyond the labour 
market. It made it easier to access minimum income support and supported low-income families 
through  easier  access  to  child  allowances.  In  addition,  tenants  facing  a  loss  of  income  were 
temporarily protected against eviction. Nonetheless, people in vulnerable situations, e.g. without 
the  possibility  to  work  from  home  or  without  liquid  assets,  were  exposed  to  hardship,  and  the 
increase in vulnerability may merit monitoring and possibly further action.  

The  government  swiftly  took  far-reaching  measures  in  response  to  the  COVID-19 
pandemic,  while  continuing  to  maintain  a  sustainable  public  debt  ratio.  The  government 
adopted  measures  of  historic  proportions  to  fight  the  COVID-19  pandemic  and  stabilise  the 
economy, estimated to 3½% of GDP in 2020 and 6¼% in 2021. They include financial support 
for small and medium-sized enterprises (SMEs), easier access to the short-time working scheme, 
additional health spending, and equity investment in rail and air transport. In addition, some 25% 
of GDP (around EUR 800 billion) was provided in the form of public guarantees for loans. The 
budget  deficit  was  reported  to  be  4.2%  of  GDP  in  2020,  and  the  Stability  Programme  (BMF, 
2021) anticipates a return to positive territory by 2025 as the measures are phased out. For 2021, 
the Stability Programme expects a deficit of 9%. After an increase in the debt-to-GDP ratio from 
just below 60% in 2019 to around 70% due to the combined effect of shrinking GDP and support 
measures in 2020, debt is expected to rise further to 74½% in 2021 before starting to fall to reach 
69¼%  in  2025.  In  comparison,  DG  ECFIN’s  Debt  Sustainability  Monitor  of  early  2021 
(European  Commission,  2021a)  projects  debt  to  be  70.1%  of  GDP  in  2021  and  to  decline  to 
58.7% of GDP in 2030. 

The current account surplus remains  high.  Following a  gradual  decline since 2015,  it eased 
further by 0.5 percentage points to 7% of GDP in 2020. The trade surplus narrowed from 6.3% to 
5.7%  of  GDP  in  2020  as  exports  contracted  more  than  imports.  However,  the  service  balance 
turned from -0.6% to neutral due to travel restrictions. The income balance deteriorated slightly. 
On  the  domestic  side,  the  sharp  fall  in  government  savings  was  largely  counterbalanced  by  a 
surge  in  private  savings,  reflecting  private  consumption  constrained  by  restrictions  and 
suspended contact-intensive services, as well as a strong fiscal  support for household  incomes. 
While there was a substantial acceleration of the upward trend in public investment from 3.7% in 
2019 to 4.2% in 2020, private investment suffered considerably in the context of the COVID-19 
crisis. Overall, gross fixed capital formation declined by 3.1% in 2020. Investment is expected to 
increase  as  the  country  recovers,  in  part  driven  by  increasing  public  investment.  With 

7 https://ec.europa.eu/eurostat/web/european-pillar-of-social-rights/indicators/social-scoreboard-indicators 

7 

 
 
                                                           
consumption possibilities returning after the lifting of containment measures, savings are forecast 
to return broadly to their pre-crisis level.  

Compared  with  the  Commission  2021  Spring  Forecast,  the  macroeconomic  scenario 
underpinning  the  recovery  and  resilience  plan  is  based  on  slightly  more  cautious 
macroeconomic  assumptions.  The  macroeconomic  scenario  underpinning  the  Stability 
Programme is  realistic in  2021 and cautious  in  2022.  It  projects  GDP  growth of 3.0% in  2021 
and 2.6% in 2022, compared to the Commission 2021 Spring Forecast projections of 3.4% and 
4.1%, respectively8. The German Stability Programme anticipates a quicker recovery in private 
consumption, but less vigorous export growth in 2021 (BMF, 2021). For 2022, the Commission 
forecast  is  driven by  a delayed but  strong  rebound in  consumption. Projections in  the Stability 
Programme  assume  a  return  to  the  pre-crisis  level  of  output  in  the  course  of  2022,  while 
employment  and  private  consumption  are  expected  to  take  somewhat  longer  to  recover.  Real 
GDP in 2022 is expected to exceed its 2019 level by 2.3% according to the Commission forecast 
and  by  0.5%  according  to  the  Stability  Programme.  The  Commission  spring  2021  forecast 
projects higher HICP inflation of 2.4% in 2021, falling to 1.4% in 2022. 

2.2 Challenges related to sustainable growth, resilience, and cohesion 

While  the  German  economy  performed  strongly  in  recent  years  and  has  cushioned  the 
country  relatively  well  from  the  economic  fallout  of  the  COVID-19  crisis,  a  number  of 
challenges  and  structural  obstacles  have  manifested  themselves.  Germany  experienced  a 
decade  of  economic  upswing  driven  by  strong  manufacturing  and  export  growth  and  very 
favourable  developments  on  the  labour  market.  However,  even  before  the  crisis,  structural 
challenges and external  headwinds became apparent,  some of which  have been exacerbated  by 
shifts accelerated by the pandemic. 

Productivity growth is expected to remain low, and Germany is at risk of falling behind in 
its innovation capacity. Total factor productivity growth is forecast to be around 0.8% over the 
next 5 years, with potential growth of just 1.2% by 2025, according to the 2021 Spring Forecast. 
Labour productivity growth was lagging behind compared to the USA, especially in information 
and  communication  services,  professional,  scientific  and 
in 
administrative  and  support  services,  in  both  the  decade  before  (1997-2007)  and  following  the 
Global Financial Crisis (2007-2017). While Germany remains innovative, it risks falling behind 
in  some  cutting-edge  technologies,  and  there  is  room  for  improving  technology  diffusion  (see 
Section  3.2.2).  The  National  Productivity  Board  also  sees  the  need  to  invest  more  in  digital 
infrastructure,  teach  key  digital  skills,  improve  the  transfer  of  knowledge  and  technology,  and 
use procurement to stimulate innovation (GCEE, 2020).  Lack of qualified personnel is a major 
factor hampering investment in innovation and digitalisation, in particular for SMEs and limiting 
investments  by  high-growth  businesses  (Benedetti-Fasil  et  al.,  2021).  SMEs  remain  slow 

technical  activities,  and 

8 The cut-off date of the Spring forecast of the European Commission was 30 April 2021. 

8 

 
 
                                                           
adopters of digital technologies, also compared to other EU Member States. Removing barriers 
to  firm  dynamics  and  making  it  easier  to  reallocate  resources  to  more  productive  businesses 
could help close the productivity gap in business services with the USA (European Commission, 
2021b).  

Although research and development (R&D) spending is high and on an upward trajectory, 
private R&D investment is concentrated in large firms and has stagnated in SMEs over the 
past decade. Total R&D spending has increased in recent years, from 2.5% of GDP in 2007 to 
3.2% in 2019 (third highest in the EU) and is expected to increase further to reach the national 
target of 3.5% by 2025, as outlined in Germany’s high-tech strategy. At the same time, private 
investment  in  R&D is  increasingly  concentrated in large firms,  while SMEs continue to  invest 
relatively  little.  Therefore,  measures  such  as  the  central  innovation  programme  for  SMEs 
(Zentrales Innovationsprogramm Mittelstand), which gives substantial  support to  companies to 
increase their innovation capacity and competitiveness, can strengthen innovation activities and 
support  economic  recovery.  With  the  exception  of  R&D,  investment  intensities  for  all  other 
intangible  assets  in  Germany  were  lagging  behind  the  EU-15  average  between  2014-2017 
(European Commission, 2021b). 

Barriers to private and public investment and lack of competition, especially in the service 
sector, are obstacles to growth.  Public investment, especially at municipal level, is hampered 
by several bottlenecks, including personnel and financing constraints and high regulatory burden, 
which  also  affect  private  investment.  These  barriers  also  hamper  decarbonisation  and  the 
deployment of  clean, efficient and integrated energy systems.  The digital transformation of  the 
public administration is lagging behind, and reforms to increase transparency and reduce red tape 
have  had  limited  effect.  For  start-ups  and  young  businesses,  financing  is  constrained  due  to 
underdeveloped  venture  capital  markets,  especially  for  growth  and  later-stage  financing.  On 
liberalising regulated professions, a country-specific recommendation has been issued each year 
between 2011 and 2019, but hardly any measurable progress has been made. 

While  the  labour  market  was  fairly  well  shielded  during  the  COVID-19  crisis,  taxes  on 
labour  remain  high,  and  demographic  change  and  housing  affordability  continue  to  pose 
challenges.  Job  shedding  was  limited  in  2020,  with  an  employment  decline  of  1.1%,  and 
unemployment increase only to 3.8%. Taxes on labour remain high, while the potential to raise 
tax  revenue  from  sources  more  supportive  of  inclusive  and  sustainable  growth,  such  as 
environmental or wealth-related taxes, remains underused. In the medium term, the retirement of 
baby  boomers  (born  between  1946  and  1964)  will  substantially  increase  age-related  spending, 
while  comprehensive  measures  to  improve  the  pension  system  are  still  pending.  There  is  still 
considerable potential for reducing disincentives that keep second earners from increasing hours 
worked. Demographic change is affecting rural areas and urban centres very differently – areas 
with strong population growth face a shortage of affordable housing, while areas with shrinking 
populations  struggle  to  maintain  public  services  and  infrastructure,  requiring  further  action  to 
address regional and territorial disparities and promote cohesion. 

Although the health system provides high-quality care, it suffers from shortages of skilled 
personnel and low levels of digitalisation, which hampers coordination in the health system 

9 

 
 
and  overall  efficiency.  The  health  system  provides  a  high  level  of  service  and  good  access  to 
care, which has also helped the country respond to the COVID-19 pandemic. At the same time, 
staff shortages are a challenge: in autumn 2019, 76% of hospitals already reported difficulties in 
filling vacancies for physicians and 78.8% of hospitals had longer-term vacancies for nurses; the 
crisis  has  put  even  more  pressure  on  these  professions.  Even  though  eHealth  infrastructure  is 
being  deployed  more  rapidly,  the  use  of  online  health  and  care  services,  e-prescriptions  and 
medical data exchange remain well below the EU average. More digitalised health services could 
reduce  the  gap  between  urban  and  rural  areas,  improve  the  integration  of  care,  facilitate 
coordination between various healthcare providers as well as with public health authorities and 
improve pandemic preparedness, surveillance and management. 

The  COVID-19  pandemic  has  aggravated  challenges  in  ensuring  equality  of  opportunity, 
while structural changes reveal a pronounced need for upskilling. The crisis exacerbated the 
situation of those who were already disadvantaged, including households with multiple children. 
The  sudden  shift  to  distance  learning  highlighted  the  challenges  faced  by  socio-economically 
disadvantaged  pupils,  such  as  lack  of  access  to  digital  solutions  as  well  as  learning  space  and 
support  at  home.  The  difficulties  of  adaptation  highlighted  the  importance  of  further  action  to 
digitally  transform  the  education  and  training  systems.  Persistent  inequalities  in  basic  skills, 
linked  to  socio-economic  and  migrant  backgrounds,  need  to  be  addressed,  also  to  alleviate 
existing  labour  shortages.  Further  expanding  high-quality,  full-time  early  childhood  education 
and care and all-day schools would contribute both to improved student outcomes and improved 
labour  market  participation  of  women.  In  addition,  the  most  likely  uneven  recovery  across 
sectors  and 
transition  and  structural 
transformation  might  cause post-pandemic shifts on the labour market,  which might  ultimately 
result  in  net  job  losses.  Higher  expenditure  on  education  and  skills  and  more  future-oriented 
reskilling  and  upskilling  would  benefit  workers  directly  affected  by  structural  change,  be 
conducive  to  equal  opportunities,  strengthen  social  cohesion  and  make  the  future  labour  force 
more productive. 

locations  combined  with 

the  accelerated  digital 

2.3 Challenges related to the green and digital transition 

Germany needs to step up policy action to achieve carbon neutrality in time and to reap the 
benefits  of  the  digital  transition.  An  overarching  objective  of  the  Recovery  and  Resilience 
Facility  is  to  support  the  twin  (green  and  digital)  transition,  an  aspect  where  Germany  has 
considerable  room  for  improvement.  Relying  on  the  Commission’s  assessment  of  Germany’s 
2020 National Energy and Climate Plan, the Environmental Implementation Review of 2019 and 
the 2020 Digital Economy and Society Index (DESI; European Commission, 2020d) as well as 
recent evidence, this section reviews Germany's progress in achieving targets related to the green 
and digital transitions. 

2.3.1  Green dimension  

All recovery and resilience plans must include a minimum spending share of 37% related 
to the green dimension. The measures in the plan should contribute to achieving the EU 2050 
climate  neutrality  objective,  and  the  2030  energy  and  climate  targets  entailed  in  the  National 

10 

 
 
Energy  and  Climate  Plans.  They  should  also  contribute  to  meeting  environmental  targets  for 
waste,  water,  pollution  control,  sustainable  mobility,  biodiversity  protection  and  restoration, 
marine and water resources, and support the transition to sustainable food systems as well as to a 
circular economy as appropriate, while ensuring that nobody is left behind. Agriculture, forestry 
and rural areas are key for sustainable food systems and the provision of eco-system services and 
their needs and potential will need to be adequately taken into account in the green transition. 

Germany is  stepping up climate protection-related policies and public investment beyond 
the  recovery  and  resilience  plan.  The  June  2020  stimulus  programme  allocated  EUR 26.2 
billion to the Energy and Climate Fund, a special reserve based on revenues from the auctioning 
of  EU  Emissions  Trading  System  (EU  ETS)  allowances  for  implementing  the  government’s 
energy  and  climate  policies.  In  2020,  the  Federal  Government  issued  ‘green’  securities  for  the 
first time, reflecting efforts to screen the environmental aspects of budgeting and strengthening 
the country’s position in sustainable finance.  

Greenhouse gas emissions 

The latest policies and measures set out in Germany’s climate action plan and its climate 
law help close the gap to its binding 2030 target, but it remains to be seen whether this will 
suffice. Germany’s target for non-EU-ETS greenhouse gas (GHG) emissions is a 38% reduction 
compared to 2005 (to be reviewed in light of the ‘fit for 55’ action). Germany projects that it will 
almost close the gap to achieve the 2030 Effort Sharing Regulation target, from 14% gap (based 
on existing measures) to 3%. To reach the target, it started using carbon pricing in transport and 
heating9, but it is expected that the planned carbon price schedule will have to be increased and 
be  complemented  with  other  measures,  including  support  measures  and  further  incentives  to 
deliver the necessary emission reductions10 (UBA, 2020a). The exit from coal is planned to be 
completed  by  2038  at  the  latest,  which  comes  later  than  similar  measures  in  other  countries 
(Agora Energiewende and Sandbag, 2020). The compatibility of this date with the objective of 
climate neutrality by 2050 (and 2045 to  which the target is expected to  be advanced) will also 
depend  on  the  development  of  CO2  prices  (which  may  make  coal-fired  power  generation 
commercially  unviable  much  earlier  than  2038).  The  socio-economic  consequences  in  coal 
regions can be mitigated with measures supported by the Just Transition Fund. Germany has also 
set a quantitative target for further emission reductions in the building sector and has announced 
several measures on the chemical sector's product use and fluorinated gases (‘F-gases’). After the 
date of submission of its plan and following a constitutional court decision (BVerfG, 2021) that 

9 Germany has started implementing its national law to introduce carbon pricing for CO2 emissions from fossil fuel 
combustion outside the EU ETS as of January 2021. It covers key emitting sectors such as industrial and building 
heating and transport. The system started with a fixed price and will steadily increase until 2025 (from EUR 25 to 
EUR 55/t  CO2).  The  emission  cap  for  2026  reflects  the  emission  reduction  trajectory  of  the  Effort  Sharing 
Regulation. From that year on, allowances will be tradeable. 
10 Germany has a trajectory for emission reductions in the transport sector (125 Mt CO2eq by 2030 compared to 161 
Mt CO2eq by 2021), responsible for more than a third of the effort sharing emissions. 

11 

 
 
                                                           
found  the  current  climate  law  in  breach  of  the  principle  of  intertemporal  freedom,  Germany’s 
government  proposed  a  thorough  strengthening  the  climate  law,  increasing  overall  GHG 
reduction  by  2030  from  currently  55%  to  65%  and  intending  to  achieve  climate  neutrality 
already by 2045. 

Sustainable mobility 

Higher  and  faster  investment  in  sustainable  transport  infrastructure  is  needed  to  make 
progress  on  emission  reductions.  Despite  some  mitigation  measures,  and  against  the  general 
downward trend in GHG emissions, transport emissions in 2019 were higher than in 1990. The 
same is true for final energy consumption in the transport sector. Germany’s weak track record in 
reducing transport emissions, also responsible for its continued failure to meet air quality targets 
(European  Commission,  2019a),  calls  for  greater  attention  and  the  possibility  of  further 
reviewing price signals. This includes areas such as road charging, placing a stronger emphasis 
on  sustainable  multimodal  urban  mobility  while  also  considering  the  needs  of  rural  areas,  and 
extending public transport for both passengers and freight.  Incentives to boost competition and 
digitalisation  in  the  rail  sector  regarding  both  passenger  and  freight  services  should  also  be 
reviewed.  In  the  longer  run,  efforts  could  also  target  not  only  cars,  vans,  and  buses,  but  also 
support clean heavy-duty vehicles and sustainable aviation fuels, and also focus on disincentives 
created by the current taxation system.  

Renewable share 

Current policies are not ambitious  enough to increase  the share of renewables to 30% of 
gross final energy consumption by 2030. Although a set of sectoral targets and policies have 
been  defined,  they  seem  jointly  inadequate  for  reaching  targets  on  renewables,  especially  on 
electricity, heating, and cooling11:  

- 

In the electricity sector, to reach the aim of covering 65% of electricity consumption 
from renewable energy sources by 2030, further efforts are needed. While the 40.8% 
country’s share of renewables in electricity consumption is high relative to 34.2% in the 
EU-28 (2019), progress in deploying renewables has been slow in recent years, with the 
current  trend  pointing  to  a  55%  share  of  renewables  by  2030  (Agora  Energiewende, 
Wattsight,  2020).  Reaching  the  65%  target  would  require  efforts  in  installing  further 
renewable capacities, also in light of the envisaged increase in overall electricity demand 
due to the expected increased electrification in transport and heating on the one hand and 
the production of hydrogen from renewable electricity on the other hand. It remains to be 
seen  whether  and  to  what  extent  recent  legislative  changes  will  be  sufficient  to  tackle 
problems of permitting and repowering onshore wind projects. Grid expansion, which is 
needed to connect renewable generation sites with regions with high electricity demand, 
has  experienced  some  delays.  Progress  is  also  crucial  for  the  uptake  of  renewable 

11 Germany’s share of renewable energy was 17.4% in 2019, 0.6 percentage points below its 2020 target. 

12 

 
 
                                                           
hydrogen12, where Germany plays a key role in the development of  planned Important 
Projects  of  Common  European  Interest  (IPCEI).  Furthermore,  the  regulatory  pricing  of 
electricity is increasingly perceived as hampering decarbonisation. 

-  For  heating  and  cooling,  the  targeted  doubling  of  the  share  of  renewables  from 
14.6% in 2019 to 27% by 2030 will require further  measures. The key  policies and 
measures  in  the  heating  and  cooling  sector  could  involve  financial  incentives:  setting  a 
CO2  price,  providing  support  to  replace  oil  boilers,  several  (financial  and  advisory) 
support  measures  for  households  and  bigger  buildings,  and  support  for  renewable  heat 
production plants to build new heat networks and transform existing ones. To  reach the 
target, further efforts may be needed, including increasing the number of buildings with 
heat pumps. 

-  For transport, planned measures appear sufficient to reach the 27% targeted share 
of renewable energy in 203013. First-generation biofuels are set to rise to 5.3% of energy 
consumption  in  transport  and  advanced  biofuels  to  3.5%  in  2030.  On  top  of  the  key 
policies and measures set out in the plan, Germany is putting in place financial incentives 
(purchase  support,  tax  incentives)  to  boost  the  market  uptake  of  electric,  gas,  plug-in 
hybrid,  and  fuel  cell  vehicles.  Overall,  these  policies  and  measures  are  considered 
sufficient to achieve Germany’s target for renewables in the transport sector. 

Energy efficiency  

Further measures are needed to deliver on the German national contribution to the already 
agreed  EU  energy  efficiency  targets  for  2030.  Germany  targets  a  30%  reduction  in  national 
primary  energy  consumption  by  2030,  compared  to  2008.  To  achieve  this,  primary  energy 
consumption must fall by an average of 1.5% per year from 2020 onwards. This would represent 
considerable  progress,  as  prior  to  2020,  primary  energy  consumption  decreased  only  by  an 
annual  average  of  1.1%.  To  meet  the  target,  in  December  2019,  the  government  launched  the 
‘Energy  Efficiency  Strategy  2050’,  which  includes  measures  to  boost  energy  efficiency 
investment  across  sectors.  On  buildings,  Germany  submitted  a  comprehensive  long-term 
renovation strategy in July 2020. In addition, Germany also developed an ambitious ‘Renovate’ 
component  in  its  national  recovery  and  resilience  plan,  focussed  on  climate-friendly  timber 
construction, increased energy efficiency of buildings and a higher share of renewable energy for 
heating and cooling in buildings, which can contribute to accelerating energy efficient buildings 
renovation. It is estimated that following an average annual renovation rate of 2.6% at the cost 
optimal level, the primary energy saving potential in Germany, by 2050, is 352 TWh. Over the 
period of 2021-2050 this is expected to generate more than 12.8 million of full time equivalent 
jobs (Zangheri et al., 2020). Finally, carbon pricing policies can create additional incentives for 
energy efficiency measures.  

12 See COM(2020) 301 final for a terminology of hydrogen 
13 According to the calculations set out by the recast Renewable Energy Directive, including several multipliers. 

13 

 
 
                                                           
Circular economy and biodiversity 

Biodiversity  preservation,  waste  reduction  and  the  circular  economy  should  also  be 
supported  through  both  regulatory  measures  and  financial  incentives.  Germany’s  waste 
generation at municipal level has remained stable over the last 5 years and remains above the EU 
average  (European  Commission,  2019a).  In  addition,  with  a  secondary  material  use  rate  of 
16.6%, circularity only meets a small share of the demand for materials at present. Biodiversity 
loss could be better prevented by a better integration of biodiversity objectives in other policies 
and  increased  funding.  Despite  local  successes,  90%  of  grassland  habitats  have  a  less  than 
favourable  conservation  status  which  gives  cause  for  concern.  Less  than  10%  of  surface  water 
bodies show good status. Out of 35 features of 11 descriptors, only 2 partly and 2 fully reached 
the status of good environmental status for marine waters by 2020. 

14 

 
 
 
 
 
Table 2. Overview of Germany’s climate objectives, targets and contributions  

National targets and contributions  

Binding target for greenhouse gas 
emissions compared to 2005 under the 
Effort Sharing Regulation (%) 

National target/contribution for 
renewable energy: share of energy 
from renewable sources in gross final 
consumption of energy (%) 

Latest 
available 
data 

2020 

2030 

Assessment of 
2030 ambition 
level 

 -8  

 -14 

 -38 

 As in ESR  

 17.4 
(2019)  

 18% 

 30  

 Adequate 
(30% is the 
result of RES 
formula)  

National contribution for energy efficiency: 

Primary energy consumption (Mtoe) 

Final energy consumption (Mtoe) 

292.1 
(2019) 

215.5 
(2019) 

 276.6  

 216  

 Sufficient  

 194.3  

 185  

 Modest  

Level of electricity interconnectivity 
(%) 

 11.4%  

 11.4%  

 Not 
provided  

 N/A  

Note: Reflecting Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 
on the Governance of the Energy Union and Climate Action. 
Source: Assessment of the final national energy and climate plan of Germany, SWD (2020) 904; Eurostat where 
latest available data is indicated for specific years. 

