By Bojan Pancevski 

BERLIN -- Germany unveiled an array of climate policies Friday designed to curb greenhouse gas emissions that economists said were unlikely to provide much of a boost to the country's flagging economy, despite a projected EUR54 billion ($60 billion) price tag between now and 2030.

The measures, including subsidies for green power generation, will be financed by revenues from higher taxes on polluting activities, such as air travel and car fuel, as well as a new carbon emission certificate trading scheme to be launched in 2021. The package won't affect Germany's balanced budget. Despite international pressure on Berlin to loosen the purse strings and revive a slowing economy, the country's budget surplus is projected to stand at over EUR40 billion in 2019.

"We are not living sustainably today, especially not with regards to the warming of the planet," Chancellor Angela Merkel told journalists in Berlin as she presented the measures.

Germany had been among the most vocal developed nations in calling for reductions in greenhouse gas emissions to slow down the warming of the planet. However, it has failed to meet its own reduction goals over the past decade, in part because of a government decision in 2011 to phase out low-emission nuclear power, benefiting highly polluting coal-fueled power plants.

Under the new package, companies providing heating, power and fuel for transportation will have to buy certificates entitling them to emit carbon dioxide, with prices set to rise from 10 euros in 2021 to 35 euros in 2025, resulting in higher costs to consumers. A rise in an existing tax rebate for commuters will soften the impact on rural communities.

The government will help pay for more than one million charging stations for electric vehicles by 2030, while owners and buyers of such cars will be offered new subsidies that the government expects will help put 10 million electric vehicles on German streets in the next decade.

The much-anticipated initiative, unveiled after marathon overnight negotiations between Ms. Merkel's conservative Christian Democrat Union and its coalition partners, had raised hopes among business and economists that Berlin would use the opportunity to stimulate the economy -- which is believed to have entered a recession this summer -- in the manner of the Green New Deal being discussed in the U.S.

However, economists criticized the government's renewed pledge to rely on levies instead of public debt to finance the measures, even though Germany is currently able to issue bonds that carry a negative interest rate. In effect, this means that investors must pay to lend money to Berlin's treasury.

"This is economic madness and at the same time, expected. The balanced budget has such a high political significance that no one dares to go against it. Not even for the climate, at a time of negative interest rates," said Christian Odendahl, chief economist at the Centre for European Reform, a think tank.

Mr. Odendahl said financing green subsidies with carbon dioxide revenues was a zero-sum redistribution scheme, and that the allegiance to "black zero" -- as Germany's goal of maintaining a balanced budget is known -- would automatically lead to a lower carbon price.

On the other hand, Karen Pittel, economics professor at the University of Munich, said "the low carbon pricing will hardly prompt any substantial reduction of emissions."

The government is under pressure to meet the target of reducing carbon dioxide emissions to 55% of their 1990 level by 2030, as Europe's largest economy simultaneously phases out nuclear and coal power plant generation.

At present, nearly 40% of Germany's power comes from burning coal, almost the same level provided by renewable energy sources such as wind.

Politicians and officials said the environmental push was partly designed to steal the thunder of the surging Green Party, which is now neck-and-neck with the CDU as Germany's most popular party.

Several polls have shown that the surge of the Greens, who captured 8.9% of the vote at the last federal election in 2017, but are now polling at around 23%, is in a significant part due to voters' concerns about the climate.

Hundreds of thousands of people took to the streets at 600 rallies across Germany on Friday, demanding a radical cut to carbon dioxide emissions. Representatives of the movement rejected the government's new measures as insufficient.

Write to Bojan Pancevski at bojan.pancevski@wsj.com

(END) Dow Jones Newswires

September 20, 2019 12:10 ET (16:10 GMT)