It will enable the retrofitting of diesel buses used for public transport in around 90 municipalities.
The European Commission has approved Germany’s plans to provide €107 million (£95m) of public funds for greener buses.
The scheme set up by the German Government will support the retrofitting of diesel buses used for public transport in around 90 municipalities where limits for nitrogen oxides (NOx) emissions exceeded in 2016 or 2017.
It will incentivise bus operators to invest in greener buses, with retrofits expected to cut NOx emissions of each bus by at least 85%.
The planned support for the retrofitting of up to 7,000 diesel buses is estimated to lead to a reduction of around 2,200 tonnes of NOx every year.
Commissioner Margrethe Vestager, in charge of competition policy said: “This is a good example of how to support our European objective of cleaner air for all. The German measure gives public transport operators an incentive to invest in greener vehicles, thereby improving air quality in German cities – fully in line with EU environmental goals.”
The European Court of Justice recently suspended the UK’s Capacity Market scheme – the Commission is requird to undertake a formal investigation before the government can continue with the auctions and payments.