2.3.2  Digital dimension  

The  recovery  and  resilience  plan  should  include  a  minimum  level  of  20%  of  spending 
related to the digital dimension. The measures in the plan should, among others, contribute to 
the  digital  transformation  of  the  economic  and  social  sector  (including  public  administration, 
public  services,  and  the  justice  and  health  systems).  The  objective  of  the  measures  in  the  plan 
should  be  to  not  only  improve  competitiveness,  but  also  resilience,  agility,  and  security  of 
companies and public actors, all while ensuring inclusiveness and preventing the widening of the 
digital  divide  across  regions  and  territories.  They  should  also  contribute  to  achieving  the 
Sustainable  Development  Goals  (SDGs),  the  objectives  of  which  have  been  integrated  into  the 
European  Semester  since  2020,  reinforcing  a  strong  commitment  towards  sustainability  in  the 
coordination of economic and employment policies in the EU. 

Compared  to  the  overall  strength  of  the  German  economy,  digitalisation  is  a  relative 
weakness.  Germany  ranked  12th  in  the  Digital  Economy  and  Society  Index  (DESI)  (European 
Commission, 2020d). While it performs reasonably well in most DESI dimensions and has made 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
progress in addressing some key challenges, there is still room for improvement, in particular in 
digital public services and the integration of digital technology by companies. The government 
made  significant  efforts  to  present  digital  transformation  strategies  and  allocate  funding  to 
several  aspects  of  the  digital  transformation.  While  the  regularly  updated  strategy  ‘Shaping 
Digitalisation’ and the recently established Dashboard14 provide the direction, a national digital 
transformation strategy is missing, and coordination in the government is sometimes ad hoc. 

Germany  leads  in  5G  readiness  in  Europe  and  has  made  significant  progress  in  fast 
broadband  coverage,  but  still  faces  regional  and  territorial  gaps.  Germany  is  the  first  EU 
Member State having fully assigned the spectrum of the identified pioneer bands to 5G purposes. 
There  is  also  progress  in  other  areas:  as  of  mid-2020,  55.9%  of  households  had  access  to 
broadband speeds of at least 1 Gbps, an increase of more than 21 percentage points over a year. 
However, an urban-rural digital divide still persists, and very high-speed fibre coverage (13.8% 
as  of  mid-2020)  is  increasing  only  slowly.  To  tackle  the  digital  divide  between  regions,  the 
government launched a federal funding programme for broadband expansion. The objective is to 
provide  nationwide  full  gigabit  network  coverage  by  2025,  which  can  only  be  realised  if 
bottlenecks in planning capacities and shortages of skilled workers are tackled.  

There is considerable potential for improving the digital skills of the population, especially 
when  it  comes  to  ICT  specialists  and  those  in  education.  Although  the  proportion  of  ICT 
specialists  in  the  total  workforce  at  4.9%  is  higher  than  the  EU  average  of  4.3%,  numbers  are 
insufficient  to  meet  demand,  and  the  shortage  of  ICT  professionals  has  worsened  during  the 
pandemic. Germany  also shows deficiencies in  the use of digital  technologies in schools (only 
9% of primary and 48% of secondary schools are highly equipped). On the positive side, there 
are improvements and currently almost three out of four (72%) schools in Germany have access 
to high-speed broadband services capable of delivering 100 Mbps or more, while gigabit speeds 
are available for more than a third of schools (BMVI, 2020, p. 8). Digital skills of teachers are 
less  developed,  with  only  20%  having  used  it  daily  in  class  before  COVID-19.  Teachers  lack 
digital  devices  and  do  not  receive  sufficient  initial  training  and  continued  development 
(European  Commission,  2020c).  This  amplified  the  disruptive  impact  of  the  pandemic  on 
educational progress, in particular for disadvantaged students. Several recent measures focus on 
digital education, but in some cases (Digitalpakt Schule) take-up seems to have been limited by 
complexity  and  administrative  burden.  Although  Germany  maintains  high  basic  digital  and 
software  skill  levels  across  the  population,  further  improving  digital  skills  would  allow  it  to 
increase the uptake and productivity of teleworking in the long term. Whilst a significant fraction 
of employees is in occupations that can be carried out from home (38.6% in Germany, 37% in 
the EU), just 9.6% (11% in the EU) had ever worked from home before the COVID-19 outbreak 
(Sostero et al., 2020; Milasi et al., 2020). 

14 https://www.digital-made-in.de 

16 

 
 
                                                           
Germany  aims  to  strengthen  its  digital  innovation  potential  and  promote  advanced 
technologies  by  investing  in  knowledge-based  capital.  The  adoption  of  newer  and  more 
advanced ICTs is crucial for data-driven innovation and higher productivity. However, German 
businesses lag behind in the adoption of advanced ICT tools, including cloud computing (20% 
versus  26%  in  the  EU,  Eurostat,  Community  survey  on  ICT  usage  and  eCommerce  in 
Enterprises). Although the number of firms that use big data analysis is increasing slightly, there 
is still a need to boost the collection, sharing and use of data by businesses. With the GAIA-X 
project, the government aims to establish key building blocks for a European data infrastructure. 
Other measures include  the commitment to  create a national  supercomputing infrastructure via 
the  European  Joint  Undertaking  ‘EuroHPC’,  the  important  role  Germany  plays  in  helping 
develop  proposals  for  planned  IPCEIs  on  microprocessors  and  semiconductor  technologies  as 
well as on Next Generation Cloud Infrastructure and Services, and the adoption of strategies and 
related measures on artificial intelligence (AI) and blockchain. 

Although  several  initiatives  boost  digital  investments  in  SMEs,  the  pace  of  digital 
transformation  may  still  fall  short.  The  COVID-19  crisis  has  increased  the  need  for  digital 
competences among SMEs where the lack of qualified personnel with the relevant skills is one of 
the main barriers for their digitalisation process (Leifels, 2021). SMEs face significant hurdles in 
digitalisation,  with  34%  of  them  not  having  digital  competences.  It  is  therefore  crucial  that 
Germany  further  accelerates,  focuses  and  strengthens  its  initiatives  to  support  SMEs’  digital 
transformation. The largest funding programme,  Digital Jetzt, provides around EUR 50 million 
annually  until  the  end  of  2023,  which  might  prove  too  limited  to  accelerate  the  digital 
transformation of over 2 million eligible firms (OECD, 2020). The latest ‘SMB Digital Maturity 
Study  2020’  indicates  that  German  SMEs  are  using  the  COVID-19  crisis  to  invest  in 
digitalisation. However, concerns about the digital gap between large firms and SMEs persist. 

The  public  sector  is  moving  towards  more  digital  services  and  open  data,  but 
implementation is slow. There has been relatively slow progress on online interactions between 
public  authorities  and  the  general  public.  Germany  is  underperforming  other  EU  countries  in 
terms of penetration of e-government services and digitisation of government services (European 
Commission,  2020b).  Digital  public  services  for  businesses  are  at  the  same  time  above  EU 
average. For individuals, one of the main obstacles hampering the use of public services is the 
low  usability  of  Germany’s  eID  solution  (national  identity  card).  Germany  has  only  recently 
announced  steps  to  move  to  a  mobile  solution  and  could  achieve  this  by  building  on  similar 
efforts  at  European  level.  Overall,  the  reasons  for  slow  progress  in  the  digitisation  of  public 
services  include  the  limited  supply,  the  lack  of  user-  and  mobile-friendliness,  and  mistrust 
(OECD, 2020).  In  addition  to  the adoption of the Online Access  Act  (Onlinezugangsgesetz)  in 
August  2017,  two  programmes  have  been  launched  to  coordinate  the  Federal  and  the  Länder 
level. By  April 2021, 315 of the 575 online services planned by the end  of 2022 had been put 
online. However, the recently published national  dashboard for digital  government15  paints too 

15 https://www.onlinezugangsgesetz.de/Webs/OZG/DE/umsetzung/dashboard 

17 

 
 
                                                           
rosy a picture, as it counts a public service as ‘online’ if it is offered by at least one municipality. 
As  many  of  the  services  have  to  be  implemented  by  all  16  Länder,  the  main  challenge  is  to 
organise  an  effective  legal  and  organisational  framework  and  strengthen  the  federal  IT 
coordination body. Cloud adoption remains low in the public sector and  could be improved by 
making use of the European Cloud initiative.  

There  is  further  potential  for  digitalisation  to  accelerate  the  green  and  carbon-neutral 
transition.  Germany  should  continue  its  efforts  to  increase  energy  efficiency  in  networks  and 
use  more  energy-efficient  devices,  in  line  with  the  ‘energy  efficiency  first’  principle  reflected 
also  in  Germany’s  national  energy  and  climate  plan.  In  addition,  the  development  and  use  of 
energy-efficient IT or the reuse of heat from IT (e.g. data centres) in homes and industry could 
be improved. At the same time, ICT-enabled solutions can reduce energy use considerably – this 
includes boosting energy efficiency and environment-friendly power generation and storage. The 
Digital  Policy  Agenda for the Environment  (BMU, 2020) addresses the green digital  transition 
through 70 measures. The momentum from COVID-19 could be used to boost energy transition, 
the circular economy and sustainable mobility (UBA, 2020b). 

Digitalisation  can  also  support  the  further  integration  of  renewables  in  electricity 
production.  While  Germany’s  aim  for  a  high  share  of  renewables  (see  Section  2.3.1)  is 
welcome,  the  deployment  of  variable  renewable  electricity  requires  an  increasingly  integrated 
energy system,  more precise market  signals,  and  enhanced flexibility and  demand response.  In 
addition to investments in additional electricity networks, the country can improve the situation 
by  deploying,  among  others,  smart  grid  solutions  –  combining  investments  in  electric  car 
charging infrastructure and in energy-efficient buildings with a digital communication layer that 
allows data access and data sharing.  

Figure 1. DESI 2020 - relative performance of Germany by dimension 

DESI 2020 - relative performance by dimension 

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DESI

1 Connectivity 2 Human capital

3 Use of
internet services

4 Integration of
digital
technology

5 Digital public
services

Germany

EU

Note: EU aggregate  corresponds to EU28, based on 2020 DESI  report  - Digital Economy  and Society Index 2020 
(European Commission, 2020d).  

18 

 
 
 
 
 
 
 
 
 
 
 
Box 1: Progress towards the Sustainable Development Goals (SDGs) 

The  objectives  of  the  Sustainable  Development  Goals  are  integrated  in  the  European 
Semester since the 2020 cycle. This provides a strong commitment towards sustainability in 
coordination  of  economic  and  employment  policies  in  the  EU.  In  that  respect,  this  section 
outlines Germany’s performance with respect to SDGs with particular relevance for the four 
dimensions  underpinning  the  2021  Annual  Sustainable  Growth  Strategy  and  of  relevance  to 
the recovery and resilience plans (green transition, fairness, digital transition and productivity, 
and macroeconomic stability), indicating possible areas where investments and reforms in line 
with the objectives of the Facility could further accelerate the progress on the SDGs. 

Figure : SDGs and key dimensions of the recovery and resilience plan

19 

 
 
  
 
 
 
 
Green transition 
Germany  has  the  capacity  to  be  at  the  forefront  of  climate  and  environmental  protection. 
However,  despite  recent  initiatives,  meeting  its  climate  and  environmental  targets  requires 
additional efforts,  and its record in  green SDGs is  somewhat  mixed (see also Section 2.3.1). 
Final energy consumption remains high and is declining slowly; energy import dependency is 
high.  Even  though  improvements  have  been  made,  the  greenhouse  gas  emission  intensity  of 
energy consumption remains significantly above the EU-27 average, suggesting improvement 
potential on SDG 7 ‘Affordable and clean energy’ and SDG 13 ‘Climate action’. Persistently 
high ammonia and nitrate levels together with a lower-than-average share of organic farming 
(7.8%  in  Germany,  8.5%  in  the  EU-27  in  2019)  suggest  the  need  for  further  greening  of 
agriculture  and  enabling  farmers  and  forester  to  embark  on  this  transition.  Given  that  the 
country  is  already the second largest  global supplier of  environmental technology, it has the 
potential to become a lead market and lead supplier (UBA, 2019). 

Fairness 
There has been considerable progress in most fairness-related SDGs, in particular on poverty 
(SDG  1  ‘No  poverty’),  well-being  (SDG  3  ‘Good  health  and  well-being’)  and  decent  work 
(SDG 8 ‘Decent work and economic growth’). The employment rate of 80.6% (age group 20-
64) in 2019 was one of the highest in the EU. While 20.6% of the population was at risk of 
poverty or social  exclusion in  2014, this fell to  18.7% in  2018 and even further to  17.4% in 
2019. There were clear improvements in avoidable mortality, work and traffic accidents, and 
exposure  to  particulate  matter.  At  the  same  time,  the  gender  pay  gap  remains  high,  even 
though  it  has  been  declining;  it  was  19.2%  in  Germany  vs  14.1%  in  the  EU-27  in  2019. 
Challenges  persist  on  SDG  4  ‘Quality  education’,  where  post-secondary  educational 
attainment and participation in adult learning remain below the EU average and the share of 
early leavers from education and training even increased from 9.5% in 2014 to 10.3% in 2019, 
while it fell from 11.1% to 10.2% in the EU-27. Foreign born are about 2.5 times more likely 
to  drop  out  compared  to  native  born.  On  SDG  10  ‘Reduced  inequalities’,  there  remain 
persistent and relatively high gaps between German nationals and non-EU citizens. Moreover, 
even  if  poverty  statistics  suggest  improvements  in  recent  years,  the  COVID-19  crisis  is 
expected to have increased vulnerability. School closures and the switch to digital learning are 
also expected to have greatly affected vulnerable students, with only limited cushion provided. 

Digital transition and productivity 
Germany  has  high  R&D  spending  that  is  on  an  upward  trajectory,  a  relatively  high  and 
increasing share of the population working in science and technology as well as in R&D, and a 
high  number  of  patent  applications.  These  factors  underpin  good  performance  on  SDG  9 
‘Industry, innovation and infrastructure’. At the same time, investments have been lagging  – 
accelerated investments in digital infrastructure would support the economic recovery and help 
reduce  Germany’s  gap  with  other  countries  in  the  coverage  of  very  high-capacity  networks. 
While basic digital and software skills are widespread, specific and advanced digital skills are 
weaker, with clear shortages in the ICT specialist workforce.  

20 

 
 
 
 
 
Macroeconomic stability 
The German economy has performed very well in recent years, reflected in good outcomes for 
SDG 8 ‘Decent work and economic growth’. It can rely on strong institutions, reflected in its 
high  score  for  SDG  16  ‘Peace,  Justice  and  strong  institutions’.  However,  it  faces  structural 
challenges,  and  the  booming  economy  coincided  with  a  persistent  current  account  surplus, 
reflecting subdued investment compared to savings. While Germany performed very well on 
employment,  certain  disadvantaged  groups  (including  people  with  a  migrant  background) 
could  be better integrated in  the labour market.  The proportion of women working part-time 
remains among the highest in Europe, driven partly by disincentives that hold them back from 
working more hours. 

3.  OBJECTIVES, STRUCTURE AND GOVERNANCE OF THE PLAN 

3.1. Overall strategy of the plan  

The  German  recovery  and  resilience  plan  is  a  forceful  response  to  the  economic 
repercussions  from  the  COVID-19  pandemic  and  consists  mainly  of  future-oriented 
measures,  with  a  strong  focus  on  the  green  transition  and  digital  transformation.  It  is 
composed of 10 components grouped in six thematic focus areas16: 1 Climate action and energy 
transition,  2  Digitalisation  of  the  economy  and  infrastructure,  3  Digitalisation  of  education,  4 
Strengthening  social  inclusion,  5  strengthening  a  pandemic-resilient  health  system,  6  Modern 
public administration and reducing barriers to investment.  

The  plan’s  first  focus  area,  Climate  action  and  energy  transition,  is  devoted  to  the  green 
transition.  With  a  total  estimated  cost  of  approximately  EUR  11.3  billon,  it  represents  about 
40% of the gross costs of the recovery and resilience plan and implements climate-related policy 
measures in  areas  such as energy transition  and adaptation  to  climate change  (see  also  Section 
2.3.1  for  related  policy  challenges).  The  plan  envisages  a  broad  range  of  measures  that  are 
grouped under three components: 

  Component  1.1  Decarbonisation  using  renewable  hydrogen  in  particular  focuses  on 
supporting  the  development  of  hydrogen  as  a  fuel  (research,  production)  to  mitigate 
climate  change,  notably  with  Hydrogen  projects  within  the  framework  of  planned 
Important Projects of Common European Interest (IPCEIs – 1.1.1).  

  Component 1.2 Climate-friendly mobility focuses on the green transition in the transport 
sector. The largest measures under this component are the support for the replacement of 
the  private  vehicle  fleet  with  zero-  or  low-emission  vehicles  (1.2.3)  and  for  the 
construction  of  charging  infrastructure  (1.2.1),  and  the  support  for  purchases  of  buses 

16 These six thematic focus areas, around which the German Recovery and Resilience Plan is structured, are distinct 
from the six pillars of ‘policy areas of European relevance’ referred to in Article 3 of the Recovery and Resilience 
Facility Regulation. 

21 

 
 
 
                                                           
with  alternative  propulsion  (1.2.5).  These  schemes  are  meant  to  lower  the  private 
acquisition  and  operating  costs  of  electric  vehicles  and  speed  up  the  transition  to  low-
emission mobility.  

  Component  1.3  Climate-friendly  renovation  and  construction  is  devoted  to  energy 
efficiency renovation of buildings. With an associated cost of EUR 2.5 billion17, Building 
renovation:  federal funding  for  energy-efficient  buildings  (1.3.3)  represents  a  broad 
energy-efficient  building  renovation  programme  which  is  designed  to  deliver  average 
primary  energy  efficiency  savings  of  at  least  30%.  It  is  complemented  by  Municipal 
living labs for the energy transition (1.3.2), which will explore the use of new solutions 
for  efficient  and  sustainable  energy  supply  in  urban  neighbourhoods  through  pilot 
projects. 

The  second  focus  area  covers  the  Digitalisation  of  the  economy  and  infrastructure  and 
consists of two components, which together comprise around 21% of the plan’s estimated 
gross costs. 

  Component 2.1 Data as the raw material of the future contains two planned IPCEIs, on 
Microelectronics and communication technologies (2.1.2), as well as on Next Generation 
Cloud  Infrastructure  and  Services  (2.1.3).  The  component  also  contains  a  measure  to 
implement  parts  of  Germany’s  data  strategy,  which  encompasses  a  large  number  of 
subprojects,  such  as  bolstering  Germany’s  high-performance-computing  capacity, 
increasing data skills and fostering the sharing and use of data by scientists, as well as by 
the federal administration services.  

  Component  2.2  Digitalisation  of  the  economy  includes  measures  to  support  the  digital 
transformation  in  the  automotive  sector,  to  develop  continuing  education  and  training 
networks,  to  strengthen  the  research  and  innovation  on  digital  technologies  through 
support  to  projects  run  by  the  centre  for  digitalisation  and  technology  research  of  the 
Bundeswehr,  as  well  as  to  contribute  to  the  acceleration  the  digitalisation  of  the  rail 
sector (as part of a plan already launched at national level). 

The third focus area is centred on the Digitalisation of education and includes expenditure 
on digital support for teachers, learning material and digital skills across the education and 
training sector, including in the armed forces. The focus area consists of a single component, 
which amounts to around 5.1% of the overall estimated gross cost of the plan. 

  Component 3.1 Digitalisation of education includes four measures that have the potential 
to  reach  large  parts  of  the  education  sector.  It  provides  support  to  equip  all  teachers 
across Germany with digital devices for end users (3.1.1) and, within the largest measure 
of the component, EUR 620 million are provided to set up a single digital platform that 

17 When referring to the cost of the measures in the text, the gross cost is quoted. In some cases this may include 
VAT. For calculating the climate and digital quota, the net cost, excluding VAT, is relevant. The Annex provides 
information on net-of-VAT costs for measures relevant for the climate and digital tagging. 

22 

 
 
                                                           
will  give  access  to  education  materials  for  all  levels  of  institutional  and  autonomous 
teaching and learning (3.1.2). Scientific content is  developed for Educational  centres of 
excellence  (3.1.3),  supporting  teachers  with  their  digital  skills  and  with  digital  learning 
content. The digital readiness of the education sites of the armed forces also gets support 
(3.1.4).  

The  fourth  focus  area  covers  Strengthening  social  inclusion,  with  expenditure  in  early 
childhood education and care, reducing learning gaps in schooling and in apprenticeships, 
as  well  as  a  labour  tax  related  reform.  The  focus  area  consists  of  a  single  component  that 
amounts  to  around  5%  of  the  plan’s  estimated  gross  cost,  while  also  including  measures  for 
which no RRF funding has been requested. 

  Component 4.1 Strengthening social inclusion includes two measures with considerable 
impact: Apprenticeship support (4.1.3) provides vital support for apprenticeship contracts 
during the pandemic-related shock, and the Investment programme ‘Childcare-financing 
2020/21’:  special  fund  ‘Child  Day-care  Expansion’  (4.1.1)  contributes  to  90 000  new 
childcare  places.  A  smaller  measure  creates  a  pension  information  portal.  In  addition, 
without  asking  for  funding,  Germany  commits  to  putting  a  temporary  ceiling  to  social 
security  contributions  at  40%  in  the  Social  Guarantee  2021  (4.1.2)  and  to  Educational 
support for students with a learning backlog (4.1.4). 

The  fifth  focus  area  is  titled  Strengthening  a  pandemic-resilient  healthcare  system,  which 
consists mainly of digitalisation investments for the health sector and a measure for vaccine 
research. The focus area consists of a single component with the same title and has an estimated 
cost of approximately 16% of the overall estimated gross cost of the plan.  

  Component  5.1  Strengthening  a  pandemic-resilient  health  system  has  as  its  largest 
measure EUR 3 billion dedicated to a scheme to digitalise hospitals (5.1.2), which have 
in  recent  years  not  been  able  to  invest  sufficiently  in  their  modernisation.  Another 
measure focuses  on the  digitalisation of public health authorities  (5.1.1),  whose lack of 
digitalisation  and  insufficient  interoperability  across  the  federal  states  were  revealed 
during  the  pandemic.  A  special  programme  to  accelerate  research  and  development  of 
urgently  needed  vaccines  against  SARS-CoV-2  (5.1.3),  which  started  in  2020,  supports 
three vaccine producers.  

The  sixth  focus  area,  Modern  administration  and  reducing  barriers  to  investment,  consists 
mainly of digitalisation investments for the public administration and reforms to accelerate 
public  investment.  The  focus  area  consists  of  two  components,  with  a  total  estimated  cost  of 
approximately EUR 3.6 billion, which represents about 12.9% of the total estimated gross cost of 
the plan. 

  Component  6.1  Modern  public  administration  aims  to  accelerate  Germany’s  efforts  to 
digitalise  its  public  administration,  an  area  in  which  the  country  has  fallen  behind  in 
recent years. The largest investment of the focus area, with EUR 3 billion, is dedicated to 
making public services digitally available, in line with implementing the German Online 

23 

 
 
Access Act (6.1.2). The two other measures in this component are the European identity 
ecosystem (6.1.1) and the modernisation of public registers (6.1.3).  

  Component  6.2  Reducing  barriers  to  investment  contains  mostly  reforms  and  does  not 
include  costs  under  the  recovery  and  resilience  plan,  apart  from  a  EUR  50  million 
measure  for  projects  with  the  public  sector  consultancy  PD  -  Berater  der  öffentlichen 
Hand  GmbH  (6.2.2).  Several  reforms  to  reduce  investment  bottlenecks  have  been 
implemented  already,  others  are  to  be  developed  by  a  working  group  comprised  of  the 
Federal Government and the Länder (6.2.1). 

Table 3. The plan’s components and their cost18 

Component 
1.1. Decarbonisation using renewable hydrogen in particular 
1.2. Climate-friendly mobility 
1.3. Climate-friendly renovation and construction 
2.1. Data as the raw material of the future 
2.2. Digitalisation of the economy 
3.1. Digitalisation of education 
4.1. Strengthening social inclusion 
5.1. Strengthening a pandemic-resilient healthcare system 
6.1. Modern public administration 
6.2. Reducing barriers to investment 

3.2. Implementation aspects of the plan 

Costs (EUR million) 

3 259.3 
5 427.9 
2 577.0 
2 766.0 
3 136.5 
1 435.0 
1 259.3 
4 563.9 
3 475.0 
50.0 

The  plan  is  aligned  with  key  European  and  national  programmes  and  initiatives.  The 
recovery and resilience plan ensures consistency, and leverages the synergies, with:  

 

 

 

the National Energy and Climate Plan and the National Hydrogen Strategy, as explained 
in detail in Sections 4.1 and 4.5, 
the German Sustainability Strategy for the plan’s focus area 1 Climate policy and energy 
transition  and  to  implement  the  United  Nations’  Agenda  2030  and  strengthen  the 
national sustainability policy as part of the Decade of Action (2020-2030) (see Sections 
2.3.1, 4.4 and 4.5), 
the National Data Strategy, for the plan’s focus area 2 Digitalisation of the economy and 
infrastructure (see Sections 4.1 and 4.6), 

18 The table shows gross cost of the measures. It is understood that at least around EUR 18.98 billion of the total 
volume of approximately EUR 27.95 billion of the recovery and resilience plan is exempt from value-added tax (see 
part 6-3 of resilience and recovery plan). Taking away the full amount of potential VAT for the remaining measures 
(assuming that the maximum VAT rate of 19% fully applies) yields a total budget of at least EUR 26 518.8 million.  

24 

 
 
 
                                                           
 

the  Youth  Guarantee  along  with  a  National  Skills  Strategy,  with  multiple  measures  to 
improve apprenticeships and fight  school  drop-out  by filling  education  gaps, as part of 
the plan’s focus areas 3 Digitalisation of education and 4 Strengthening social inclusion 
(see Section 4.1). 

Furthermore,  Germany  puts  the  reforms  and  investments  from  its  recovery  and  resilience  plan 
into the context  of the  National  Reform  Programme19  under the  European Semester, as  part of 
the comprehensive agenda of the Federal Government to cushion the impact of the pandemic and 
respond to the challenges of the future (see Section 4.2). 

The  reforms  and  investments  in  the  German  plan  are  consistent  with  the  challenges  and 
priorities  identified  in  the  most  recent  Draft  Council  Recommendation  on  the  economic 
policy  of  the  euro  area20.  Major  investments  focus  on  modern  emergency  capacity  and  better 
digital  infrastructure  for  hospitals  (EUR  3  billion),  supporting  digital  education  (EUR  1.4 
billion),  increasing  social  inclusion  and  thus  supporting  a  fair  recovery  through  the  post-
pandemic catch-up programme for children and young people (euro area recommendations 1 and 
2).  The  reforms  in  components  6.1  and  6.2  strive  to  modernise  and  digitalise  public 
administration  and  increase  its  efficiency  and  to  tackle  investment  bottlenecks.  They  are 
expected  to  reduce  the  administrative  burden  for  businesses  and  citizens  and  improve  the 
business environment (euro area recommendation 3).  

Gender  equality  issues  and  equal  opportunities  for  all  are  adequately  addressed.  Aspects 
related  to  gender  equality  and  challenges  related  to  socio-economic  backgrounds  run  through 
multiple  components.  A  particularly  relevant  measure  is  improving  the  availability  of  quality 
early childhood education and care, which promotes gender equality and the reduction of socio-
economic disadvantages, and enables women to return to work earlier after a period of maternity 
and  parental  leave  and  to  work  more  hours.  However,  with  the  arrangements  regarding  joint 
taxation of spouses, an important disincentive for second earners to work more hours remains in 
place.  Support  for  apprenticeships  and  help  for  students  with  COVID-19-related  learning 
disadvantages  are  expected  to  benefit  young  people  with  vulnerable  backgrounds  over-
proportionally,  including  those  with  migration  background.  Recently  implemented  measures 
outside of the plan also contribute to equality. For example, in July 2020 the federal government 
law  enhancing  women’s 
adopted  a  comprehensive  gender  equality  strategy,  while  a 
representation  in  company  boards  (Zweites  Führungspositionen-Gesetz)  is  close  to  being 
adopted. The legislation process in line with the European Accessibility act to reduce barriers to 
people  with  disabilities  is  in  progress21.  Still,  the  plan’s  expected  contribution  to  equal 

19 https://www.bmwi.de/Redaktion/DE/Publikationen/Europa/nationales-reformprogramm-
2021.pdf?__blob=publicationFile&v=24  
20  Pending  final  adoption  by  the  Council,  after  endorsement  by  the  European  Council.  The  text  agreed  by  the 
Eurogroup  on  16  December  2020  is  available  at:  https://data.consilium.europa.eu/doc/document/ST-14356-2020-
INIT/en/pdf 
21 https://www.bmas.de/DE/Service/Gesetze-und-Gesetzesvorhaben/barrierefreiheitsstaerkungsgesetz.html 

25 

 
 
                                                           
opportunities for specific groups, such as older persons and persons with disabilities, could have 
been described more clearly.  

The plan lays down a clear governance structure for its implementation, with a dedicated 
the  Federal  Ministry  of  Finance.  The  coordination  unit 
coordination  unit  at 
(Koordinierungsstelle)  is  also  charged  with  the  monitoring  of  the  plan’s  implementation  (see 
Section  4.8).  This  includes  monitoring  and  reporting  on  progress  with  the  implementation  of 
milestones  and  targets,  monitoring  the  implementation  of  the  audit  and  control  strategy, 
qualitative  control  of  all  financial  data  and  submitting  payment  requests.  The  unit  is  further 
responsible  for  identifying  and  correcting  early  on  any  potential  undesirable  developments.  To 
this  end,  but  also  to  ensure  coherence  with  the  use  of  other  sources  of  Union  funding,  the 
coordination  unit  is  in  close  contact  with  the  line  ministries  that  are  in  the  lead  on  the 
implementation  of  specific  reforms  and  investments.  In  its  role  as  coordinator,  the  Federal 
Ministry  of  Finance  acts  in  agreement  with  the  Federal  Chancellery,  co-penholder  of  the 
recovery and resilience plan, and with the Federal Parliament. 

Relevant stakeholders were involved in the preparation of the plan and their opinions were 
considered. Within the scope of their responsibilities, the Federal States (Länder) were involved 
at  an  early  stage  and  in  numerous  steps  in  the  elaboration  of  the  recovery  and  resilience  plan 
through  the  conferences  of  Ministers  and  through  the  upper  chamber  of  Parliament,  the 
Bundesrat,  and  their  positions  were  considered  in  the  final  elaboration  of  the  plan.  The  lower 
chamber  of  Parliament,  the  Bundestag,  was  regularly  informed  about  the  status  of  preparation 
and the content of the plan; questions of Members of Parliament were addressed. Social partners, 
social  stakeholders,  environmental  organisations,  youth  organisations,  industry  representatives 
and the national productivity board were all involved in the preparation of the plan. Their views 
were taken into consideration and reflected in the structure of the plan. The views of the social 
partners  were  particularly  reflected  in  the  elaboration  of  the  measures  in  component  4.1 
Strengthening  social  inclusion  and  the  continuing  education  and  training  networks  (2.2.2)  in 
component  2.2  Digitalisation  of  the  economy.  The  critical  evaluation  by  environmental 
organisations  of some measures in  the draft plan led to  the  exclusion of investments  that were 
deemed problematic regarding climate protection. Germany worked closely with other Member 
States on the institutional and technical aspects of the cross-border projects included in the plan. 
It  will  be  important  to  involve  stakeholders  also  during  the  implementation  of  the  plan,  in 
particular for promoting and monitoring SME participation. 

An ongoing process of coordination with the Länder is planned also for the implementation 
phase.  In  the  federal  context,  the  Länder  will  be  crucial  players  in  the  implementation  of  the 
plan,  in  particular  regarding  investments  in  the  digitalisation  of  education  and  healthcare, 
apprenticeship  support  and  reforms  and  investments  to  modernise  public  administration  and  to 
reduce barriers to investment. Close technical cooperation and coordination between the Länder 
and  the  federal  Ministries  responsible  for  these  measures  is  indispensable  to  take  appropriate 
account  of regional structures during the implementation  phase and is provided for in  the plan 
through  regular  coordination  meetings,  as  requested  by  the  Länder,  organised  by  the 
coordination unit. The Länder are expected to be involved closely and in a timely manner in the 
reporting on the implementation progress. 

26 

 
 
A  comprehensive  three-pillar  communication  strategy  is  set  out  in  the  plan  to  promote  it 
both to the public and to key stakeholders. The communication on the plan highlights its role 
for  the  modernisation  of  Germany’s  economy  and  society  in  the  context  of  post-pandemic 
recovery.  The  strategy  is  based  on  integrated  communication  (first  pillar)  with  a  cross-medial 
(second  pillar)  and  multi-perspective  (third  pillar)  approach.  It  is  coordinated  by  the  Federal 
Press Office, which develops the visuals, the key messages, and the horizontal narrative on the 
plan,  to  be  included  in  the  communication  material  prepared  by  the  responsible  federal 
ministries. The communication involves a mix of formats – text, visual and audio-visual content 
combined with live events – to be used both by the communication channels of federal ministries 
and  subordinated  public  bodies  and  in  overarching  communication  campaigns.  The  website  of 
the Federal Ministry of Finance serves as a hub that ensures continuous and complete overview 
of the information on the plan. The third communication pillar establishes a close link between 
the recovery and resilience plan and the communication activities of the federal government on 
modernisation  projects  and  plan-related  aspects  of  the  national  fiscal  stimulus  package.  Key 
visible  landmark  events  such  as  the  approval  of  the  plan  by  Council,  the  launch  of  key 
programmes, and reviews of implementation progress are expected to be used as communication 
opportunities  to  generate  and  sustain  public  and  media  interest  throughout  the  lifecycle  of  the 
plan. 

The plan has a strong cross-border dimension. Central elements of the German recovery and 
resilience  plan  are  the  planned  IPCEIs  in  the  areas  of  hydrogen  (EUR  1.5  billion), 
microelectronics  (EUR  1.5  billion)  and  cloud  and  data  processing  (EUR  0.75  billion)  open  for 
participation to  all interested Member States. Other measures such as the  one on the European 
identity ecosystem (6.1.2) are also centred on cross-border cooperation and interoperability. 

The recovery and resilience plan does not include a security self-assessment for investments 
in digital capacities and connectivity. However, related concerns are alleviated by the fact that 
there  is  no  measure  that  would  relate  to  5G  deployment,  and  open  strategic  autonomy  and 
security  issues  have  been  addressed  in  the  description  of  the  component  for  which  they  were 
most relevant, i.e. in component 2.1 Data as the raw material of the future. 

State  aid  and  competition  rules  fully  apply  to  the  measures  funded  by  the  Recovery  and 
Resilience Facility. Union funds channelled through the authorities of Member States, like the 
RRF funds, become State resources and can constitute State aid if all the other criteria of Article 
107(1)  TFEU  are  met.  When  this  is  the  case  and  State  aid  is  present,  these  measures  must  be 
notified and approved by the Commission before Member States can grant the aid, unless those 
measures are covered by an existing aid  scheme or comply  with  the applicable conditions  of a 
block  exemption  regulation,  in  particular  the  General  Block  Exemption  Regulation  (GBER) 
declaring certain categories of aid compatible with the internal market in application of Articles 
107 and 108 TFEU22. When State aid is present and it requires notification, it is the duty of the 

22 Commission Regulation 651/2014, OJ L 187, 26.6.2014, p. 1 

27 

 
 
                                                           
Member  State  to  notify  State  aid  measures  to  the  Commission  before  granting  them,  in 
compliance  with  Article  108(3)  TFEU.  In  this  respect,  the  State  aid  analysis  carried  out  by 
Germany in the recovery and resilience plan cannot be deemed a State aid notification. In as far 
as  Germany  considers  that  a  specific  measure  contained  in  the  recovery  and  resilience  plan 
entails de minimis aid or aid exempted from the notification requirement, it is the responsibility 
of Germany to  ensure full compliance with the applicable rules. In addition to complying with 
EU  State  aid  rules,  measures  taken  under  this  framework  should  be  compatible  with  the  EU’s 
international obligations, in particular under World Trade Organization rules. 

4.  SUMMARY OF THE ASSESSMENT OF THE PLAN 

4.1. Comprehensive  and  adequately  balanced  response  to  the  economic  and  social 

situation 

The plan follows a holistic approach to recovery and reinforcing socio-economic resilience. 
This is achieved through 40 measures that tackle key structural challenges and pave the way for 
the  twin  transition.  The  measures  are  organised  in  10  components  structured  around  six  focus 
areas: 1 Climate policy and energy transition, 2 Digitalisation of the economy and infrastructure, 
3  Digitalisation  of  education,  4  Strengthening  social  inclusion,  5  Strengthening  a  pandemic-
resilient  healthcare  system,  and  6  Modern  public  administration  and  reducing  barriers  to 
investment.  Germany  submitted  its  National  Reform  Programme  on  13  April  2021.  The 
information  provided  in  the  National  Reform  Programme  is  being  considered  and  jointly 
assessed in this Staff Working Document together with the Recovery and Resilience Plan.  

Both  the  green  and  digital  targets  are  met,  with  the  digital  one  exceeded  considerably. 
Overall,  the  plan  is  balanced  across  the  six  pillars  of  the  RRF  Regulation23  (see  Table  4),  is 
aligned with the European Pillar of Social Rights (see also Box 3) and focuses on a significant 
subset  of  Germany’s  main  challenges,  which  beside  the  twin  transition  include  addressing 
investment bottlenecks and modernising the public administration. 

First RRF pillar: green transition  

The plan has a strong focus on the green transition. With a total envelope of approximately 
EUR  10.5  billion,  measures  devoted  to  the  green  transition  represent  at  least  42.4%  of  the 
financial  contribution.  Measures  in  the  plan  are  aligned  with  the  German  Climate  Action  Plan 
2050 and in many instances also explicitly with the German National Energy and Climate Plan 
(NECP) for 2021-2030.  The German NECP aims to  achieve the goals  of energy transition  and 
decarbonisation, including the objectives of a reduction in GHG emissions of 38% (compared to 
2005), an increase in energy efficiency of 30% (reduction in primary energy consumption), and 

23 Article 3 of Regulation (EU) 2021/241 

28 

 
 
                                                           
the  reinforcement  of  the  share  of  renewable  sources  in  energy  generation  (30%  of  renewable 
energy in gross final energy consumption). 

29 

 
 
 
 
 
Table 4: Coverage of the six pillars of the Facility by the German recovery and resilience 
plan components 

Components  

Green 
transition 

Digital 
transition 

Smart, 
sustainable 
& inclusive 
growth 

Social and 
territorial 
cohesion 

Health, and 
economic, 
social and 
institutional 
resilience 
○ 

Policies for 
the next 
generation 

1.1. Decarbonisation using 
renewable hydrogen in 
particular 

1.2. Climate-friendly mobility 

1.3. Climate-friendly 
renovation and construction 

2.1. Data as the raw material 
of the future 

2.2. Digitalisation of the 
economy 

3.1. Digitalisation of 
education 

4.1. Strengthening social 
inclusion 

5.1. Strengthening a 
pandemic-resilient healthcare 
system 

6.1. Modern public 
administration 

6.2. Reducing barriers to 
investment 

● 

● 

● 

○ 

○ 

○ 

● 

● 

○ 

● 

○ 

● 

○ 

● 

○ 

○ 

● 

● 

● 

○ 

● 

● 

○ 

○ 

○ 

● 

● 

○ 

○ 

● 

○ 

○ 

○ 

● 

● 

○ 

○ 

● 

● 

○ 

Key:  

‘●’ investments and reforms of the component significantly contribute to the pillar;  
‘○’ the component partially contributes to the pillar. 

The  plan  envisages  a  broad  range  of  climate-related  policy  measures  in  areas  such  as  energy 
transition and mobility adaptation to climate change. These can be grouped in three main areas of 
action. 

The main actions targeting decarbonisation and energy transition in the economy foster the 
development  of  an  efficient  hydrogen  economy,  with  a  particular  focus  on  renewable 
hydrogen.  The  plan  contains  a  bundle  of  measures  addressing  various  stages  of  the  hydrogen 
value  chain  from  production  to  use  and  from  research  to  industrial  application.  With  a  cost  of 
EUR 1.5 billion, the hydrogen projects  within the framework of planned  Important  Projects  of 

30 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common European Interest (IPCEIs – 1.1.124) aim to accelerate the necessary market uptake of 
hydrogen by supporting integrated projects  along the entire value chain.  This  is  complemented 
by  further efforts  to  support flagship  projects  for research and innovation in  the context  of the 
National  Hydrogen  Strategy  (1.1.5),  a  pilot  scheme  for  climate  action  contracts  based  on  the 
principle of carbon contracts for difference (1.1.3) and a support programme for decarbonisation 
in industry going beyond hydrogen (1.1.2). Efforts are also made to foster the use of hydrogen in 
the  transport  sector  where  electrification  is  difficult,  both  for  bus  purchases  (1.2.5)  and  for 
funding  research  and  the  creation  of  a  Technology  and  Innovation  Centre  for  Fuel  Cell 
Technology (1.2.7). 

A sizeable effort is made to accelerate investments in climate-friendly mobility to address 
Germany’s  challenges  regarding  sustainable  transport.  The  biggest  measure  under  this 
objective  establishes  an  innovation  premium  to  promote  the  sale  of  electric  vehicles  (1.1.2) 
which  will  support  battery–electric  vehicles.  This  effort  is  complemented  by  support  for  the 
construction  of  charging  infrastructure  (1.2.1).  The  promotion  of  the  purchase  of  alternative-
powered  buses,  i.e.  electric  buses  and  hydrogen-powered  buses  (1.2.5),  also  represents  an 
important  contribution.  These  more  sizable  measures  are  complemented  by  smaller  measures 
such as the extension of the initial registration period for granting the ten-year tax exemption for 
purely  electric  vehicles  (1.2.4),  the  above-mentioned  funding  of  hydrogen  and  fuel  cell 
applications  for  the  vehicle  and  supplier  industry,  and  the  creation  of  a  Technology  and 
Innovation Centre for Fuel Cell Technology (1.2.7). 

Lastly,  the  plan  steps  up  climate-friendly  construction  and  renovation,  with  a  prominent 
focus on energy efficiency renovation. The measure Building renovation: Federal funding for 
energy-efficient  buildings  (1.3.3)  represents  a  broad  energy  efficiency  building  renovation 
programme,  in  continuity  with  existing  measures  (Castellazzi  et  al.,  2019;  European 
Commission, 2021c), which is expected to deliver primary energy efficiency savings of at least 
30%.  It  is  complemented  by  the  funding  of  Municipal  living  labs  for  the  energy  transition 
(1.3.2), which will explore the use of new solutions for efficient and sustainable energy supply in 
urban  neighbourhoods  through  pilot  projects.  In  addition,  Germany  plans  to  introduce 
administrative simplifications, which is expected to facilitate the construction and renovation of 
buildings and help keep housing affordable (6.2.1). 

Beyond climate change mitigation, these measures contribute also to other objectives of the 
green transition. The measures contribute directly to climate change mitigation, and indirectly 
to  objectives  such  as  environmental  protection,  including  circular  economy.  For  example,  all 
projects  in  measure  Building  renovation:  federal  funding  for  energy-efficient  buildings  (1.3.3) 
will have to comply with circularity principles (recycling of construction waste, and recyclability 

24 Measures are identified by a three-number code. The first two numbers indicate the component they belong to and 
the  third  number  identifies  the  measure  within  that  component.  For  allowing  quick  referencing,  measures  are 
referred to with their three-number code. All measure in the plan are listed in the Annex. 

31 

 
 
                                                           
and  reparability  of  equipment).  Other  measures  linked  to  the  digital  transition  such  as  the 
planned  Important  Project  of  Common  European  Interest  on  Next  Generation  Cloud 
Infrastructure and Services (2.1.3) and some parts of the programme for vehicle manufacturers 
and suppliers (2.2.1) contribute to carbon emission reduction but also to energy efficiency. The 
plan does not contain any measure which has biodiversity as its objective. However, some of the 
measures for climate mitigation may indirectly benefit biodiversity, given that climate change in 
itself is an important threat to biodiversity. This is for instance the case for measures supporting 
the  decarbonisation  of  industry  or  projects  on  research  and  innovation  in  the  context  of  the 
National Hydrogen Strategy. Also, Germany has carried out a systematic do-no-significant-harm 
assessment  indicating  that  none  of  the  proposed  measures  under  the  plan  generates  significant 
harm to biodiversity. 

Based  on  the  methodology  for  climate  tracking  set  out  in  Annex  VI  to  Regulation  (EU) 
2021/241,  the  quantitative  assessment  of  the  plan  in  relation  to  the  climate  target  finds  a 
contribution  of  at  least  42.4%  of  the  total  allocation,  thereby  complying  with  the  minimum 
threshold of 37%, with a direct contribution from 5 of the 10 components. 

Second RRF pillar: digital transformation 

The recovery and resilience plan puts a strong emphasis  on the digital transition and the 
challenges resulting from it across all sectors. This is reflected both in the share of digital in 
the overall envelope and the prominence of digital aspects across the components.  With a total 
envelope of approximately EUR 13.5 billion, measures devoted to the digital transition represent 
at least 52.6% of the financial contribution. 

The strong focus on digital is particularly welcome as Germany is a medium performer in 
digitalisation.  In  2020,  Germany  ranked  12th  amongst  EU  Member  States  in  the  Digital 
Economy and Society Index (DESI), with performances below EU average on the integration of 
digital  technology  by  enterprises  and  digital  public  services  (European  Commission,  2020a). 
These  two  aspects,  especially  the  latter,  are  well  addressed  in  the  proposed  recovery  and 
resilience plan. 

More  than  one-fourth  of  the  plan’s  budget  is  dedicated  to  the  digitalisation  of  public 
services.  Key  contributions  come  from  component  6.1  Modern  public  administration,  with 
measures  on  implementing  the  European  identity  ecosystem  (6.1.1),  the  Online  Access  Act 
(6.1.2)  and  the  modernisation  of  public  registers  (6.1.3).  The  plan  also  includes  measures  to 
simplify the access to information about pension rights for citizens (4.1.5) and to overhaul data 
policy that are expected to contribute to improving the use and management of data in the public 
administration (2.1.1). Digitalisation is also an essential aspect of the measures to modernise the 
German  health  system,  reflected  in  upgrading  and  connecting  all  public  health  offices  and 
linking  them  with  other  key  institutions  for  public  health  surveillance  (5.1.1)  and  in  the 

32 

 
 
programme  for  future-proof  hospitals  to  substantially  increase  their  digital  maturity  (5.1.2). 
Furthermore, digitalisation of railway signalling devices is also included (2.2.4)25. 

Efforts  to  digitalise  businesses  focus  on  the  automotive  industry.  More  than  half  of  the 
budget  for  component  2.2  Digitalisation  of  the  economy  is  earmarked  to  help  the  automotive 
sector address the challenges of the digital transformation, both through investments in research 
and development and cluster-building (2.2.1). 

The  measures  to  improve  digital  infrastructure  and  skills  are  expected  to  contribute 
significantly  to  digitalisation.  Various  measures  promote  the  digitalisation  of  education. 
Teachers  will be  equipped with  digital  devices  (3.1.1), an education platform  will be set  up to 
help learners all over the life cycle (3.1.2), educational centres of excellence will equip teachers 
with necessary digital skills (3.1.3) and the Bundeswehr’s educational and training facilities will 
be  modernised  (3.1.4).  Digital  skills  in  the  workplace  will  be  also  promoted  by  supporting 
that  offer 
continuing  education  and 
apprenticeships (4.1.3), and training staff to use the digital tools supplied in the framework of the 
future-proof hospitals programme (5.1.2). 

training  networks  (2.2.2),  supporting  companies 

Key advanced technologies are an important enabler of a successful digital transformation. 
A  comprehensive  set  of  actions  is  planned  to  promote  an  innovative  data  policy  (2.1.1), 
including  an  action  on  high-performance  computing,  a  pilot  measure  on  data  cooperation  on 
sustainability,  ecosystem services in  the food value chain,  and measures  for strengthening data 
literacy  in  the  society  and  in  the  federal  public  administration.  Data-driven  innovation  will  be 
fostered,  including  through  contributions  to  two  multi-country  projects  for  which  IPCEIs  are 
planned, on advanced technologies in  the areas of microelectronics (2.1.2) and next  generation 
cloud, edge and data processing (2.1.3). This innovation effort will be complemented by funding 
research and development projects  carried out by the Centre for Digitalisation and Technology 
Research of the Federal Armed Forces (Zentrum für Digitalisierungs- und Technologieforschung 
der Bundeswehr; dtec.bw; 2.2.3) in  areas such as cybersecurity,  artificial intelligence, robotics, 
innovative mobility, and the digitalisation of energy. 

Third  RRF  pillar:  smart,  sustainable  and  inclusive  growth,  including  economic  cohesion, 
jobs,  productivity,  competitiveness,  research,  development  and  innovation,  and  a  well-
functioning internal market with strong SMEs 

The plan is expected to contribute significantly to the various objectives of the third RRF 
pillar. The green and sustainable growth dimension is well covered by the plan (for a detailed 
discussion see Sections 4.4 and 4.5), and the same holds for digital aspects of smart growth and 
competitiveness and innovation (see Section 4.6). Given the wide scope of the third RRF pillar, 
the below list is not exhaustive. 

25 https://www.digitale-schiene-deutschland.de/en 

33 

 
 
                                                           
The  plan  is  expected  to  contribute  to  economic  cohesion,  jobs  and  social  fairness, 
productivity  and  competitiveness  through  a  number  of  measures.  The  green  and  digital 
transitions facilitated by the plan have the potential to create and secure jobs, make the economy 
more  competitive,  and  contribute  to  economic  and  social  cohesion.  For  instance,  positioning 
Germany as an important player in renewable hydrogen also has the potential to create new jobs 
in  this  emerging  sector.  Component  4.1  Strengthening  social  inclusion  is  fully  devoted  to 
inclusive  growth,  thereby  directly  contributing  to  the  third  RRF  pillar,  including  through 
maintaining job creation and by putting a temporary cap on social security contributions (4.1.2). 
Various  measures  contribute  to  upgrading  skills  and  thus  addressing  labour  shortages  and 
enhancing  productivity;  both  through  individual  learning  on  an  Education  platform  (3.1.2),  as 
well  as  through  improving  the  operation  of  the  education  system  by  enhancing  availability  of 
digital devices (3.1.1) and improving teaching competences and methodology (3.1.3).  

Numerous  measures  in  the  plan  are  expected  to  contribute  to  research,  development  and 
innovation. These include the innovative IPCEIs planned on hydrogen (1.1.1), microelectronics 
(2.1.2) and next generation cloud, edge and data processing (2.1.3), as well as measures with a 
dedicated research focus. Among the latter are, for instance, support for vaccine research (5.1.3), 
innovation premiums on electro-mobility (1.2.3), setting up a technology and innovation centre 
for  hydrogen  (1.2.7),  and  project-based  research  on  climate  change  (1.1.4).  Research  and 
development  are  also  supported  by  new  low  carbon  integrated  energy  systems  for  urban 
neighbourhoods (1.3.2) and by developing and implementing greenhouse gas neutral production 
services (1.1.2) 

The well-functioning of the internal market and the role of strong SMEs is given particular 
consideration.  Some  measures,  in  particular  those  that  include  a  call  for  projects,  positively 
factor in  the involvement  of SMEs. The role of  SMEs is  explicitly  considered, for instance, in 
measures 1.2.5, 1.2.7, 1.3.1, 2.1.1, 2.1.2, 2.1.3, 2.2.1 and 2.2.2. Other measures are expected to 
benefit  SMEs  in  particular.  It  is  for  instance  the  case  for  the  implementation  of  the  Online 
Access  Act  (6.1.2)  and  the  modernisation  of  registers  (6.1.3),  which  are  set  to  reduce  the 
administrative burden for all companies and constitute a noticeable improvement especially for 
SMEs.  By  providing  training  and  guidance  on  new  business  models,  new  technologies, 
digitalisation  and  sustainability,  SMEs  will  be  supported  also  in  the  timber  construction  sector 
(1.3.1). The objectives of continuing education and training networks (2.2.2) include supporting 
SMEs  in  particular.  It  will  be  important  to  promote  and  to  monitor  SME  participation  also 
throughout  the  implementation  phase,  including  by  designing  the  projects  and  application 
procedures with a particular focus on SMEs and with a minimum bureaucratic burden. 

Fourth RRF pillar: social and territorial cohesion 

The plan is expected to contribute to social and territorial cohesion. A number of measures 
relate  to  areas  in  which  also  European  structural  funds  promote  cohesion,  while  ensuring  that 
double  funding  is  avoided.  Key  areas  for  social  cohesion  include  apprenticeships  (4.1.3),  the 
education  platform  (3.1.2),  the  educational  centres  of  excellence  (3.1.3),  creating  additional 
childcare places (4.1.1) and development of continuing education and training networks (2.2.2). 
Areas  relevant  for  territorial  cohesion  include  the  development  of  the  climate-friendly  timber 

34 

 
 
construction  sector  (1.3.1),  municipal  laboratories  for  the  energy  transition  (1.3.2),  energy-
efficient building renovation (1.3.3) and electromobility with hydrogen technology. 

Social  cohesion  is  advanced  by  a  range  of  educational  measures,  with  a  more  limited 
contribution  from  social  measures.  Many  measures  in  components  3.1  Digitalisation  of 
education and 4.1 Strengthening social inclusion promote education and skills, also by tackling 
specific  disadvantages  (see  also  the  sixth  pillar).  Capping  social  security  contributions  (4.1.2) 
helps low-wage workers keep their income and jobs, as for them labour demand is more elastic 
to prices.  

Less  developed  areas  can  benefit  from  the  deployment  of  a  decentralised  renewable 
hydrogen production and energy-efficient renovation. This is particularly the case for energy-
efficient  building  renovation  (1.3.3),  which  is  likely  to  benefit  less  developed  areas  over-
proportionally,  as  those  areas  tend  to  have  a  larger  building  stock  in  need  of  energy-efficient 
renovation. Also, the digitalisation and connection of all public health services (5.1.1) as well as 
of hospitals (5.1.2) is expected to support the effective provision of such health services across 
the country and has the potential to reduce regional differences. 

Tackling investment bottlenecks is  expected to help areas with infrastructural challenges. 
Efforts  to  accelerate  planning  procedures  (6.2.1  and  6.2.3)  and  to  help  municipalities  manage 
investment  subsidies  and  digitalise  schools  (6.2.2)  are  expected  to  help  municipalities  reduce 
their  investment  gap,  regardless  of  whether  they  are  representing  densely  populated  areas  that 
need to cope with population inflows or remote, depopulating areas. 

Fifth RRF pillar: health and economic, social  and institutional  resilience, with  the aim of 
increasing crisis preparedness and crisis response capacity, among others 

The  plan  contains  substantial  investment  to  bolster  the  healthcare  system’s  resilience, 
mainly  through  measures  in  component  5.1  Strengthening  a  pandemic-resilient  healthcare 
system.  The  pandemic  revealed  the  drawbacks  of  the  heterogeneous  landscape  of  often  not 
interoperable IT systems used by the health authorities. The measures included in the plan aim at 
creating an interoperable digital infrastructure to connect the public health authorities and other 
actors  in  the  public  health  system  and  are  embedded  in  a  more  comprehensive  strategy  to 
modernise  the  public  health  offices  (5.1.1).  A  measure  dedicated  to  vaccine  research  against 
SARS-CoV-2  also  contributes  to  Germany’s  resilience  to  the  current  and  potential  future 
pandemics (5.1.3). The digitalisation of hospitals, addressed in a large measure in the plan (EUR 
3  billion),  is  expected  also  to  contribute  to  the  overall  resilience  of  the  healthcare  system  and 
remedy an investment shortfall in the digitalisation of hospitals in recent years (5.1.2). 

Social  resilience  is  reinforced  through  making  education  more  digital.  The  COVID-19-
related  switch  to  remote  education  was  particularly  disruptive  to  the  non-digitalised  German 
education  system,  with  shortages  or  lack  of  digital  equipment  and  expertise.  Component  3.1 
Digitalisation of education tackles this vulnerability by providing digital equipment to teachers 
(3.1.1), better supporting them with digital teaching methodologies (3.1.3) and improving access 
to online learning materials through a dedicated platform (3.1.2).  

35 

 
 
The  resilience  of  Germany’s  public  administration  is  increased  by  digitalisation  and 
modernisation  measures.  Component  6.1  is  expected  to  improve  citizens’  access  to  digital 
public  services  and  develop  a  European  digital  identification  ecosystem.  By  reducing  the  need 
for  in-person  interactions  in  the  provision  of  public  services,  these  measures  contribute  to  a 
public  administration  that  is  more  resilient  to  disruptions  than  one  using  the  current  analogue 
workflows. 

Sixth  RRF  pillar:  policies  for  the  next  generation,  children,  and  young  people,  such  as 
education and skills 

The  plan  has  a  strong  focus  on  acquiring  skills,  starting  from  nursery  age.  High  quality 
nurseries  and  kindergartens  can  play  a  key  role  in  mitigating  socio-economic  disadvantages 
before  entering  school.  The  plan’s  effort  to  add  90 000  childcare  places  (4.1.1),  and  improve 
childcare quality is thus an important contribution to equal opportunities.  

The  plan’s  measures  help  avoid  the  compounding  effects  of  learning  disadvantages  and 
early  school  leaving.  Pupils  with  a  learning  backlog  because  of  COVID-19  (around  1  million 
students) will receive an offer for additional tutoring services and other learning support (4.1.4). 
To  avoid  a  surplus  demand  for  apprenticeship  placement  due  to  companies  scaling  back  their 
apprenticeship programmes, businesses will receive financial support to keep on hiring (4.1.3). 

Through an effective use of digital resources, the education system is expected to improve 
thanks to the plan. Teachers will receive digital equipment such as laptops and tablets (3.1.1) 
and  support  in  the  form  of  digital  teaching  methodologies  through  educational  centres  of 
excellence (3.1.3).  

Young people are expected to have more opportunities to improve their skills. A one-stop 
web  portal  is  expected  to  make  educational  content  more  accessible  to  learners  of  all  ages 
(3.1.2).  The  creation  of  continuing  education  and  training  networks  (2.2.2)  is  expected  to  help 
companies provide their staff with relevant trainings.  

Taking  into  consideration  all  reforms  and  investments  planned  by  Germany,  its  recovery  and 
resilience plan represents to a large extent a comprehensive and adequately balanced response to 
the economic and social situation, thereby contributing appropriately to all six pillars referred to 
in Article 3 of the RRF Regulation, taking the specific challenges and the financial allocation of 
Germany  into  account.  This  would  warrant  a  rating  of  A  under  the  assessment  criterion  2.1  in 
Annex V to the RRF Regulation.  

4.2. Link with country-specific recommendations and the European Semester 

Overall,  the  plan  represents  a  comprehensive  and  adequate  response  to  the  challenges 
faced  by  Germany’s  economy  and  society.  The  plan  introduces  reforms  and  investments 
notably  in  the  areas  of  climate  and  digital  transition,  resilience  of  the  healthcare  system, 
modernisation of the public administration, removing investment  bottlenecks, promoting social 
inclusion, education and skills. These constitute a significant subset of the challenges identified 
in the country-specific recommendations to Germany. Nevertheless, considering the entrenched 
nature of the challenges, further efforts are needed in the coming years on several reform areas. 

36 

 
 
This  is  particularly  the  case  for  recommendations  in  areas  such  as  taxes  on  labour  and  the  tax 
wedge, disincentives to work for second earners, competition in business services and regulated 
professions, and sustainability of the pension system while maintaining adequacy. 

The COVID-19 pandemic led to the deepest recession on national record, yet the economic 
and  social  impact  was  cushioned  by  far-reaching  measures  to  sustain  the  economy  and 
support  the  ensuing  recovery  (CSR  1  in  2020).  The  economy  contracted  by  4.8%  in  2020, 
recording an unprecedented -9.7% in the second quarter of 2020. The federal government swiftly 
made use of its ample fiscal space to support decidedly its economy and society and alleviate the 
immediate  impact  of  the  pandemic.  The  federal  government  and  Länder  provided  liquidity  for 
companies,  subsidising  them  to  keep  their  skilled  workforce,  and  provided  income  support  for 
workers including through the short-time work scheme Kurzarbeit, from which about 6 million 
workers  benefitted  at  the  peak  in  April/May  2020.  Insolvency  rules  were  modified  to  avoid 
technical insolvency procedures. Liquidity support also helped contain risks to financial stability. 
The government balance deteriorated by 5.7 pps. to a deficit of 4.2% of GDP in 2020, due to the 
size of public support measures related to the COVID-19 pandemic. Still, the deficit turned out 
smaller than expected on account of administrative bottlenecks causing delays in the pay-out of 
support  measures  accounting  for  1%  to  2%  of  GDP.  The  relevant  amounts  are  expected  to  be 
actually paid out in 2021. Despite the considerable stimulus package and the ample guarantees, 
risks to fiscal sustainability have remained limited so far, thanks to the sound starting position of 
public finances. 

The plan adequately complements Germany’s efforts to tackle the health consequences of 
the crisis. In the immediate response to the pandemic, Germany was able to provide high-quality 
healthcare  and  rapidly  increase  its  testing  and  intensive-care  capacity.  At  the  same  time, 
however,  the  ongoing  pandemic  underlined  the  continuous  need  to  strengthen  the  resilience  of 
the  system,  including  eHealth  (CSR1  2020).  While  Germany  benefitted  from  its  universal 
healthcare  system  at  the  peak  of  the  pandemic,  the  insufficient  digitalisation  of  the  healthcare 
sector and the lack of interoperability of the available IT systems were exposed (for example by 
the use of fax machines by the public heath offices to report new COVID-19 cases). Germany is 
addressing these challenges in its recovery and resilience plan. It dedicates one of the six focus 
areas of the plan to strengthening a pandemic-resilient healthcare system, with a strong focus on 
the  digitalisation  of  public  health  services  and  the  hospital  sector  (5.1.1,  5.1.2).  With  a  strong 
research base, Germany engaged immediately in research and innovation for the development of 
vaccines  and  therapeutics  against  COVID-19.  It  was  a  German  start-up  –  BioNTech  –  that 
developed  the  first  approved  SARS-CoV-2  vaccine  in  the  world.  The  German  plan  supports 
BioNTech and two other vaccine producers with EUR 750 million for vaccine research against 
SARS-CoV-2 (5.1.3). The investments in the plan aimed at strengthening the healthcare system 
thus effectively address the country-specific recommendation to mobilise adequate resources and 
build overall resilience of the health system, including by deploying eHealth services. 

The  plan  effectively  addresses  investment-related  recommendations  given  to  Germany  to 
reduce the gap between savings and investment, reflected also in Germany’s high current 
account  surplus.  Country-specific  recommendations  to  increase  public  investment  and  tackle 

37 

 
 
investment  relative 

bottlenecks  to  both  public  and  private  investment  have  been  repeatedly  addressed  to  Germany 
since  the  beginning  of  the  Semester  process.  In  addition,  Germany  has  been  identified  as 
experiencing  macroeconomic  imbalances  related  to  its  large  current  account  surplus,  which 
to  saving  and  has  cross-border  relevance.  The 
reflects  subdued 
implementation  of  the  reforms  included  in  the  plan  to  reduce  barriers  to  investment  and 
modernise  the  public  administration  (Components  6.1  and  6.2)  is  expected  to  strengthen  the 
capacity  and  planning  capability  of  the  public  administration  and  improve  its  efficiency  in 
deploying public investment. It is also expected to reduce red tape for businesses, thus freeing up 
capacities  and  improving  the  business  environment  to  incentivise  private  investment.  The 
extension  of  the  consulting  services  of  PD  –  Berater  der  öffentlichen  Hand  GmbH  (6.2.2)  to 
municipalities  is  expected  in  particular  support  investment  at  the  regional  and  municipal level, 
where investment needs are the highest (European Commission, 2020a; European Commission, 
2019b including its Annex D). 

A dedicated component in the recovery and resilience plan deals with the need to invest in 
sustainable  mobility  (CSR  1  in  2019).  More  investment  in  clean  public  transport  and 
infrastructure, including in electric mobility and related charging infrastructure, alternative fuels 
such as hydrogen and e-fuels, and clean mobility solutions are needed to tackle mobility and air 
quality  challenges  and  to  support  the  green  transition  of  the  sector.  Greenhouse  gas  emissions 
from road transport have increased over the last 5 years. Air quality in Germany also gives cause 
for  concern,  especially  in  urban  areas  where  traffic  accounts  for  about  60%  of  harmful  NOx 
emissions.  These  challenges  are  effectively  addressed  by  component  1.2  Climate-friendly 
mobility.  The  investment  and  reform  priorities  of  this  component,  such  as  the  development  of 
electro-mobility  (1.2.2),  the  promotion  of  the  industries  involved  in  hydrogen  and  fuel  cell 
applications  in  transport  (1.2.7),  support  for  the  construction  of  charging  infrastructure  (1.2.1), 
the extension of the initial registration period for granting the ten-year tax exemption for purely 
electric vehicles (1.2.4), are coherent with the identified challenges and previous progress in the 
country-specific  recommendation  to  focus  investment-related  economic  policy  on  sustainable 
transport. 

Germany’s  transformation  to  a  climate-neutral  economy  also  requires  sizable  investment 
in clean, efficient and integrated energy systems and network (CSR 1 in 2019 and CSR 2 in 
2020);  the  plan  includes  measures  to  promote  such  investment.  Germany's  electricity 
networks are slowly adapting to renewable production and significant investment in transmission 
and  distribution  grids  remains  necessary.  Investments  in  energy  networks  that  promote  sector 
coupling,  diversification  and  an  appropriate  grid  infrastructure  are  crucial  for  the  flexibility  of 
the energy system and for better integration across  different sectors of the economy in view of 
the achievement of energy and climate targets. Component 6.2 Reducing barriers to investment 
helps address this challenge. Component 1.1 focuses on the decarbonisation of the economy. Its 
goal  is,  among  others,  to  develop  an  EU-wide  integrated  market  for  renewable  hydrogen 
production  including  cross-border  transport  infrastructure.  To  this  end,  Germany  is  working 
together  with  other  Member  States  in  the  framework  of  planned  IPCEIs  on  green  hydrogen 
(1.1.1).  With  this,  the  reforms  and  investments  under  component  1.1  contribute  directly  to  the 
design of clean and integrated energy networks.  

38 

 
 
Housing in large German cities has become less affordable. The plan provides an adequate 
response  to  this  challenge  with  investment  in  energy-efficient  renovation  (CSR  2  in  2020 
and  CSR  1  in  2019).  House  prices  have  risen  by  half  in  the  last  decade.  This  development 
reflects  a  shortage  of  housing  supply  relative  to  demand,  as  the  completion  of  new  dwellings 
remains considerably below demand and well below the government target of 375 000 per year. 
The  renovation  of  existing  housing  stock  by  adhering  to  environmental  considerations  could 
reduce  energy  consumption,  make  the  cost  of  housing  more  affordable,  in  particular  for 
disadvantaged  households,  and  promote  the  green  transition.  This  is  addressed  by  the  energy 
efficient  building renovation measure (1.3.3), which budgets  EUR 2.5 billion for investment  in 
the  energy-efficient  renovation  of  buildings.  Beyond  this  investment,  the  plan  provides  for 
reforms  to  remove barriers to  investment  (component  6.2) and thus  strengthens,  among others, 
the  capacities  for  construction  works,  which  is  expected  to  benefit  also  the  supply  of  social 
housing and improve transport options from areas where housing is more affordable. 

Various  investments  in  the  plan  aim  to  expand  digital  infrastructure  and improve  digital 
skills  (CSR  1  in  2019  and  CSR  2  in  2020).  The  digitalisation  of  the  German  economy  is 
progressing slowly. There is still a significant urban-rural divide in digital infrastructure, so that 
uncovered regions risk to be left behind, not only when competing for businesses and economic 
development,  but  also  in  various social  dimensions  – something that the lockdown made more 
visible. Investments in digital infrastructure can support the economic recovery and help reduce 
Germany’s  gap  with  other  countries  in  the  coverage  of  very  high-capacity  networks,  which 
remains  substantial.  While  basic  digital  and  software  skills  are  widespread,  specific  and 
advanced digital skills are weak and there are clear shortages in the workforce. Facing all these 
challenges,  Germany  is  putting  a  strong  emphasis  on  the  digitalisation  of  its  economy  in  its 
recovery and resilience plan, with more than 50% of the total envelope dedicated to investments 
in  the  digital  infrastructure,  digital  education  and  skills,  and  more  generally  to  the  digital 
transition  of  the  economy,  public  administration  and  society.  The  completion  of  the  proposed 
reforms  and  investments  into  digital  initiatives  is  expected  to  contribute  significantly  to  the 
implementation  of  the  country-specific  recommendations  to  Germany  to  focus  investment-
related  economic  policy  on  the  digital  transition,  in  particular  digital  infrastructure  and  skills, 
even  if  no  measure  is  proposed  in  the  plan  to  support  the  deployment  of  very  high-capacity 
broadband networks (which is however supported through federal and state programmes that are 
being implemented, for example the Federal Support Programme for Broadband Expansion, see 
National Reform Programme 2021). 

The plan taps into the large potential for improving digital public services (CSR 2 in 2020). 
Modern and connected digital services are crucial when mobility is restricted, but Germany still 
underperforms in these compared to other Member States, even though digital service provision 
to businesses improved recently. Still, the level of online interaction between the authorities and 
the  public  is  very  low.  The  implementation  of  the  Online  Access  Act  (6.1.2)  should  lead  to 
significant improvements in digital public administration. Connected public registers (6.1.3) are 
then expected to  help  citizens and businesses reap the full benefits  of digitalisation and reduce 
the  administrative  burden  for  them.  The  introduction  of  an  open  and  license-free  digital 
European  identity  ecosystem  (6.1.1)  is  likely  to  boost  the  use  of  digitally  available  public 

39 

 
 
services. The register modernisation (6.1.3) is expected to help Germany introduce the once-only 
principle  in  digital  public  services  as  required  across  border  by  the  Single  Digital  Gateway 
Regulation ((EU) 2018/1724). With this, the measures in the plan would go a long way towards 
the modernisation and digitalisation of public services. 

A  set  of  reforms  aims  to  reduce  the  regulatory  and  administrative  burden  for  businesses 
(CSR  2  in  2020).  Keeping  the  administrative  burden  for  access  to  support  measures  at  a 
minimum both  during and in  the  wake of the pandemic speeds up the implementation of these 
measures  and  ensures  easier  access  to  them  for  both  citizens  and  businesses.  Reducing  other 
administrative  burdens  more  broadly,  i.e.  beyond  support  measures,  for  example  by  applying 
flexibility  for  non-essential  bureaucratic  procedures,  can  provide  additional  relief  to  SMEs. 
Component 6.1 Modern public administration is addressing these issues with several reforms of 
the  public  administration.  These  reforms  provide  for  the  introduction  and  eventually  for  the 
effective  application  of  the  once-only  principle  through  digital  means  across  all  levels  of  the 
administration. Measures related to the public administration are included also in component 2.1 
Data as the raw material for the future. These provide for the use of administrative data across 
ministries  and  other  public  bodies.  With  this,  the  plan  contributes  effectively  to  reducing 
administrative burden and compliance costs for businesses.  

The  German  plan  gives  a  strong  boost  to  investment  in  research  and  development  and 
innovation  (CSR  1  in  2019  and  CSR  2  in  2020).  While  Germany  invests  considerable 
resources  in  research  and  development  (R&D),  private  investment  in  R&D  is  increasingly 
concentrated  in  large  firms,  while  SMEs  and  start-ups  face  challenges.  Total  R&D  intensity, 
from both the public and private sectors, has increased in recent years, but this increase does not 
necessarily translate into a higher innovative performance of the German economy. In particular, 
SMEs’  R&D  expenditure  stagnated  over  the  past  decade  and  the  level  of  innovation  by  SMEs 
decreased  in  recent  years.  The  plan  contains  investments  in  research,  development  and 
innovation  spread  throughout  several  components.  Most  prominent  examples  are  the  planned 
IPCEIs in the areas of renewable hydrogen, microelectronics and cloud technology. In addition 
to  these,  various  measures  in  components  1.1,  1.2,  2.2,  and  5.1  also  support  R&I.  The 
programme  for  vehicle  manufacturers  and  suppliers  (2.2.1)  in  particular  supports  research  and 
development with a focus on SMEs.  

The  plan  includes  measures  to  address  the  repeated  recommendations  to  reduce 
disincentives to work more hours, in particular for low-wage and second earners (CSR 2 in 
2019). In 2019, Germany had the second lowest average hours worked in the main job, and the 
share of women  working part time due to  caring  responsibilities was among the highest  in  the 
EU.  Standing  at  56.9%  in  2018,  Germany’s  share  of  revenues  from  labour  taxes  and  social 
security contributions on total revenues is the second highest in the EU. The effective marginal 
burden  from  taxes  and  social-security  contributions  is  relatively  high  for  low-  and  medium-
income  earners,  while  the  joint  taxation  of  spouses  severely  limits  work  incentives  for  second 
earners, contributing to a low share of women working full-time. In addition to the joint taxation 
framework,  and  despite  a  strong  expansion  since  2010,  persistent  supply  gaps  remain  in  the 
provision of quality full-time childcare. The high labour tax wedge, which includes  also  social 

40 

 
 
security  contributions,  and  the  insufficient  provision  of  full-time  quality  childcare  thus  create 
significant  disincentives  for  labour  demand  and  supply  and  pose  a  risk  to  a  job-rich  economic 
recovery by reducing work incentives and consumption possibilities. This was already partially 
alleviated by the abolition of the solidarity surcharge for most taxpayers as of 2021. In addition, 
several  measures  in  component  4.1  Strengthening  social  inclusion  tackle  these  challenges. 
Regarding the high tax wedge on low and medium incomes, the Social Guarantee 2021 (4.1.2) 
provides a temporary relief through a cap on social security contributions up to the end of 2021. 
This  stabilisation  reduces  disincentives  to  work  more  hours  at  least  until  the  end  of  2021.  In 
parallel,  investment  in  new childcare  facilities (4.1.1) is  expected to  have a positive impact  on 
the number of hours worked for parents with caring responsibilities. 

Investment in education is a priority of the plan and improving the educational outcomes 
and skill levels of disadvantages groups is supported through relevant measures (CSR 2 in 
2020,  CSR  1  and  2  in  2019).  Already  before  the  emergence  of  the  COVID-19  crisis, 
technological  progress  was  transforming  the  labour  market,  requiring  increased  funding  of 
education  and  training,  including  reskilling  and  upskilling  and  improving  digital  skills.  The 
COVID-19  crisis  made  this  need  even  more  pressing.  The  sudden  shift  to  a  more  digitalised 
society and home-based education poses a particular challenge for vulnerable pupils and students 
who  do  not  have  access  to  digital  solutions  and  support  at  home.  This  includes  students  with 
disabilities.  Already  existing  inequalities  in  basic  skills,  linked  to  socio-economic  and  migrant 
backgrounds, risk to be exacerbated. The plan dedicates a comprehensive set of investments and 
reforms to digital education, which is also one of the six focus areas of the plan (3 Digitalisation 
of  education),  and  training  (measures  2.2.2  Development  of  continuing  education  and  training 
networks  and  4.1.3  Apprenticeship  support).  A  special  reform  programme  (4.1.4)  is  offering 
educational  support  for  students  with  a  learning  backlog  due  to  the  pandemic,  targeting 
effectively disadvantaged pupils whose educational possibilities were disproportionally affected 
by the crisis. A higher number of high-quality early childhood education and care places (4.1.1) 
is  expected  to  help  address  educational  disadvantages  early  on.  Overall,  the  plan  boosts 
investment in education, puts forward adequate measures to strengthen educational outcomes and 
skills, in particular of disadvantaged groups, improves conditions for participation in the labour 
market, and safeguards employability in the long term.  

The  plan  is  expected  to  partly  contribute  to  the  long-term  sustainability  of  the  pension 
system  and  the  adequacy  of  pensions  (CSR  2  in  2019).  The  retirement  of  the  baby  boomer 
generation is affecting Germany more than other EU countries. In the long run, this demographic 
change  is  expected  to  strain  Germany’s  public  finances,  putting  the  long-term  sustainability  of 
the pension system and the adequacy of pensions at  risk. By 2040,  Germany is  expected to  be 
facing  a relatively  high increase in  spending on  public pensions in  relation to  GDP (up by  1.7 
pps. of GDP from 2019), and at the same time the public pension benefit ratio is expected to fall 
by  2.8  pps.,  to  39%  (EPC/EC,  2021).  The  German  recovery  and  resilience  plan  provides  a 
description of the pension system, including the private pension scheme  Riester Rente, without 
binding  milestones  and  targets  or  specific  reforms  of  the  pension  system.  However,  the  plan 
commits  to  the  development  of  a  digital  pension  portal  (4.1.5)  which  is  expected  to  support 

41 

 
 
citizens  in  their  pension  planning  by  providing  an  overview  of  their  individual  pension  rights 
from all three pension pillars. 

While as of 2021, the fee scale for architects and engineers has been liberalised, and legislative 
processes are ongoing to liberalise some aspects of tax advice services, the plan does not include 
further  measures  to  address  the  country-specific  recommendation  to  strengthen  competition  in 
business services and regulated professions (CSR since 2011). 

The  priorities  of  the  plan  are  coherent  with  progress  on  the  relevant  country-specific 
recommendations. As evident from the juxtaposition of the proposed reforms and investments 
with the most imminent challenges to the German economy and society, the six priorities of the 
plan  focus  on  the  most  pressing  issues  and  are  expected  to  contribute  significantly  and 
effectively to the resolution of these challenges.  

Addressing  these  challenges  could  boost  Germany’s  growth  potential  in  a  sustainable 
manner. With a fast-ageing population, potential growth in Germany is on a long-term declining 
trend. Investment bottlenecks, such as inadequate administrative capacity for public investment 
and  procurement,  overly  complex  procedures,  and  insufficient  planning  capacities,  have  been 
holding  back  investment  –  another  driver  of  potential  growth  –  for  years.  In  addition,  the  low 
level of digitalisation and patchy coverage of very high-speed broadband have a negative impact 
on  investment.  The  reforms  in  the  plan  to  reduce  barriers  to  investment,  together  with  the 
relevant  investments  into the green and digital  transitions,  have the potential  to  boost potential 
growth  in  the  long-term  in  a  sustainable  manner,  beyond  the  short  time  span  of  the  fiscal 
stimulus.  

Taking into consideration the reforms and investments envisaged by Germany, its recovery and 
resilience  plan  is  expected  to  contribute  to  effectively  addressing  all  or  a  significant  subset  of 
challenges  identified  in  the  country-specific  recommendations,  or  challenges  in  other  relevant 
documents officially adopted by the Commission under the European Semester, and the recovery 
and  resilience  plan  represents  an  adequate  response  to  the  economic  and  social  situation  of 
Germany. This would warrant a rating of A under the assessment criterion 2.2 in Annex V to the 
RRF Regulation. 

42 

 
 
 
 
Table 5. Mapping of country challenges identified in 2019-20 country-specific recommendations 
and components in Germany’s recovery and resilience plan 

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○  ○  ○  ○  ○  ○  ○  ○  ○  ● 

  ● 

  ● 

  ○  ○ 

  ● 

  ●  ● 

  ○ 

  ○ 

●  ●  ● 
●  ● 

  ○ 

  ●  ●  ● 

  ○ 
  ● 
  ○ 
  ●  ●  ○ 

○ 

  ●  ○ 

○ 

Country challenges 
(as identified in Section 2) 

Fiscal policy and fiscal governance 

Sustainability and adequacy of pensions 

Associated CSR (2019-
2020) and European 
Semester 
recommendations 

Public finances  
2019.1.1 ; 2020.1.1; 
2020.2.2 
2019.2.4 

Labour market, education and social policies 

Disincentives to work, tax burden on 
labour 
Wages and wage setting 
Health and long-term care 
Education, skills, including for 
disadvantaged groups 

2019.1.8; 2019.2.1, 
2019.2.2, 2019.2.3 
2019.2.5 
2020.1.2 
2019.1.2, 2019.2.6, 
2020.2.5 and 2020.2.7 

Investment and structural polices 

Energy systems 
Sustainable transport 
Housing 
Digitalisation and digital infrastructure 

Research and innovation 
Competition in business services and 
regulated professions 

2019.1.6; 2020.2.4 
2019.1.5; 2020.2.3 
2019.1.7; 2020.2.6 
2019.1.4; 2020.2.5; 
2020.2.10 
2019.1.3; 2020.2.8 
2019.1.9 

Public administration and business climate 

Digitalise the public administration 
Reducing the regulatory and 
administrative burden 
Key: “●” investments and reforms of the component significantly address the challenge; “○” the 
component partially addresses the challenge 

2020.2.11 

2020.2.9 

  ○ 

○ 

●  ○ 
● 

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.3. Growth  potential,  job  creation,  economic,  institutional  and  social  resilience, 
European  Pillar  of  Social  Rights,  mitigating  the  impact  of  the  crisis,  and  social 
territorial cohesion and convergence 

Fostering economic growth and jobs 

The  plan  aims  to  accelerate  the  economic  recovery  in  Germany  by  implementing 
investments in physical and human capital and adopting reforms. By improving Germany’s 
growth  potential,  creating  jobs  and  increasing  economic,  social  and  institutional  resilience,  the 
measures  included  in  the  plan  are  expected  to  ultimately  reduce  the  country’s  vulnerability  to 
shocks. The plan is a resolute contribution to the green and digital transition and gives effect to 
the EU ambition in these fields. It actively contributes to the implementation of the EU update of 
the 2020 new industrial strategy26. The three planned IPCEIs on hydrogen, microelectronics, and 
cloud,  edge  and  data  processing  are  expected  to  develop  and  industrially  deploy  the  next 
generation  of  green  and  secure  digital  capabilities  to  directly  contribute  to  economic  growth, 
competitiveness and resilience . The plan is also expected to contribute to the implementation of 
the European Pillar of Social Rights, including through the promotion of policies reducing child 
poverty  and  increasing  youth  employment,  and  help  Germany  further  in  being  an  inclusive 
society with good access to health care and a productive and sustainable economy. 

The  German  economy  has  weathered  the  COVID-19  crisis  relatively  well.  The  economic 
impact  of  the  COVID-19  pandemic  has  been  less  severe  than  initially  expected.  The  massive 
drop in GDP in the first half of 2020 was followed by a strong, if incomplete, rebound and the 
decline for the entire year turned out smaller than during the global financial crisis and smaller 
than the GDP decline in the rest of the EU on average. Employment in 2020 fell by 1.1%, while 
the  unemployment  rate  remained  among  the  lowest  in  the  EU,  significantly  aided  by  the 
expanded subsidy short-time work arrangement (Kurzarbeit) and other income support measures. 
Aggregate  household  disposable  income  remained  stable.  An  increase  in  the  saving  rate  was 
driven  by  forced  rather  than  precautionary  savings.  The  accumulated  savings  are  expected  to 
give  impetus  to  a  recovery  in  consumption  as  soon  as  the  public  health  situation  allows  it. 
Contact-intensive  sectors,  which  were  disproportionately  affected  by  containment  measures, 
account for a relatively small share of employment in Germany. On the other hand, a large part 
of  the  economy,  notably  industry,  was  spared  from  the  containment  measures  and  has  been 
recovering vigorously since the second half of 2020. Sentiment has also been improving steadily, 
indicating an imminent expansion of business investment. Overall, from a macroeconomic point 
of view, the economy is well set to return to the pre-crisis level of output towards the end of the 
year.  Levels  of  consumption  and  employment  are  expected  to  rebound  to  pre-pandemic  levels 
over the next year, as contact-intensive services take somewhat longer to return to their normal 
volume of activity. 

26 See European Commission, Updating the 2020 New Industrial Strategy, COM(2021) 350 final, 05.05.2021 

44 

 
 
                                                           
German  authorities  responded  to  the  economic  fallout  of  the  COVID-19  pandemic  using 
established  policy  tools.  Ample  fiscal  space  allowed  providing  subsidies  and  financial 
assistance  to  firms,  which  helped  avoid  a  large  wave  of  insolvencies.  The  overall  decline  in 
investment has remained contained. Subsidised short-term work (Kurzarbeit) has also prevented 
large-scale  lay-offs  and  an  erosion  of  firm-specific  human  capital.  Combined  with  automatic 
stabilisers  built  into  the  tax  and  social  benefits  system  and  with  targeted  social  transfers,  the 
scheme  was  also  effective  in  cushioning  the  income  loss,  including  for  poorer  households. 
Increased  benefits  and  Kurzarbeit  together  were  making  up  for  80%  of  the  income  losses 
households suffered from  COVID-19 (Christl et al.,  2021). This  way, the immediate impact  of 
the crisis was mitigated using the standard set of policy tools. The measures of the plan, while 
expected to provide an additional boost to output and employment growth in the short term and 
speed  up  the  economic  recovery,  are  primarily  focused  on  addressing  structural  challenges  to 
long-term growth, innovation capacity, and inclusiveness. 

Despite  being  a  highly  developed,  resilient  economy  offering  effective  social  protection, 
Germany  still  faces  challenges  in  ensuring  sustainable  and  more  inclusive  long-term 
growth.  Policy  analysis  by  international  and  German  institutions  as  well  as  the  German 
authorities  have  identified  a  need  to  boost  productivity  growth,  innovation  and  equality  of 
opportunity  and  stepping  up  the  green  and  digital  transition.  Barriers  to  public  and  private 
investment  are  still  a  relevant  issue.  The  country  is  at  risk  of  falling  behind  on  its  innovation 
capacity  and  R&D  activity,  in  particular  concerning  SMEs.  Regarding  digitalisation,  there  is 
significant untapped scope for the further deployment of high-capacity data networks, a stronger 
integration  of  digital  technologies  into  the  public  and  private  sector,  and  the  dissemination  of 
digital  skills.  Furthermore,  Germany  needs  to  step  up  its  efforts  to  reach  the  renewables  and 
energy  efficiency  targets,  in  order to  achieve  carbon-neutrality by  2050  - and  even more so as 
this target is expected to be advanced to 2045 (see Section 2).  

The  recovery  and  resilience  plan  includes  measures  addressing  these  challenges  in  a 
coherent way and convincingly demonstrates how they could benefit potential growth and 
job  creation.  The  plan  comprises  a  varied  mix  of  investments  and  investment  support 
(decarbonisation, climate-friendly mobility and housing, digitalisation), expenditure into human 
capital  (education, healthcare) and reforms  of  the  public administration, including an emphasis 
on  removing  barriers  to  investment.  The  synergy  between  more  investment  in  future-oriented 
technologies  (green  and  digital),  higher  quality  of  human  capital  and  better  governance  is 
expected to boost productivity growth, including in the long run, and potential output. With the 
help  of  a  state-of-the-art  economic  model,  similar  to  the  one  applied  by  the  Commission,  the 
effects are quantified in a rigorous way to plausibly demonstrate the improvements in output and 
productivity  growth  and  the  increasing  demand  for  labour  (job  creation)  that  stem  from  the 
measures included in the plan in the medium and long term  (Clemens et al, 2021). According to 
the model simulation results, the level of GDP is expected to be 0.13% higher than the baseline 
on average for the duration of the plan (2021-2026). The difference in the output level relative to 
the baseline is expected to ease to around 0.1 pps in 2027 and subsequently weaken further but 
remain  slightly  positive.  Productivity  is  expected  to  be  0.1%  higher  in  2022-2026  and  remain 
slightly  higher  than  baseline  in  the  long  run.    Considering  also  spill-over  effects  from  other 

45 

 
 
countries,  the  Commission’s  QUEST  model  finds  that  Germany’s  GDP  can  an  increase  by 
between  0.4%  and  0.7%  by  2026,  and  effects  could  be  stronger  considering  the  impact  of 
structural reforms (see Box 2). 

Box 2: Stylised NextGenerationEU impact simulations with QUEST - Germany 

Model simulations conducted by the Commission using the QUEST model show that the 
economic  impact  of  the  NextGenerationEU  (NGEU)  in  Germany  could  lead  to  an 
increase  of  GDP  of  between  0.4%  and  0.7%  by  202627.  After  20  years,  GDP  could  be 
0.2% higher. Spillovers account for a large part of such impact.  

According to these simulations, this would translate into up to 135 000 additional jobs. Cross 
border (GDP) spillovers account for 0.4 pps in 2026, showing the value added of synchronised 
expenditure  across  Member  States  (line  2).  Even  in  a  scenario  with  a  lower  productivity  of 
NGEU funds, it would still lead to a significant impact (line 3)28. 

Table: QUEST simulation results (%-deviation of real GDP level from non-NGEU case, 
linear disbursement assumption over 6 years)  
2021 

Scenario 

2027 

2022 

2023 

2024 

2025 

2026 

2028 

2029 

2030 

2040 

Baseline 

  of which spillover 

Low productivity 

0.5 

0.3 

0.2 

0.6 

0.4 

0.3 

0.6 

0.4 

0.3 

0.6 

0.4 

0.3 

0.7 

0.4 

0.3 

0.7 

0.4 

0.4 

0.6 

0.4 

0.3 

0.5 

0.3 

0.2 

0.4 

0.2 

0.2 

0.4 

0.2 

0.2 

0.2 

0.0 

0.1 

This stylised scenario does not include the possible positive impact of structural reforms, 
which  can  be  substantial.  A  model-based  benchmarking  exercise  shows  that  undertaking 
structural  reforms  that  would  result  in  halving  the  gap  vis-à-vis  best  performers  in  terms  of 
indicators of structural reforms could raise German GDP by 8% in 20 years’ time, compared to 
11% for the EU average. (Varga and in 't Veld, 2014)  

Due  to  the  differences  in  the  assumptions  and  methodology,  the  results  of  this  stylised 
assessment  cannot  be  directly  compared  to  the  numbers  reported  in  chapter  4  of 
Germany’s RRP.  

27  RRF  amounts  to  roughly  90%  of  NGEU,  which  also  includes  ReactEU,  Horizon,  InvestEU,  JTF,  Rural 
Development and RescEU. 
28 Technically, the low productivity scenario considers a significantly reduced output elasticity of public capital. 

46 

 
 
 
 
 
 
 
                                                           
The plan can be understood as additional to the expenditure policy currently in place. The 
bulk  of  the  response  to  the  economic  impact  of  the  pandemic  has  been  realised  within  the 
national  policy  framework,  without  resorting  to  EU  instruments.  The  overall  volume  of  the 
expected disbursements from the RRF to Germany of EUR 25.6 billion is rather small relative to 
the size of the economy (0.74% of 2019 GDP, spread over six years). Judging from information 
contained in the 2021 Stability Programme, the level of planned public capital expenditure is set 
to increase in subsequent years relative to 2020, even without considering the expenditures to be 
financed by the RRF. Furthermore, for most of the measures, additional funding will also come 
from national sources. 

Strengthening social cohesion 

The plan strengthens social cohesion through multiple measures and aims to contribute to 
the implementation of the principles of the European Pillar of Social Rights.  In particular, 
component 4.1 Strengthening social inclusion contains measures to reduce social vulnerabilities 
and strengthen social protection systems. For instance, to support parents and increase equality 
of  opportunity,  childcare  is  bolstered  by  providing  financial  support  to  the  Länder  to  create 
additional high-quality childcare capacities (4.1.1). Furthermore, pupils who have fallen behind 
because of the pandemic will receive additional teaching support (4.1.4). These efforts, targeted 
at pupils, are complemented by measures in component 3.1 Digitalization of education, some of 
which  is  expected  to  have  a  positive  effect  especially  on  vulnerable  groups.  To  support  the 
apprenticeship system, which has been negatively impacted by the pandemic, companies receive 
financial incentives to hire and retain apprentices (4.1.3), which hence contribute to fulfilling the 
Youth Guarantee.  With the  Social Guarantee 2021 (4.1.2), the plan contributes to  preventing a 
rise  in  non-wage  labour  costs,  which  have  remained  at  a  high  level  in  Germany,  by  capping 
social  security  contributions  at  40%.  The  plan  also  commits  to  developing  a  digital  pension 
portal (4.1.5), which aims to support citizens in their pension planning by providing an overview 
of their individual pension provisions from all three pension pillars. 

Germany’s relatively good results on  the Social Scoreboard are expected to be reinforced 
by the plan. Germany has been a relatively good performer according to the Social Scoreboard 
accompanying  the  European  Pillar  of  Social  Rights  (see  Box  3).  Still,  some  indicators  such  as 
early school leaving and persons not in education, employment or training (NEETs) have been 
deteriorating lately and hence the measures of the recovery and resilience plan mentioned above 
are particularly welcome.  

Reducing vulnerability and increasing resilience  

The  German  plan  includes  several  investments  and  reforms  to  increase  resilience  and 
reduce  vulnerabilities. The  pandemic  has  exacerbated  or  revealed  vulnerabilities,  for  instance 
regarding  the  digital  capacities  of  the  public  health  offices  and  public  administration,  which  is 
expected  to  be  bolstered  by  several  measures  in  the  plan.  Component  6.2  is  fully  dedicated  to 
reducing  barriers  to  investment,  which  can  help  provide  a  faster  and  more  forceful  economic 
response to future shocks. Furthermore, the support provided to the German industry to switch to 
climate-friendly technologies (see measures in components 1.1, 1.2 and 2.2) is expected to help 

47 

 
 
companies become more resilient to shocks from rising and volatile CO2 prices. Social resilience 
is improved through measures to strengthen social inclusion and on education.  

Component  6.2  Reducing  barriers  to  investment  is  expected  to  increase  Germany’s 
capacity to absorb economic shocks, if implemented well. Resistance to shocks is expected to 
increase as streamlined decision-making processes accelerate the implementation of investment 
projects. The reforms included in this component cover multiple areas, including the acceleration 
of  planning  and  approval  procedures,  which  have  already  been  partially  implemented  in  2020 
(6.2.3). Other reforms  are to  be developed by a  working  group that brings together the federal 
and Länder levels (6.2.1). These reforms include, for instance, the reinforcement of planning and 
approval authorities, accelerating the outflow of financial aid, targeted support to municipalities, 
and  streamlining  participation  procedures  through  digital  methods.  Since  these  reforms  can 
facilitate public and private investment, they can also contribute to narrowing the current account 
surplus. 

Component 6.1 Modern public administration aims to increase the resilience of the public 
administration  by  increasing  its  degree  of  digitalisation.  The  contact  restrictions  and 
lockdown  measures  in  response  to  the  pandemic  have  demonstrated  the  importance  of 
digitalising Germany’s public administration, as most public services cannot be accessed online 
yet.  The  Online  Access  Act  implementation  (6.1.2)  aims  to  make  hundreds  of  public  services 
digitally available by 2022 and is complemented by a measure to modernise registers (6.1.3), and 
a  measure  to  establish  a  European  ecosystem  for  online  identification  (6.1.1).  Germany’s 
ambition  to  implement  this  last  measure  on  a  European  scale  is  a  welcome  initiative, 
demonstrating a focus on maintaining interoperability with other Member States.  

Component  5.1  Strengthening  a  pandemic-resilient  health  system  aims  to  increase  the 
health  sector’s  resilience.  Public  health  offices  have  been  important  actors  in  tackling  the 
pandemic  in  Germany  and  have  been  significantly  lagging  behind  in  their  digitalisation  and  in 
terms  of  interoperability  of  data  systems  across  the  federal  states.  Modernising  public  health 
offices  (5.1.1)  aims  to  address  these  challenges  and  contribute  to  increasing  resilience. 
Furthermore,  the  overall  efficiency  gains  expected  from  a  large  measure  to  digitalise  hospitals 
(5.1.2)  can  bolster  the  healthcare  system  and  emergency  capacities.  The  plan  also  contains  a 
measure  dedicated  to  vaccine  research  (5.1.3),  which  has  proven  to  be  a  key  instrument  for 
overcoming the pandemic and has made the economy and the society more resilient. 

Components  3.1  Digitalisation  of  education  and  4.1  Strengthening  social  inclusion  are 
expected  to  improve  social  resilience  and  adaptability.  Improving  the  operation  of  the 
education  system  by  providing  digital  devices  for  teachers  (3.1.1),  making  improved  teaching 
methodologies available (3.1.3) and helping availability of digital educational material (3.1.2) is 
expected  to  lead  to  improved  performance.  These  efforts  may  be  particularly  successful  if 
coupled  with  flanking  measures  caring  for  the  more  vulnerable,  such  as  additional  support  for 
students with learning backlogs (4.1.4). 

Cohesion and convergence  

48 

 
 
The  plan  is  expected  to  contribute  considerably  to  social  cohesion,  while  territorial 
cohesion  and  convergence  is  addressed  in  a  rather  implicit  way.  Components  3.1 
Digitalisation of education and 4.1 Strengthening social inclusion improve education and skills, 
particularly aiming to support students with learning gaps (4.1.4). Component 5.1 Strengthening 
a  pandemic-resilient  healthcare  system  is  expected  to  facilitate  access  to  healthcare  and  thus 
contribute to social cohesion, also benefitting hospitals (5.1.2) and public health offices (5.1.1) in 
remoter areas and in challenged urban areas where backlogs are particularly prevalent. 

Cross-border projects are expected to contribute to convergence across the EU. Germany, 
together  with  France,  initiated  planned  IPCEIs  open  to  all  Member  States  (1.1.1,  2.1.2,  2.1.3). 
With an allocation of EUR  3.8 billion, the plan gives a considerable impetus for these projects 
with  the aim to  create an integrated EU-wide market  for hydrogen production including cross-
border transport infrastructure, to lay down the foundations for the next generation edge, cloud 
infrastructure  and  services,  and  to  improve  the  EU’s  standing  on  selected  microelectronic 
communication technologies. 

49 

 
 
 
Box 3: Employment and social challenges in light of the Social Scoreboard accompanying the 
European Pillar of Social Rights 

The  Social  Scoreboard  supporting  the  European  Pillar  of  Social  Rights  points  to  relatively  few 
employment and social challenges in Germany. Due to the COVID-19 pandemic and the measures to 
contain it, Germany’s economy contracted by 4.8% in 2020, after 10 years of expansion. However, the 
extended  regulations  on  short-time  work  helped  prevent  dismissals  on  a  larger  scale.  The  decrease  in 
employment was limited to 1.1% in 2020 while compensation of employees increased by 0.5% after a 
3.0% increase the year before. Germany’s well 
developed  social  protection  system  and  well-
social  dialogue  also  helped 
established 
the  COVID-19 
mitigate 
pandemic.  Although 
the  employment  rate 
among women is one of the highest in the EU 
and  the  gender  employment  gap  is  below  the 
EU  average,  Germany  has  one  of  the  highest 
part-time  employment  rates  among  women, 
accompanied  by  a  wide  gender  pay  gap  (also 
reflecting  differences  in  the  number  of  hours 
worked).  The  rate  of  early  leavers  from 
education and training has not improved since 
2016 and is above the EU average.  

impact  of 

the 

to 

full-time 
insufficient  provision  of 
The 
school 
facilities 
childcare  and  all-day 
contribute 
labour  market 
lower 
attainment  among  women.  The  employment 
rate of women with children younger than 6 is 
21.7 pps  lower  than  that  of  women  without 
children,  one  of  the  widest  differences  in  the 
EU  (where  the  average  is  9 pps).  Despite 
ambitious  measures 
the 
increasing  demand  for  childcare  and  provide 
more places in all-day schools, with 31.4% of 
children  under  3  in  formal  childcare  in  2019, 
the  country  remains  below  the  EU  average  of 
35.3%  and  the  Barcelona  target  of  33%. 
Ensuring  the  quality  of  childcare  provision 
remains essential too.  

respond 

to 

to 

Poverty  has  been  gradually  decreasing  in 
the  years  before  the  COVID-19  pandemic. 
In 2019, the at risk of poverty or social inclusion rate fell further to 17.4%, well below the EU average 
of 20.7%. Social transfers are impactful; they reduced the number of people at risk of poverty by over 
one  third  (36.2%),  which  is  above  the  EU  average  (32.4%).  Even  though  poverty  figures  suggest 
improvements  in  recent  years  and  the  tax  and  transfer  system  provided  support,  the  COVID-19 
pandemic is likely to have increased vulnerabilities.  

The recovery and resilience plan submitted by Germany addresses a multitude of employment and 

50 

Critical situationTo watchWeak but improvingGood but to monitorOn averageBest performersEqual opportunities and access to the labour marketDynamic labour markets and fair working conditionsSocial protection and inclusionSocial Scoreboard for GERMANYEarly leavers from education and training (% of population aged 18-24) (2020)Youth NEET (% of total population aged 15-24) (2020)Gender employment gap (2020)Income quintile ratio (S80/S20) (2019)At risk of poverty or social exclusion (in %) (2019)Employment rate (% population aged 20-64) (2020)Unemployment rate (% population aged 15-74) (2020)Long term unemployment (% population aged 15-74) (2020)GDHI per capita growth (2019)Net earnings of a full-time single worker earning AW (2019)Better than averageUpdate of 29 April 2021. Members States are classified on the Social Scoreboard according to a statistical methodology agreed with the EMCO and SPC Committees. It looks jointly at levels and changes of the indicators in comparison with the respective EU averages and classifies Member States in seven categories. For methodological details, please consult the Joint Employment Report 2021; NEET: neither in employment nor in education and training; GDHI: gross disposable household income.Impact of social transfers (other than pensions) on poverty reduction (2019)Children aged less than 3 years in formal childcare (2019)Self-reported unmet need for medical care (2019)Individuals' level of digital skills (2019) 
 
social  challenges  relevant  for  the  implementation  of  the  Pillar.  To  foster  equal  opportunities  and 
access  to  the  labour  market  and  to  reduce  disincentives  to  work  for  second  earners,  mainly  women, 
Germany  is  expected  to  expand  quality  child  day-care  facilities  (4.1.1).  To  improve  labour  market 
dynamics, skills, and working conditions, a digital education platform (3.1.2) and educational centres of 
excellence  (3.1.3)  are  put  forward,  which  are  expected  to  improve  access  to  the  labour  market. 
Introducing a cap on social security contributions to prevent increases in the labour tax wedge (4.1.2) 
provides  a  solution  at  least  for  2021.  Finally,  the  plan  fosters  resilience  of  the  health  system  and  its 
accessibility by stepping up its digitalisation. 

Taking into consideration all reforms and investments envisaged by Germany, its recovery and 
resilience  plan  is  expected  to  have  a  high  impact  on  strengthening  the  growth  potential,  job 
creation, and economic, social and institutional resilience of the Member State, on contributing 
to the implementation of the European Pillar of Social Rights, including through the promotion 
of  policies  for  children  and  youth,  and  on  mitigating  the  economic  and  social  impact  of  the 
COVID-19  crisis,  thereby  enhancing  the  economic,  social  and  territorial  cohesion  and 
convergence within the Union. This would warrant a rating of A under the assessment criterion 
2.3 of Annex V to the RRF Regulation. 

4.4. The principle of ‘do no significant harm’ 

Germany’s  recovery  and  resilience  plan  assesses  compliance  with  the  ‘do  no  significant 
harm’ (DNSH) principle. The assessment follows the methodology set out in the Commission’s 
Technical  guidance  on  the  application  of  ‘do  no  significant  harm’  under  the  Recovery  and 
Resilience Facility Regulation (2021/C 58/01). It covers the six environmental objectives within 
the meaning of Article 17 of Regulation (EU) No 2020/852, namely climate change mitigation, 
climate change adaptation, sustainable use and protection of water and marine resources, circular 
economy,  pollution  prevention  and  control,  and  protection  and  restoration  of  biodiversity  and 
ecosystems.  The  environmental  impact  is  assessed  at  measure-level,  i.e.  one  individual 
assessment per reform or investment.  

Each  DNSH  assessment  follows  a  two-step  approach.  In  step  one,  the  potential  risk  that  a 
measure  could  do  significant  harm  to  any  of  the  environmental  objectives  is  assessed.  When 
there  is  no  risk  of  significant  harm,  the  measure  assessed  complies  with  the  objective  of  the 
Regulation. When a risk of significant harm is identified, a more detailed assessment follows in 
step  two,  in  which  Germany  must  demonstrate  the  absence  of  significant  harm.  Results  of  the 
two-step approach are often conflated into one table for conciseness.  

A  significant  part  of  Germany’s  plan  is  devoted  to  decarbonisation  notably  through 
renewable  hydrogen.  Component  1.1  and  the  measure  providing  support  to  the  vehicle  and 
supply  industry  for  hydrogen  and  fuel  cell  applications  in  transport  (1.2.7)  are  central  to  this 

51 

 
 
 
effort. Electricity generation is not yet a climate-neutral activity, but as set out in the Technical 
guidance on the application of DNSH under the Recovery and Resilience Facility Regulation29, 
the deployment of electrification technologies and infrastructure including hydrogen is required 
for  a  climate-neutral  economy  and  should  be  considered  to  comply  with  DNSH  if  a  policy 
framework for electricity decarbonisation and the development of renewables is already in place 
in  the  relevant  Member  State.  In  that  respect,  the  plan  recognises  that  the  demand  for 
(renewable)  electricity  linked  to  support  for  green  hydrogen  production  should  not  lead  to  an 
increase in CO2 emissions and sets out a related monitoring for the development of the demand 
for renewable hydrogen. Notably, the plan indicates the efforts to promote the energy transition 
by promoting renewable energy, which have been operationalised through the Renewable Energy 
Act (EEG) and other measures.  

Germany’  plan  also  puts  a  strong  emphasis  on  climate-friendly  mobility.  Despite  the 
positive  decarbonising  effect  on  the  transport  sector,  battery  production  and  recycling  may 
conflict  with  the  circular  economy  objective.  The  plan  therefore  stresses  that  the  measure 
Support for the replacement of the private vehicle fleet (1.2.3) will comply with the End-of-Life 
Vehicles  Directive30,  which  specifies  that  residuals  must  be  used  according  to  the  waste 
hierarchy. 

Germany’s  recovery  and  resilience  plan  puts  a  particular  focus  on  energy  renovation 
(component 1.3). While such renovation reduces emissions overall, it usually creates significant 
amounts of construction waste. Germany therefore ensures no significant  harm will be done to 
the  circular  economy  objective  by  detailing,  in  the  measure  on  energy-efficient  buildings’ 
renovation  (1.3.3),  that  at  least  70%  of  the  non-hazardous  construction  and  demolition  waste 
generated  on  the  construction  sites  by  weight  will  be  prepared  for  re-use,  recycling,  and  other 
material recovery.  

The  plan  also  includes  several  regulatory  reforms  (e.g.  components  6.1  and  6.2)  and  measures 
related  to  education  (component  3.1)  and  health  (component  5.1).  The  DNSH  assessment 
indicates  that  their  environmental  impacts  are  negligible  and  that  they  are  expected  to  do  no 
significant  harm  to  any  of  the  six  environmental  objectives.  Concerns  linked  to  the  circular 
economy  and the acquisition of  IT equipment  are also  covered  for instance for the Digital  and 
technical strengthening of the public health service (5.1.1) 

Measures  whose  impact  on  the  environmental  objectives  necessitate  close  scrutiny  are 
given  special  consideration.  Under  measures  1.1.2  and  1.1.3  support  may  be  provided  to 
installations covered by the EU emissions trading system (ETS). DNSH compliance is ensured 
by the fact that only projects with emissions substantially below ETS benchmark are eligible for 

29 2021/C 58/01, Commission Notice Technical guidance on the application of ‘do no significant harm’ under the 
Recovery and Resilience Facility Regulation, 12 February 2021. 
30  Directive  2000/53/EC  of  the  European  Parliament  and  of  the  Council  of  18  September  2000  on  end-of  life 
vehicles. 

52 

 
 
                                                           
support  under  the  measures.  Regarding  the  support  for  purchases  of  buses  with  alternative 
propulsion (1.2.5), it is to be noted that the financing of buses to be fueled with biomethane will 
remain limited. The share of gas buses has steadily decreased in recent years to currently around 
2%  of  all  city  buses  in  use.  The  fuels  used  by  the  supported  gas  buses  will  comply  with  the 
requirements  of  the  Renewable  Energy  Directive  (EU)  2018/2001  (REDII),  in  particular  its 
Articles 29 to 31 on sustainability and greenhouse gas emission saving criteria and Article 26 on 
the rules for food and feed based biofuels. 

Regarding  the  vehicle  manufacturer/supply  industry  investment  programme  (2.2.1),  the  plan 
specifies  that  only  future  investments  that  make  a  significant  contribution  to  the  programme’s 
digitalisation  and  climate  objectives  will  be  supported,  therefore  targeted  support  for  fossil 
combustion engine technologies in the vehicle sector is excluded under the measure. Regarding 
the support to promote alternative rail propulsion (1.2.6), hybrid locomotives will only represent 
a fifth of the measure in costs and will only be financed for shunting in freight transport where 
no fully electric offers exists. Moreover, hybrid locomotives will only be used where bi-modes 
locomotives  cannot.  Under  the  measure  on  building  renovation,  providing  federal  funding  for 
energy-efficient  buildings  (1.3.3),  gas-fired  boilers  can  also  be  financed,  albeit  limited  to 
replacing coal and oil-based heating systems. According to the DNSH assessment the investment 
is  expected  to  lead  to  a  significant  reduction  of  air  emissions  and  an  improvement  in  public 
health  in  areas  where  the  EU  air  quality  standards  laid  down  in  Directive  2008/50/EU  are  or 
could be exceeded. Also, in line with the Technical guidance on the application of DNSH under 
the Recovery and Resilience Facility Regulation, the investment in gas condensing boilers is part 
of a broader building renovation programme to improve energy efficiency in line with the long-
term renovation strategies under the Energy Performance of Buildings Directive and leads to  a 
significant improvement in energy performance. Finally, photovoltaic modules will be installed 
together with the gas boilers during these renovations.  

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  no  measure  for  the 
implementation of reform and investment projects included in Germany's recovery and resilience 
plan is expected to do significant harm to environmental objectives within the meaning of Article 
17  of  Regulation  (EU)  No  2020/852  (the  principle  of  ‘do  no  significant  harm’).  This  would 
warrant a rating of A under the assessment criterion 2.4 of Annex V to the RRF Regulation 

4.5. Green transition 

Germany’s plan correctly follows the methodology for climate tracking set out in Annex VI 
to the RRF Regulation by identifying intervention fields and corresponding coefficients for 
the  calculation  of  support  to  the  climate  objectives,  for  each  measure.  It  should  be  noted 
that: 

 

 

the  measures  of  the  plan  often  consist  of  several  sub-measures;  for  these  measures,  the 
plan  indicates  an  intervention  field  for  each  sub-measure  and  computes  the  climate 
contribution at sub-measure level; 
the choice of intervention fields for the climate transition is well justified and reflects the 
nature, focus, objective or expected outcome of the investments; and 

53 

 
 
 

the plan does not propose to increase the climate coefficient for any measure. 

54 

 
 
 
 
Table 6 Climate contribution per component  

Component 

Total 
cost  

Climate-
related 

Climate contribution  

(EUR million) 

as % of the 
cost of the 
component 

as % of the non-
repayable 
allocation 

1.1  Decarbonisation  using  renewable 
hydrogen in particular 
1.2 Climate-friendly mobility 
1.3  Climate-friendly  renovation  and 
construction 
2.1  Data  as  the  raw  material  of  the 
future 
2.2 Digitalisation of the economy 
3.1 Digitalisation of education 
4.1 Strengthening social inclusion 
5.1Strengthening a pandemic-resilient 
healthcare system 
6.1 Modern public administration 

3 138 

5 329 

2 574 

2 684 

3 019 
1 206 
1 174 

4 434 

2 920 

6.2 Reducing barriers to investment 

42 

3 138 

4 602 

2 523 

150 

460 
0 
0 

0 

0 

0 

100% 

86% 

98% 

6% 

15% 
0% 
0% 

0% 

0% 

0% 

12.2% 

18.0% 

9.8% 

0.6% 

1.8% 
0.0% 
0.0% 

0.0% 

0.0% 

0.0% 

26 519 

Total (net of VAT) 
Note:  The  table  shows  the  cost  of  the  components  without  VAT.  For  some  measures  Germany  indicated  that  the 
gross costs may include VAT, which for this table was deducted assuming that the full VAT rate of 19% applies. 
This results in a potentially lower estimate  for the  measure cost  without VAT. Reflecting this, the contribution to 
climate  purposes  is  estimated  to  be  at  least  42.4%.  For  further  details,  please  see  the  tagging  at  measure  level  in 
Annex 1.  

10 873 

42.4% 

41% 

Measures supporting climate change objectives in Germany’s recovery and resilience plan 
account for at least EUR 10 872 502 168 which represents at least 42.4% of the plan’s total 
allocation.  Five  of  the  10  components  in  the  recovery  and  resilience  plan  include  expenditure 
that contributes to the climate objectives. 

Component  1.1  Decarbonisation  using  renewable  hydrogen  in  particular  provides  the 
largest  contribution  to  the  climate  mitigation  objective.  All  of  the  seven  measures  of  the 
component  are  fully  counted  towards  the  climate  target  as  they  all  aim  to  develop  green 
hydrogen.  Most  measures  operate  at  various  stages  of  hydrogen  development  (research, 
production  and  use)  but  ultimately  aim  to  mitigate  climate  change.  Other  measures  aim  at 
developing decarbonisation solutions  in  general  without limitation  to  hydrogen. With a cost  of 
EUR 1.5 billion, the planned Hydrogen IPCEIs (1.1.1) make the second biggest contribution to 
climate protection and aims to accelerate the necessary market uptake of hydrogen by supporting 
integrated  projects  along  the  entire  value  chain.  This  effort  is  complemented  by  supporting 
flagship  projects  for  research  and  innovation  in  the  context  of  the  National  Hydrogen  Strategy 
(1.1.5)  and  the  development  of  carbon  neutral  production  processes  in  hard-to-decarbonise 

55 

 
 
industrial sectors (1.1.2 and 1.1.4), including a pilot scheme for climate action contracts based on 
the principle of carbon contracts for difference (1.1.3) and measures more specifically oriented 
towards SMEs and research (part of 1.1.4).  

The  second  largest  contribution  to  the  climate  target  is  provided  by  component  1.2 
Climate-friendly  mobility.  The  biggest  contribution  under  that  component  results  from  the 
support for the replacement of the private vehicle fleet (1.2.3). This effort is complemented by 
support for the construction of recharging infrastructure for the deployment of a Germany-wide 
network  (1.2.1).  The  promotion  of  the  purchase  of  alternative-powered  buses  and  related 
refuelling  or  recharging  infrastructure  (1.2.5)  also  represents  an  important  contribution  to  the 
climate  target  in  that  component.  These  more  sizable  measures  are  complemented  by  smaller 
ones with a full climate tag such as the extension of the initial registration period for granting the 
ten-year  tax  exemption  for  purely  electric  vehicles  (1.2.4),  the  funding,  for  the  vehicle  and 
supplier industry, of hydrogen and fuel cell applications, and the creation of a Technology and 
Innovation Centre for Fuel Cell Technology (1.2.7). 

A  third  important  part  of  the  plan’s  climate  contribution  comes  from  component  1.3 
Climate-friendly  renovation  and  construction,  devoted  to  energy  efficiency  renovation. 
With an associated cost of EUR 2.5 billion, the measure Building renovation: federal funding for 
energy-efficient  buildings  (1.3.3)  represents  the  biggest  contribution  of  the  plan  to  the  climate 
target.  This  is  a  broad  energy-efficient  building  renovation  programme  which  is  expected  to 
deliver  energy  savings  of  at  least  30%  during  its  implementation  under  the  RRF.  It  is 
complemented  by  municipal  living  laboratories  for  the  energy  transition  (1.3.2)  which  will 
explore  the  use  of  new  solutions  for  efficient  and  sustainable  energy  supply  in  urban 
neighbourhoods through pilot projects.  

Other measures linked to the digital transition also contribute to the plan’s climate target 
(components 2.1 and 2.2). This includes two measures: the planned  IPCEI on next generation 
cloud infrastructure and services (2.1.3) and some parts of programme for vehicle manufacturers 
and  suppliers  (2.2.1)  which  will  target  carbon  emission  reductions  but  also  energy  efficiency 
improvements. 

Green transition 

The implementation of the measures in Germany’s recovery and resilience plan is expected 
to effectively contribute to the green transition and to addressing the challenges associated 
with this transition. The plan supports the decarbonisation and energy transition objectives of 
Germany  as  set  out  in  the  National  Energy  and  Climate  Plan  (NECP).  In  its  NECP,  Germany 
commits  to  reducing  GHG  emissions  (38%  reduction  compared  to  2005),  increasing  energy 
efficiency  (30%  reduction  in  primary  energy  consumption),  and  increasing  renewable  energy 
(30%  renewables  in  gross  final  energy  consumption)31.  Together  with  the  NECP,  the  German 

31 For a comprehensive assessment of the German NECP, see Economidou et al.(2020). 

56 

 
 
                                                           
Climate  Action  Plan  2050  ensures  coherence  between  the  energy  and  climate  areas,  and  the 
interconnection with the green and energy transition dimension of the investments envisaged in 
the recovery and resilience plan. 

The  recovery  and  resilience  plan  contributes  to  the  commitments  made  in  the  National 
Energy  and  Climate  Plan  and  the  Roadmap  for  Carbon  Neutrality  2050  across  various 
components: 

Component  1.1  Decarbonisation  using  renewable  hydrogen  in  particular  is  expected  to 
contribute as a primary goal to the objective of GHG emission reduction as defined in the 
German NECP with a focus on the industry. Sustainable CO2-free hydrogen that is produced 
using renewable energy can play an important role in achieving energy and climate targets and in 
the decarbonisation of the economy. The plan notably provides that specific integrated projects 
along  the  entire  hydrogen  value-added  chain  is  planned  to  be  promoted  within  the  scope  of 
hydrogen  projects  within  the  framework  of  planned  IPCEIs  (1.1.1).  With  a  focus  on  energy-
intensive industries, the funding programme for the decarbonisation in industry plans to reduce 
process-related industrial emissions by supporting research and development, testing in test and 
pilot facilities and investments in CO2-reducing facilities (1.1.2). To support the higher operating 
costs required  for innovative decarbonising technologies, the plan  also  includes a pilot  scheme 
for climate action contracts based on the principle of carbon contracts for difference (1.1.3). 

Component 1.2 Climate-friendly mobility is also expected to support Germany in reaching 
its  GHG  emission  reduction  targets,  with  a  focus  on  the  transport  sector.  Support  for  the 
construction of charging infrastructure (1.2.1) as well as sub-measures in 1.2.2, 1.2.5, and 1.2.7 
should  support  the  market  ramp-up  of  battery-  and  hydrogen-based  vehicles.  The  plan  is 
expected  to  also  support  the  funding  for  the  development  of  electro-mobility  (1.2.2)  and  the 
support  scheme  for  e-vehicles  (1.2.3)  is  expected  to  directly  boost  demand  for  these  types  of 
passenger  cars  and  close  existing  gaps  in  the  area  of  research  and  development  by  means  of 
targeted support. This is complemented by a reform of vehicle taxation with a tax exemption for 
purely  electric vehicles (1.2.4) and by promoting  the vehicle and supply industry for hydrogen 
and  fuel  cell  applications  in  transport  (1.2.7).  Other  measures  within  this  component  aim  to 
promote purchases of buses with alternative propulsion (1.2.5) and alternative propulsion in rail 
transport (1.2.6). 

Component  1.3  Climate-friendly  renovation  and  construction  is  expected  to  strongly 
contribute to Germany’s contribution to the Union’s energy efficiency targets as set in its 
NECP. This component generally has a strong focus on the EU flagship Renovate. The aim of 
the  measure  Building  renovation:  federal  funding  for  energy-efficient  buildings  (1.3.3)  is  to 
encourage investments that will improve energy efficiency and increase the share of renewable 
energies in the end energy consumption of buildings. Compared to its predecessor scheme it will 
step  up  emission  savings  thanks  to  increased  support  for  renewable  energy  heating  systems, 
smart home solutions, renovations to very high efficiency classes and the abolition of support for 
lower  classes  of  energy  performance.  Municipal  living  labs  for  the  energy  transition  (1.3.2)  is 
also expected to contribute to these targets by supporting energy-optimised urban district projects 
(see Shnapp et al. 2020) as blueprints for the roll-out of efficient and integrated energy solutions 

57 

 
 
to achieve emission reductions in urban districts. The GHG emission reduction potential of those 
measures is expected to be reinforced by Germany’s carbon pricing policy. 

These measures contribute to the green transition and to some degree to the protection of 
the  environment,  e.g.  by  promoting  circularity  in  the  renovation  measure  (1.3.3)  and  by 
improving  air  quality  standards  through  the  measures  in  the  climate-friendly  mobility 
component  (1.2).  The  plan  does  not  contain  any  measure  directly  addressing  biodiversity. 
However,  some  measures  for  climate  mitigation  contained  in  the  plan  may  also  indirectly  be 
beneficial  to  biodiversity  given  that  climate  change  is  one  of  the  main  threats  to  biodiversity. 
Germany has carried out a systematic do-so-significant-harm assessment indicating that none of 
the  proposed  measures  generates  harm  to  the  protection  and  restoration  of  biodiversity  and 
ecosystems. The recovery and resilience plan supports Germany in meeting the national energy 
and climate targets set out in its NECP and in the German Climate Action Plan 2050 and thus in 
achieving carbon neutrality in 2050/2045. 

Measures can generally be expected to have a positive long-term impact on environmental 
objectives.  Regarding  the  funding  programme  for  decarbonisation  in  industry  (1.1.2), 
calculations by DIW annexed to the plan estimate that the measure will save 562 500 tonnes of 
CO2 equivalent per year in the long term, resulting in emission savings of 11.25 million tonnes 
over an approximate lifetime of 20  years (Clemens et  al,  2021). Regarding the funding for the 
development  of  electro-mobility  (1.2.2),  this  independent  study  annexed  to  the  plan  concludes 
that through the investment volume of EUR 75 million allocated to this measure, the plan could 
support  the  deployment  of  around  3 275  electric  vehicles  and  1 823  recharging  points,  which 
‘would result in  an approximate emission saving of around 98 250 tonnes of CO2 assuming an 
average  life  span  of  twelve  years’.  The  same  study  underlines  the  long-lasting  effect  of  the 
municipal  living  laboratories  for  the  energy  transition  (1.3.2).  A  living  lab  is  assumed  to  save 
approximately  200 000  tonnes  of  CO2  equivalent  per  year  on  average.  The  amount  financed 
under  the  recovery  and  resilience  plan  (EUR  57  million)  is  therefore  expected  to  prevent 
approximately 9.12 million tonnes of CO2 equivalent from being emitted in the long term.  

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  recovery  and 
resilience  plan  is  expected,  to  a  large  extent,  to  make  a  significant  contribution  to  the  green 
transition or to address the challenges resulting from it and ensures that at least 37% of its total 
allocation contribute to the climate target. This would warrant a rating of A under criterion 2.5 of 
Annex V to the RRF Regulation. 

4.6. Digital transition  

Digital tagging  

To  determine  the  contribution  of  the  proposed  measures  to  the  digital  transition  and  the 
challenges resulting from it, the methodology laid down in Annex VII to the RRF Regulation has 
been applied. 

It should be noted that: 

58 

 
 
  appropriate intervention fields have been selected for most of the measures; 
 

for a  few measures,  for  instance the  federal  programme ‘Building  continuing education 
and  training  networks’  (2.2.2)  and  the  apprenticeships  support  (4.1.3),  the  proposed 
digital tagging could have been more substantiated (or else, the measure could have been 
broken down into a digital and a non-digital part); 
the plan does not propose to increase the digital coefficients for any measure. 

 

Overall, based on the methodology, the contribution to digital objectives accounts for more 
than half of the recovery and resilience plan’s total allocation, which is far above the 20% 
target  set  by  the  Regulation.  Out  of  the  ten  components  of  the  plan,  six  include  measures 
directly  supporting  the  digital  transition  or  addressing  related  challenges.  The  most  important 
contributions  come  from  components  addressing  the  modernisation  of  the  health  system  (5.1) 
and  of  the  public  administration  (6.1),  followed  by  the  two  components  addressing  the 
digitalisation of the economy (2.2), and data and advanced technologies (2.1) respectively.  

Table 7 –Digital contribution per component  

Component 

Total cost  

Digital-
related 

Digital contribution  

(EUR million) 

as % of the cost 
of the 
component 

as % of the non-
repayable 
allocation 

0 

0 

0 

0% 

0% 

0% 

0.0% 

0.0% 

0.0% 

2 684 

2 684 

2 574 

5 329 

3 138 

100% 

1.1 Decarbonisation using renewable 
hydrogen in particular 
1.2 Climate-friendly mobility 
1.3  Climate-friendly  renovation  and 
construction 
2.1  Data  as  the  raw  material  of  the 
future 
2.2 Digitalisation of the economy 
3.1 Digitalisation of education 
4.1 Strengthening social inclusion 
5.1  Strengthening  a  pandemic-
resilient healthcare system 
6.1 Modern public administration 
6.2 Reducing barriers to investment 
Total (net of VAT) 
Note:  The  table  shows  the  cost  of  the  components  without  VAT.  For  some  measures  Germany  indicated  that  the 
gross costs may include VAT, which for this table was deducted assuming that the full VAT rate of 19% applies. 
This results in a potentially lower estimate  for the  measure cost  without VAT. Reflecting this, the contribution to 
climate  purposes  is  estimated  to  be  at  least  52.6%.  For  further  details,  please  see  the  tagging  at  measure  level  in 
Annex 1.  

2 920 
42 
26 519 

2 920 
0 
13 476 

11.4% 
0.0% 
52.6% 

10.4% 
4.7% 
1.2% 

100% 
0% 
51% 

88% 
100% 
27% 

3 019 
1 206 
1 174 

2 664 
1 206 
319 

14.4% 

10.5% 

4 434 

3 684 

83% 

Digital transition  

59 

 
 
  
With  a  significant  share  of  the  overall  budget  and  a  prominence  of  digital  aspects  across 
the  majority  of  its  components,  the  recovery  and  resilience  plan  proposed  by  Germany 
clearly puts a strong emphasis on the digital transition and the challenges resulting from it 
across all sectors. 
The measures of the plan cover six of the seven priority areas identified in Annex VII to the RRF 
Regulation: 

-  digital-related investment in research and development, 
-  human capital, 
- 
- 
- 
- 

the digitalisation of public services, 
the digitalisation of businesses, 
investments in digital capacities and advanced technologies, and 
the greening of the digital sector. 

Connectivity is the only area for which no measure is proposed under the recovery and resilience 
plan.  However,  it  is  to  be  noted  that  actions  are  planned  with  national  funding  to  address  this 
priority. To tackle the digital divide between regions, the government notably launched a federal 
funding programme for broadband expansion. 

The  proposed  measures  are  well  aligned  with  the  digital  strategy  adopted  by  the  federal 
government  in  November  2018  (Shaping  digitalisation32  –  Digitalisierung  gestalten).  This 
strategy comprises five pillars, which are all addressed by the recovery and resilience plan: 

-  digital competence, 
- 
- 
- 
-  modern State. 

infrastructure and equipment, 
innovation and digital transformation, 
society in digital transformation, 

The German recovery and resilience plan also tackles the four strategic priorities identified 
at  EU  level  and  reaffirmed  in  the  recent  communication  on  Europe’s  Digital  Decade33: 
skills, infrastructures, digital transformation of businesses and digitalisation of public services. 

More  than  half  of  the  effort  on  digital  will  be  dedicated  to  the  digitalisation  of  public 
services, notably through the measures in component 6.1 (Modern public administration). 
The proposed reforms and investments are expected to help develop and improve the delivery of, 
and  the  access  to,  public  administration  services.  A  measure  of  this  component  also  aims  at 
fostering the development of a European identity ecosystem based on an open and licence-free 
identity  infrastructure  and  another  measure  at  the  introduction  of  the  once-only  principle  in 
public administration. Moreover, one measure in component 4.1 (Strengthening social inclusion) 
will specifically address the simplification of the access to information about pension rights for 
citizens,  while  the  first  measure  in  component  2.1  (Data  as  the  raw  material  of  the  future)  is 

32 https://www.bmwi.de/Redaktion/DE/Dossier/digitalisierung.html  
33 COM(2021) 118 - 2030 Digital Compass: the European way for the Digital Decade, 9 March 2021 

60 

 
 
                                                           
expected  to  contribute  to  improving  the  skills  and  organisational  structures  for  the  use  and 
management of data within public administration. All these measures are expected to represent 
important contributions to addressing policy priorities identified in the eGovernment action plan 
adopted by the European Commission34 to which Member States committed in the 2017 Tallinn 
Declaration  on  eGovernment35  and  the  more  recent  Berlin  Declaration  on  Digital  Society  and 
Value-based Digital Government36. 

Digitalisation  is  also  an  essential  aspect  of  the  measures  envisaged  to  modernise  the 
German  health  system.  In  component  5.1  (Strengthening  a  pandemic-resilient  healthcare 
system)  a  substantial  amount  (EUR  3  billion)  will  be  invested  into  modernisation  projects  in 
hospitals.  These  projects  are  expected  to  help  improve  quickly  the  degree  of  digitalisation  of 
hospitals, covering the whole patient care process in a hospital and taking cybersecurity aspects 
into  account.  Another  measure  will  address  the  digitalisation  of  public  health  authorities.  It 
should help increase the overall level of digital maturity in the public health offices and will also 
support the modernisation of the IT systems used for epidemiological surveillance in particular.  

Furthermore,  one  measure  in  component  2.2  (Digitalisation  of  the  economy)  will  contribute  to 
the  ‘Digital  Rail  Germany’  initiative,  a  programme  gathering  public  and  private  stakeholders 
(including the Federal Railway Authority, research organisations and industry) with the objective 
of digitalising the railway system37. 

As  far  as  the  digitalisation  of  businesses  is  concerned,  the  recovery  and  resilience  plan 
focuses on a sector of particular importance for Germany: automotive. A sizeable share of 
component 2.2 (Digitalisation of the economy) is indeed earmarked to help the whole sector take 
up  the  challenges  of  the  digital  transformation  and  reduce  its  environmental  footprint,  thus 
aiming at ensuring its sustainability. This will notably include a strong support to research and 
innovation projects. 

The approach to digital skills addresses the two strategic priorities of the Digital Education 
Action Plan adopted in September 202038: (i) fostering the development of a high-performing 
digital  education  ecosystem,  and  (ii)  enhancing  digital  skills  and  competences  for  the  digital 
transformation.  Component  3.1  (Digitalisation  of  education)  is  expected  to  reinforce  previous 
initiatives  launched  by  the  federal  government  and  the  Länder,  with  the  objective  of  enabling 
both  teachers  and  students  to  take  full  advantage  of  the  possibilities  offered  by  digital 
technologies.  One  measure  of  this  component  will  also  address  the  modernisation  of  the 

34 COM(2016)179 - eGovernment action plan, 19 Apr 2016 
35 https://digital-strategy.ec.europa.eu/en/news/ministerial-declaration-egovernment-tallinn-declaration  

36 https://digital-strategy.ec.europa.eu/en/news/berlin-declaration-digital-society-and-value-based-digital-government 

37 https://www.digitale-schiene-deutschland.de/en  
38 COM(2020)624 - Digital Education Action Plan 2021-2027 Resetting education and training for the digital age, 
30 September 2020 

61 

 
 
                                                           
education  institutions  of  the  Federal  Armed  Forces.  Moreover,  both  components  2.2 
(Digitalisation  of  the  economy)  and  4.1  (Strengthening  social  inclusion)  include  measures  on 
skills  (continuing  education  and  training  networks  and  support  to  companies  offering 
apprenticeships) which are expected to address digital skills to some extent. 

The measures in component 2.1 (Data as the raw material of the future) is also expected to 
significantly contribute to addressing challenges related to key strategic technology areas. 
These include a comprehensive set of actions aiming at fostering data-driven innovation (in line 
with  the  European  data  strategy39),  as  well  as  contributions  to  two  multi-country  projects  on 
advanced technologies in the areas of microelectronics and cloud.  Improving energy-efficiency 
of ICT systems and devices will be one of the main objectives of these two important projects. 
This innovation effort will be complemented by a measure in component 2.2 (Digitalisation of 
the economy) aiming at funding research and development projects carried out by the Centre for 
Digitalisation  and  Technology  Research  of 
für 
Digitalisierungs-  und  Technologieforschung  der  Bundeswehr)  in  areas  such  as  cybersecurity, 
artificial intelligence, robotics, innovative mobility, and the digitalisation of energy. 

the  Federal  Armed  Forces  (Zentrum 

This  comprehensive  set  of  measures  is  expected  to  have  a  lasting  impact  on  Germany’s 
ability  to  fully  seize  the  opportunities  offered  by  the  digital  transition  and  address  the 
challenges resulting from it. They are expected to be instrumental in improving the delivery of 
public  services  to  businesses  and  citizens.  They  are  also  expected  to  contribute  to  the  needed 
improvement  of  digital  skills  in  education  and  further  training  and  to  the  long-term 
transformation of the automotive and health sectors, thus ensuring that Germany remains at the 
forefront of technological developments in strategic areas. 

The proposed measures are aligned with the following three flagship initiatives identified in 
the Annual Sustainable Growth Strategy 202140: 

- 
- 
- 

‘Modernise’, 
‘Scale-Up’, 
‘Reskill and Upskill’. 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  recovery  and 
resilience  plan  is  expected,  to  a  large  extent,  to  make  a  significant  contribution  to  the  digital 
transition and to address the challenges resulting from it and ensures that at least 20% of its total 
allocation  contribute  to  supporting  digital  objectives.  This  would  warrant  a  rating  of  A  under 
criterion 2.6 of Annex V to the RRF Regulation. 

39 COM(2020)66 - A European strategy for data, 19 February 2020 
40 COM(2020) 575 - Annual Sustainable Growth Strategy 2021, 17 September 2020 

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4.7. Lasting impact of the plan  

The  recovery  and  resilience  plan  includes  an  ambitious  package  of  measures  aimed  at 
addressing challenges identified in the context of the European Semester. The measures in 
the  plan  also  support  the  green  and  digital  transitions  and  strengthen  the  growth  potential,  job 
creation and economic and social resilience and cohesion of Germany. The proposed initiatives 
and  investments  are  expected  to  have  a  lasting,  positive  impact  on  Germany’s  economy  and 
society.  

Most of the components of the plan are assessed as having a lasting impact on Germany. 
The  measures  presented  in  this  respect  comprise  structural  changes  to  the  administration  or 
relevant  institutions  and  policies.  The  lasting  impact  results  from  policy  areas  where  the 
estimated  long-term  impact  on  growth  potential  and  employment  is  significant,  as  specified  in 
Section 4.3, together with areas where structural changes are expected to improve social aspects 
that are not necessarily quantifiable. 

Structural change in the administration and institutions 

The plan presents structural changes in the country’s public administration, education and 
healthcare. This  is  particularly the case in  digitalisation of the country’s  public administration 
(component  6.1  Modern  public  administration), of  health  care  (component  5.1  Strengthening  a 
pandemic-resilient healthcare system), of the education system (component 3.1 Digitalisation of 
education). Other measures aim to ensure sufficient capacity and service supply of quality early 
childhood education and vocational training (component 4.1 Strengthening social cohesion). Not 
least,  reforms  in  the  public  administration  to  streamline  approval  procedures  involving  public 
and  private  investments  and  disbursement  of  financial  assistance  are  expected  to  lower 
administrative  burden  and  barriers  to  investment  (component  6.2  Reducing  barriers  to 
investment). 

Investments in the digitalisation of public services are expected to have a lasting impact by 
expanding  and  consolidating  IT  infrastructures,  which  increase  quality  and  efficiency  of 
the respective providers. The implementation of the Online Access Act obliges the federal and 
regional  government  levels  to  group  their  administrative  portals  and  link  them  to  the  Your-
Europe  Portal  (6.1.2).  Combined  with  measures  to  raise  the  digital  competencies  of  staff,  this 
shall create a modern technical infrastructure, enabling all levels of government to provide user-
friendly services  over an efficient  platform system,  compliant with  the Single Digital  Gateway 
Regulation. 

The  investment  in  public  health  services,  complemented  by  relevant  reforms,  supports  a 
lasting  structural  change  in  the  coordination  and  cooperation  between  the  various  actors 
and  levels  of  governance.  The  federal  government  will  support  financially  the  Pact  for  the 
Public Health Service aiming to reinforce staffing and the technical, including digital, capacity of 
public health services  (5.1.2). The digitalisation of the public health services (5.1.1) as well as 
the  investment  in  research  on  SARS-CoV-2  vaccines  (5.1.3)  tackle  root  causes  not  just  of  the 
pandemic,  but  also  of  difficulties  in  tracking  and  tracing  the  spread  of  viruses  and  in  the 
coordination  between  the  public  health  actors  at  national,  regional  and  local  levels.  The 

63 

 
 
investment  in  the  digitalisation  of  hospitals  is  expected  to  contribute  to  more  efficient  hospital 
care in the long run.  

The  investments  and  reforms  in  the  education  and  training  sectors  is  expected  to  boost 
their capacity to deliver relevant skills in an inclusive way. The measures of component 3.1 
Digitalisation of education aim to close the gaps in the digital skills of teachers (3.1.3) and in the 
availability of equipment (3.1.1), and to create a national digital education platform to facilitate 
access  to,  and  exchange  of,  educational  material  (3.1.2).  Expanding  quality  early  childhood 
education  and  care  (4.1.1)  and  supporting  apprenticeships  (4.1.3)  aim  to  enhance  the 
opportunities for children and youth from vulnerable backgrounds to obtain the skills necessary 
to keep up with the requirements of the education system and the labour market. 

Structural changes in policies 

The  plan  consists  of  a  set  of  measures  putting  emphasis  on  policies  on  the  long-term 
sustainability and inclusiveness  of economic growth. These measures  address  the take-up of 
carbon-free energy, low-emission mobility, and housing (components 1.1, 1.2, 1.3), support the 
digitalisation  of  the  public  administration  (component  6.1),  education  (component  3.1), 
healthcare (component 5.1) and businesses (components 2.1 and 2.2), promote better  access  to 
skills  for  vulnerable  youth  (component  4.1),  and  remove  barriers  to  public  and  private 
investment (component 6.2). Dealing with these challenges is indispensable to making economic 
growth sustainable and inclusive. These measures are expected to have a lasting beneficial effect 
on human capital, productivity and resource efficiency. 

Lasting impact 

Relative to a scenario without the RRF, Germany estimates that the RRF-financed investments 
and the reforms accompanying them will contribute to a 0.1% increase in the level of GDP after 
two years, a 0.2% increase after five years, and a 0.04% increase after twenty years.  (See also 
Section  4.3  and  Box  2.)  The  measures  are  expected  to  exert  a  positive  impact  on  productivity 
beyond the duration of the plan.  

Taking into consideration all reforms and investments envisaged by Germany in its recovery and 
resilience  plan,  their  implementation  is  expected,  to  a  large  extent,  to  bring  about  a  structural 
change in the administration or in relevant policies to a large extent and to have a lasting impact. 
This would warrant a rating of A under criterion 2.7 of Annex V to the RRF Regulation. 

4.8. Milestones, targets, monitoring and implementation  

The  coordination  unit  in  the  Federal  Ministry  of  Finance  and  the  line  Ministries  have 
clearly  assigned  responsibilities  and  adequate  structure  for  implementing  the  plan, 
monitoring progress and reporting. A coordination unit (Koordinierungsstelle) in the Federal 
Ministry of Finance is coordinating the work in the line ministries so that they altogether ensure 
an effective implementation of the plan. The coordination unit is staffed with economists, public 
finance  and  audit  and  control  experts,  and  is  coordinating  the  monitoring  and  reporting  of 
progress on milestones and targets, relevant indicators, financial information and other data. It is 
also coordinating the monitoring and implementation of control and audit activities. In addition, 

64 

 
 
it is coordinating the reporting to the Commission including sending requests for payments, and 
is accompanying the process, identifying potential adjustment needs.  In the line Ministries that 
are  responsible  for  the  implementation  of  the  measures,  central  coordination  units  have  been 
identified, and dedicated units have already been designated as primary contact points. 

The milestones and targets of the German recovery and resilience plan enable an adequate 
monitoring of the plan’s implementation. The implementation of the 40 measures in the plan 
is tracked through 129 milestones and targets, of which there are 54 milestones and 75 targets. 
Each  measure  has  on  average  three  milestones  and  targets.  The  first  indicator  is  usually  a 
milestone that tracks  the initiation of implementation, often the publication of the relevant  call 
for tender. The second indicator is a milestone or target that tracks interim progress, such as the 
achievement of certain performance or having reached a high level of budgetary execution. The 
third  indicator  is,  wherever  appropriate,  a  target  tracking  the  accomplishment  of  a  tangible 
objective, such as the outcome of a certain number of projects. 

The  monitoring  indicators  are  sufficiently  clear  and  comprehensive  to  ensure  that  their 
completion  can  be  traced  and  verified.  The  milestones  and  targets  represent  mostly  the  key 
elements of the measures and as such can be considered relevant for their implementation. They 
adequately reflect the overall level of ambition of the plan and appear realistic. Limited changes 
to some of the submitted milestones and targets increased their specificity and their ambition. In 
a  limited  number  of  cases  further  specifications  are  foreseen,  with  the  potential  of  increasing 
relevance. 

The  various  arrangements  to  ensure  an  efficient  and  regular  implementation  of  the  plan 
are  credible  in  terms  of  legal  mandate  and  administrative  capacity.  The  verification 
mechanisms,  data  collection  systems  and  responsibilities  described  by  the  German  authorities 
appear  sufficiently  robust  to  justify  in  an  adequate  manner  the  disbursement  requests  once  the 
milestones and targets are completed. In addition, milestones and targets comprehensively cover 
sub-investments, and will allow to monitor the relevant aspects of the plan. Regular departmental 
meetings  will  be  held  with  the  line  ministries  responsible  for  technical  matters  on  the 
implementation  of  the  German  plan.  These  meetings  will  also  deal  with,  and  coordinate  the 
achievement of, milestones and targets. 

The interaction between the monitoring and control systems are clear. The actors, their roles 
and  the  responsibilities  of  the  internal  control  system  are  clearly  described  and  the  bodies  are 
independent in their functioning. The coordination unit in the Federal Ministry of Finance will 
act as a counterpart for the European Commission, sign the management declaration provided for 
by Article 22(c)(i) of the RRF Regulation, and also countersign the summary of audits provided 
by the Court of Auditors (Bundesrechnungshof) as well as the audits and control reports from the 
internal control units (Innenrevisionen) within the implementing Ministries.  

The arrangements proposed by Germany in its recovery  and resilience plan are  expected to  be 
adequate to ensure effective monitoring and implementation of the recovery and resilience plan, 
including the envisaged timetable, milestones and targets, and the related indicators. This would 
warrant a rating of A under the assessment criterion 2.8 of Annex V to the RRF Regulation. 

65 

 
 
4.9. Costing  

Germany  has  provided  cost  estimates  for  all  investments  and  reforms  included  in  the 
recovery and resilience plan for which funding through the RRF is requested. The recovery 
and resilience plan includes information on costing for each measure in a dedicated section. For 
cases  with  comparable  projects  in  the  past,  there  are  comparisons,  justifications  and,  if 
applicable, links to external sources and reports are sometimes indicated for further information.  

The reforms and investments included in the plan comply with the eligibility criteria set out 
in  the  Regulation.  All  measures  are  set  to  be  implemented  and  generate  costs  only  after  1 
February 2020, the initial cut-off date for eligible costs. According to the planned milestones and 
targets and associated payments requests, no funding is planned to be requested after 31 August 
2026, which is the final cut-off date for eligible funding requests. The costing does not provide a 
detailed calculation  of the potentially included value-added tax (VAT), which would not be an 
eligible  cost  under  the  RRF,  except  for  very  special  circumstances.  Instead,  the  plan 
demonstrates  that  the  potential  VAT  generated  by  the  plan  is  lower  than  the  plan’s 
oversubscription, ensuring that the financial contribution will not cover VAT.41  

The assessment of costing in the plan did not reveal any indication that the reasonability of 
costs would be impaired.  Information provided on costing for the different measures entails a 
varying degree of detail and completeness, while overall providing a reasonable explanation on 
key  cost  drivers.  Further  information  on  costing  providing  a  greater  depth  of  calculations  and 
verifiable sources was requested following the submission of the plan and led overall to a higher 
level of assurance that estimated costs in the plan are reasonable. 

As  regards  plausibility  of  costs,  the  information  on  costing  provided  gives  no  indication 
that  costs  would  not  be  in  line  with  the  nature  and  type  of  the  envisaged  reforms  and 
investments. The different types of measures entail varying degrees of challenges for providing 
costing information. In the case of funding programmes, where final beneficiaries have to submit 
applications  for  intended  projects,  ex-ante  cost  estimations  are  less  precise  than  in  the  case  of 
measures where the type and nature of projects is clearly defined from the beginning. Depending 
on  the  number  of  applications  for  the  different  types  of  projects  and  the  volume  of  funding 
requested, the final costs are expected to vary in their nature and composition. For these reasons, 
Germany  has  argued  for  measures  on  planned  IPCEIs  and  for  demand-driven  schemes  that 
providing detailed information on the possible number and nature of projects to be funded by the 
respective  measure  has  proven  difficult  and  is  possible  only  to  a  limited  extent.  However,  for 
these demand-driven schemes, the costs to be covered by the RRF are in line with the funding 
needs in the given sectors, giving a degree of reassurance on the plausibility of the costs. 

41  The  recovery  and  resilience  plan  amounts  to  EUR  27.9  billion  in  non-repayable  financial  support.  Completely 
excluding VAT for measures where it may be included, the plan corresponds to a net amount of at least EUR 26.5 
billion. This still exceeds the allocation for non-repayable support for Germany (EUR 25.6 billion). 

66 

 
 
                                                           
The plan states that costs to be financed by the RRF will not be funded at the same time by 
other  EU  funding  sources,  thus  guaranteeing  additionality  of  costs  according  to  the 
Regulation.  In  a  horizontal  chapter  of  the  plan,  Germany  gives  assurance  that  double  funding 
will be avoided and that administrative procedures are put in place to allow for a clear separation 
of costs so that the same costs are not funded by other EU funds.  

The amount of the estimated total costs of the plan appears commensurate to the expected 
social and economic impact of the funded measures and in line with the principle of cost-
efficiency. Many measures included in the plan are also part of the national Recovery and Future 
Plan that Germany adopted in June 2020. Measures of the recovery and resilience plan which are 
part of the national Recovery and Future Plan must follow the national rules on proper and sound 
financial management, which thus also apply to the recovery and resilience plan to this extent. 
The total measures put in place by Germany in the year 2020 alone amount to around 3.5% of 
GDP and, together with additional measures paid for in 2021, are projected to reach almost 10% 
of GDP. Compared to this benchmark, the total  estimated cost of the plan is reasonable and in 
line with the principle of cost-efficiency given the envisaged social and economic impact of the 
funded measures. 

Overall,  the  costing  information  presented  in  the  plan  complies  with  the  minimum 
requirements on costing provided for by the Regulation. The costing information provided in 
the plan shows varying degrees of detail and depth of calculations. According to the information 
provided,  reasonability,  plausibility  or  additionality  of  costs  as  required  by  the  Regulation  are 
proven to a sufficient extent. However, more detailed estimations could have increased the level 
of assurance that these principles are fulfilled.  

The justification provided by Germany on the amount of the estimated total costs of the recovery 
and resilience plan is to a medium extent reasonable, plausible, in line with the principle of cost-
efficiency and commensurate to the expected national economic and social impact.  

Germany provided sufficient information and evidence that the amount of the estimated cost of 
the reforms and investments of the recovery and resilience plan to be financed under the Facility 
is not covered by existing or planned Union financing. 

This  would  warrant  a  rating  of  B  under  the  assessment  criterion  2.9  of  Annex  V  to  the  RRF 
Regulation. 

4.10. 

Controls and audit  

The  control  function  relies  strongly  on  Germany’s  national  set-up,  resulting  in  adequate 
empowerment and administrative capacity. Audits and controls are performed mainly by the 
internal control units (Innenrevisionen) embedded in the ministries implementing the measures. 
They  are  audited  by  the  Court  of  Auditors  (Bundesrechnungshof,  BRH)  and  coordinated  by  a 
central  unit  (comprising  audit,  economics  and  accounting  experts)  in  the  Federal  Ministry  of 
Finance, which will sign the management declaration and prepare the summary of audits. Since 
the ministries and other bodies described in  the plan are part of Germany’s national  set-up, all 
these bodies have the legal mandate to exercise their tasks. It is explicitly stated in the plan that 

67 

 
 
progress on milestones and targets will be audited by them. The bodies have the administrative 
capacities and experienced staff. Personnel involved in the management of the plan is expected 
to receive training on specificities of the programme.  

The internal control system is robust, with a clear distribution of roles and responsibilities, 
and  the  bodies  are  independent  in  their  functioning.  The  control  systems  and  other 
arrangements  described  in  the  plan  are  overall  adequate.  The  plan  explains  the  intentions 
regarding the audit strategy for the audit bodies to plan their audits, including a risk assessment, 
an indication of the frequency and type of audits, whether these will cover both the systems in 
place and the underlying actions (i.e. support given to final beneficiaries). There will be a group 
within the coordinating unit in  charge of elaboration of the operational  audit strategy based on 
risk  assessment,  followed  by  a  prioritisation  of  audits.  This  group  will  work  together  with  the 
ministries and their internal  control units. The audits will include assessments  on progress  and 
verification  of  reported  milestones  and  targets.  The  audits  will  be  selected  based  on  a  risk 
analysis and in cooperation with the implementing ministries.  

The  national  system’s  set-up  ensures  the  protection  of  the  EU’s  financial  interests.  The 
national  system  ensures  the  prevention,  detection  and  correction  of  fraud,  corruption,  double 
funding,  and  conflicts  of  interest.  It  also  guarantees  the  accuracy  of  the  data  underlying 
milestones  and  targets.  Due  to  the  absence  of  a  dedicated  IT  system,  the  data  collection  and 
verification are rather based on supervision, monitoring and reporting from implementing bodies 
back to coordination bodies. However, a full audit trail and full access to data is  guaranteed at 
any moment in time.  

The  national  laws  and  regulations  are  considered  efficient  in  preventing,  detecting  and 
correcting  serious  irregularities  like  fraud,  corruption  and  conflict  of  interest.  There  are 
standardised  internal  control  procedures,  checks  and  audits  in  the  implementing  public  bodies, 
together with a regulatory framework concerning behaviour of officials, declarations on absence 
of conflicts of interest where appropriate, and reporting of fraud. The law to prevent corruption 
(from  2004)  is  also  applicable  to  the  recovery  and  resilience  plan.  In  all  Ministries  there  are 
measures in place to fight corruption and fraud and independent dedicated persons are nominated 
for  that  purpose.  Suspected  fraud  is  dealt  with  by  the  offices  fighting  white-collar  crime 
(Dienststellen für Wirtschaftskriminalität). 

The  arrangement  to  avoid  double  EU  funding  is  adequate.  The  coordinating  unit  in  the 
Ministry  of  Finance  performs  checks  on  double  funding  as  part  of  their  tasks  of  monitoring, 
supervision,  and  coordination.  In  the  first  place,  measures  in  the  plan  do  not  combine  funding 
with other EU funds, therefore the risk for double funding is intrinsically limited. The plan states 
that  in  case  of  parallel  funding  of  measures  and  projects  from  different  EU  sources,  adequate 
reporting will make sure that the same costs are not reimbursed several times.  

Decision  quality  and  integrity  benefit  from  a  systemic  separation  of  funding  streams  and 
the  system  of  individual  commitments.  This  separation  follows  the  German  financial 
regulation  (Haushaltsordnung)  and  possible  cross-checks  are  to  be  made  in  the  database  of 
support  recipients  (Förderdatenbank).  The  plan  announces  that  it  will  be  checked  how 

68 

 
 
ARACHNE, the European Commission’s data mining and risk scoring tool, could complement 
or integrate data from the database of German support recipients.  

Payments made under the funding guidelines benefit from a high degree of clarity. Various 
measures in the plan are based on funding guidelines (Förderrichtlinien), which set out detailed 
specifications  on  funding  objectives,  projects  and  types  of  beneficiaries  eligible,  kind  and 
amount  of  funding,  application  guidelines,  project  approval  and  payment  conditions.  These 
checks  have  to  be  applied  by  implementing  bodies  which  can  be  easily  controlled  by  internal 
control units as well as the Court of Auditors as provided for by the plan.  

Data  management  could  be  made  more  efficient.  The  data  encoding  takes  place  in 
decentralised  IT systems  across ministries, which are obliged to  report the required data to  the 
coordinating unit in the Federal Ministry of Finance. Access to the data (e.g. on final recipients 
in  the  subsidiaries  databases)  is  granted  to  all  relevant  EU  bodies  upon  request.  Shortcomings 
regarding the practical  arrangements  and the  audit trail for checking milestones and targets  (in 
the  absence  of  a  central  IT  system)  have  been  identified  by  the  Commission  services,  as 
Germany  only  mentions  the  mandatory  national  full  communication  chain  and  reporting  lines 
ranging  from  coordinating  bodies  via  implementing  bodies  down  to  final  recipients.  These, 
however, appear to be rather a question of efficiency than of Germany’s ability to provide sound 
reporting and verification of progress on milestones and targets. Germany has started a process 
to have its IT system audited by the Court of Auditors (Bundesrechnungshof) to identify possible 
weaknesses and to address without delay any recommendations of the audit report, as well as to 
ensure  the  complete  recording  of  all  data  referred  to  in  paragraph  (d)  of  Article  22(2)  of 
Regulation (EU) 2021/241, including by a transitional system. Germany committed to providing 
access to such data. 

The  arrangements  proposed  by  Germany  in  the  recovery  and  resilience  plan  to  prevent,  detect 
and correct corruption, fraud and conflicts of interest when using the funds provided under the 
Facility, including the arrangements aimed to avoid double funding from the Facility and other 
Union  programmes,  are  assessed  to  be  adequate.  This  would  warrant  a  rating  of  A  under  the 
assessment criterion 2.10 of Annex V to the RRF Regulation.  

4.11. 

Coherence  

The German recovery and resilience plan has a coherent and convincing narrative focused 
on the green and digital transitions. The plan builds on the national support package from June 
2020  and  complements  it  with  planned  IPCEIs  on  green  hydrogen  (1.1.1),  cloud  (2.1.3)  and 
microelectronics (2.1.2), and with reforms to reduce barriers to investment (6.1.1 and 6.1.2). The 
plan  has  a  clear  strategic  focus  with  coherent  actions  at  all  levels  –  within  each  component, 
across the components and among individual measures in the different components. 

Mutually reinforcing measures 

The  reforms  and  investments  in  the  components  are  coherent  and  mutually  reinforcing. 
Within  each  component,  the  measures  are  targeted  to  achieve  coherent  objectives  and  their 
expected  results  are  reinforcing  each  other.  Municipal  living  labs  for  the  energy  transition 

69 

 
 
(1.3.2), for example, test new ways to decarbonise energy needs for buildings and thus feeds into 
the  building  renovation  measure  (1.3.3).  Similarly,  measures  1.2.1  to  1.2.4  in  component  1.2 
Climate-friendly mobility mutually reinforce each other in supporting sustainable mobility from 
different  angles  –  through  investment  in  infrastructure  for  electric  vehicles  combined  with 
purchase and tax incentives for low- and zero-emission vehicles. The measure to strengthen the 
digital and technical resources of the public health service (5.1.1) and the programme for future-
proof hospitals  (5.1.2) respond to  the reform and investment  needs for the digitalisation of the 
healthcare sector, contribute to digitalising the economy and, together with research on  SARS-
CoV-2 vaccines (5.1.3), effectively address the pandemic. 

Structural reforms accompany the investment priorities to reinforce the impact of planned 
investment. A clear example are the reforms in component 6.2 Reducing barriers to investment. 
The joint programme of the Federal Government and the Länder for an efficient administration 
that  benefits  citizens  and businesses  (6.2.1),  the  support  for  local  authorities  through  PD  – 
Berater  der  öffentlichen  Hand  GmbH  in  the  effective  implementation  of  investment  funding 
(6.2.2) and the legal measures to speed up planning and authorisation procedures in particular in 
the transport sector (6.2.3) are all set to strengthen the public sector’s capacity to implement the 
investment  measures  under  the  German  recovery  and  resilience  plan  in  a  faster  and  more 
efficient  manner,  for  example  in  the  areas  of  education  or  healthcare  and  also  in  the  area  of 
energy-efficient  building  renovation.  The  implementation  of  these  reforms  is  also  expected  to 
benefit businesses and citizens by cutting red tape and expediting administrative procedures.  

Complementarity of measures 

The components pursue complementary aims with clearly discernible overarching strategic 
objectives. There are synergies between the components with regard to both pursued objectives 
and  concerted  approach  towards  reforms  and  investments.  The  digital  transformation  of  the 
economy,  for  instance,  in  component  2.2,  is  complemented  by  reforms  on  data  infrastructure 
(component 2.1) and investments in digital education and skills (component 3.1) and is closely 
linked to the digitalisation of the public administration (component 6.1) and of the health sector 
(component  5.1).  Similarly,  climate  protection  and  climate  change  mitigation  as  overarching 
objectives of the plan are reflected in investments  in green hydrogen (component 1.1), reforms 
and investments to promote sustainable mobility (component 1.2) and energy-efficient building 
renovation  (component  1.3).  In  addition,  the  production  of  clean  hydrogen  (component  1.1)  is 
integral  to  the  use  of  hydrogen  for  sustainable  mobility  (component  1.2).  Some  components 
mutually  reinforce  each  other.  For  example,  component  1.3  also  promotes  digitalisation  of  the 
timber construction sector and in buildings. At the same time, also component 2.2 pays attention 
to energy-efficiency and sustainable solutions.  

Individual measures also show the intrinsic complementarity between the components. The 
effectiveness  of  investment  in  the  digitalisation  of  education  (component  3.1),  which  aims  to 
improve pupils’ and teachers’ digital skills and promote access to learning materials through the 
education  lifecycle,  is  strengthened  by  the  focus  on  the  education  of  vulnerable  groups  (4.1.4) 
and the expansion of quality early childhood education and care, a key policy lever for reducing 
learning disadvantages (4.1.1). 

70 

 
 
No  instances  of  measures  within  any  component  that  may  contradict  or  undermine  each 
other’s  effectiveness  were  identified.  There  are  no  conflicts  between  the  aims,  the  envisaged 
implementation of the reforms and investments and their expected effect.  

In  view  of  the  challenges  faced  by  Germany,  the  recovery  and  resilience  plan  presents  a 
balanced  approach  between  reforms  and  investments.  As  elaborated  in  Section  1.2  of  the 
plan,  it  addresses  a  significant  subset  of  the  country-specific  recommendations  addressed  to 
Germany in the context of the European Semester, making the proposed reforms and investments 
appropriate. In order to promote wider coherence across instruments, notably with the European 
cohesion policy funds, a balanced territorial allocation of resources is encouraged.  

Taking  into consideration the qualitative assessment  of  all components of Germany’s  recovery 
and resilience plan, their individual weight (importance, relevance, financial allocation) and their 
interactions,  the  plan  contains  measures  for  the  implementation  of  reforms  and  public 
investments which, to a high extent, represent coherent actions. This would warrant a rating of A 
under the assessment criterion 2.11 of Annex V to the RRF Regulation. 

71 

 
 
 
 
 
ANNEX: CLIMATE TRACKING AND DIGITAL TAGGING TABLE 

42 

Measure/ Sub-
Measure ID 

Measure/Sub-Measure 
Name 

Budget (EUR 
m)  

Climate 

Digital 

Int. 
Fiel
d 

022 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

100% 

027 

100% 

033 

100% 

500 

500 

500 

1.1.1.1 

1.1.1.2 

1.1.1.3 

1.1.2 

1.1.3 

1.1.4 

1.1.5 

1.2.1 

1.2.2.1 

1.2.2.2 

1.2.3.1 

1.2.3.2 

1.2.4 

1.2.5 

Hydrogen projects within the 
framework of IPCEIs: part 1 
Hydrogen projects within the 
framework of IPCEIs: part 2 
Hydrogen projects within the 
framework of IPCEIs: part 3 
Funding programme for 
decarbonisation in industry  
Pilot scheme for climate 
action contracts based on the 
principle of Carbon Contracts 
for Difference  
Project-related climate 
protection research  
Flagship projects for research 
and innovation in the context 
of the National Hydrogen 
Strategy  
Support for the construction 
of charging infrastructure 
Funding for the development 
of electro-mobility: R & D, 
mobility concepts 
Funding for the development 
of electro-mobility: zero-
emission vehicles 
Support for the replacement of 
the private vehicle fleet: zero-
emission vehicles 
Support for the replacement of 
the private vehicle fleet: 
hybrid vehicles. 
Extension of the initial 
registration period for 
granting the ten-year tax 
exemption for purely electric 
vehicles 
Support for purchases of 
buses with alternative 
propulsion 

449.3 

022 

100% 

550 

027 

100% 

50.4* 

022 

100% 

588.2* 

022 

100% 

700 

42* 

077 

100% 

022 

100% 

21* 

n/a** 

100% 

1364 

n/a** 

100% 

1 136 

n/a** 

40% 

295 

n/a** 

100% 

1 085 

n/a** 

100% 

42 While the total cost of Germany’s recovery and resilience plan exceeds the total allocation of non-repayable 
financial support to Germany, Germany will ensure that all spending related to the investments mentioned in the 
following table as contributing to climate objectives are fully financed by the funds from the Recovery and 
Resilience Facility. 

72 

 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
                                                           
Measure/ Sub-
Measure ID 

Measure/Sub-Measure 
Name 

Budget (EUR 
m)  

1.2.6.1 

1.2.7.1 

1.2.7.2 

1.3.2 

1.3.3 

2.1.1.1 

2.1.1.2 

2.1.1.3 

2.1.1.4 

2.1.1.5 

2.1.1.6 

2.1.1.7 

2.1.1.8 

2.1.1.9 

2.1.1.10 

2.1.1.11 

Support to promote alternative 
rail propulsion: electric rolling 
stock 
Promotion of the industries 
involved in hydrogen and fuel 
cell applications in transport: 
part 1 
Promotion of the industries 
involved in hydrogen and fuel 
cell applications in transport: 
part 2 
Municipal living labs for the 
energy transition 
Building renovation: 
federal funding for energy-
efficient buildings 

Innovative data policy for 
Germany: overall strategy 
high-performance computing  

Innovative data policy for 
Germany: ideas competition 
and piloting of data fiduciaries 
Innovative data policy for 
Germany: research network 
depersonalisation  
Innovative data policy for 
Germany: support programme 
anonymisation 
Innovative data policy for 
Germany: National Research 
Data Infrastructure (Nationale 
Forschungsdateninfrastruktur
) and data literacy 
Innovative data policy for 
Germany: PhD programme in 
data sciences  
Innovative data policy for 
Germany: incentives for the 
after-use of data  
Innovative data policy for 
Germany: long-term 
competence monitoring  
Innovative data policy for 
Germany: data literacy 
courses for students  
Innovative data policy for 
Germany: toolbox data 
literacy  
Innovative data policy for 
Germany: innovation process 
‘architectures, institutions and 

Climate 

Digital 

Int. 
Fiel
d 

072b
is  

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

100% 

182 

229.4* 

022 

100% 

229.4* 

n/a** 

100% 

57 

025 

40% 

025b
is  

100% 

021quat
er  

100% 

009bis 

100% 

 009bis  

100% 

 009bis  

100% 

108 

100% 

108 

100% 

108 

100% 

108 

100% 

108 

100% 

108 

100% 

108 

100% 

2 500 

21* 

45.4* 

37.8* 

25.2* 

50.4* 

5.5* 

4.2* 

8.0* 

8.8* 

8.4* 

6.7* 

73 

 
 
 
  
 
  
 
  
 
  
 
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ Sub-
Measure ID 

Measure/Sub-Measure 
Name 

Budget (EUR 
m)  

Climate 

Digital 

Int. 
Fiel
d 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

spaces for the data society’ 
Innovative data policy for 
Germany: establishment of 
data cooperations  
Innovative data policy for 
Germany: data literacy in the 
federal administration: data 
laboratories, Chief Data 
Scientists and competence 
building  

11.3* 

011 

100% 

200.8* 

108 

100% 

IPCEI microelectronics and 
communication technologies 

1 500 

IPCEI Next Generation Cloud 
Infrastructure and Services 
(IPCEI CIS): emission 
reduction and energy 
efficiency criteria 

IPCEI Next Generation Cloud 
Infrastructure and Services 
(IPCEI CIS) 

Vehicle manufacturer/supply 
industry investment 
programme: digitalisation of 
production as a boost for 
productivity and resilience: 
greenhouse gas emission 
reduction or energy efficiency 
criteria 
Vehicle manufacturer/supply 
industry investment 
programme: digitalisation of 
production as a boost for 
productivity and resilience  
Vehicle manufacturer/supply 
industry investment 
programme: new innovative 
products as the key to vehicles 
and mobility of the future - 
automated driving 
Vehicle manufacturer/supply 
industry investment 
programme: finding joint 
solutions, building regional 
innovation clusters 
Federal programme ‘Building 
continuing education and 
training networks (CET 
networks)’ 
Digitalisation and Technology 
Research Centre of the 

021quat
er  

100% 

055b
is  

40% 

021quat
er  

100% 

021quat
er  

100% 

010t
er  

40% 

 010ter  

100% 

375 

375 

650 

427.1 

 010ter  

100% 

392.67 

 009bis  

100% 

232.4 

019 

40% 

31.9* 

588.2* 

74 

016 

40% 

 009bis  

100% 

2.1.1.12 

2.1.1.13 

2.1.2.2 

2.1.3.1 

2.1.3.2 

2.2.1.1 

2.2.1.2 

2.2.1.3 

2.2.1.5 

2.2.2 

2.2.3 

 
 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
Measure/ Sub-
Measure ID 

Measure/Sub-Measure 
Name 

Budget (EUR 
m)  

Climate 

Digital 

Int. 
Fiel
d 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

2.2.4 

3.1.1 

3.1.2 

3.1.3 

3.1.4 

4.1.3 
4.1.5 

5.1.1 

5.1.2 

6.1.1 

6.1.2 

6.1.3 

Bundeswehr (dtec.bw) 
Promoting the digitalisation of 
rail by replacing conventional 
interlocking/fast-track 
programmes to speed up the 
roll-out of the ‘Digital Rail 
Germany’ (SLP)’ 
Investment programme for 
teacher devices  
Education platform 
Educational centres of 
excellence  
Modernisation of the Federal 
Armed Forces’ educational 
and training facilities  
Apprenticeships support  
Digital pension overview  
Strengthening the digital and 
technical resources of the 
public health service  
Programme to future-proof 
hospitals  
European identity ecosystem  
Digitalisation of the 
administration – 
implementation of the Online 
Access Act  
Digitalisation of the 
administration – 
modernisation of registers 

500 

420.2* 

529.4* 

172.3* 

84* 

725 
34.3 

684* 

2 521* 

168.1* 

2521* 

231.1* 

070 

100% 

012 

012 

108 

100% 

100% 

100% 

012 

100% 

099 
011 

40% 
100% 

011 

100% 

095 

100% 

 011  

100% 

011 

100% 

011 

100% 

* Budget figures are rounded to hundred thousands. The table shows the cost of the measures without VAT. For most measures 
this equals the cost included in the recovery and resilience plan. However, for measures marked with an asterisk (*), Germany 
indicated that their cost may include VAT, and in this table the cost is shown while taking away the full amount of potential VAT 
for these measures (assuming that the maximum VAT rate of 19% fully applies). Without adjusting for VAT, the cost of the plan 
is EUR 27 949.9 million, while adjusting for VAT yields a total budget of at least EUR 26 518.8 million, with a climate quota of 
at least 42.4% and a digital quota of at least 52.6%.  
** The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation does not set out 
intervention fields that would allow for climate or environmental tracking of electric vehicles or plug-in hybrid vehicles, except 
for vehicles for urban transport falling under intervention field 074. According to Article 18(4)(e) of the Regulation, the 
methodology should however ‘be used accordingly for measures that cannot be directly assigned to an intervention field listed in 
Annex VI’. In this context, the Commission has applied a 100% climate contribution coefficient for zero-emission vehicles of all 
categories (this includes battery electric and fuel cell/hydrogen-powered vehicles); a 40% climate contribution coefficient for 
plug-in hybrid light-duty vehicles; and, in line with the criteria under the Taxonomy Regulation, a 100% climate coefficient for 
low-emission heavy-duty vehicles. 

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