€860 billion needed to finance German climate goals

Massive investments and political support for German industry would be needed in order to reach the country's 2030 climate goals. EPA-EFE/FRIEDEMANN VOGEL

The new German government should facilitate investments of €860 billion by 2030 to initiate emission reduction activities across all sectors of the economy, industry association BDI said, reported CLEW.

As negotiations for the first-ever three-way government are expected to be completed imminently, the “traffic light” government of social democrat SPD, the Greens and liberal FPD are less than nine years away from the deadline to achieve the country’s ambitious climate goals.

“The pressure on policymakers to achieve climate neutrality by 2045 while preserving a competitive industry is immense,” said BDI president Siegfried Russwurm. Ahead of its industry “climate day,” the association released a five-point plan for the prospective new coalition. 

“The German industry expects the next government to swiftly decide on a reliable framework to strengthen Germany as a country for export, industry and innovation,” he added. 

The central element of the “investment turbo” approaching nearly €1 trillion over less than ten years should be a retrofitting and upgrading of the country’s infrastructure “that goes far beyond what has been planned so far,” the association said. 

Moreover, the fast expansion of renewable power sources should be supplemented by building new gas-fired power plants that can operate entirely on renewables-based green hydrogen. 

“For the duration of that transition, the government should support the inclusion of natural gas in the EU taxonomy on sustainable investments,” the group argued. 

The EU taxonomy regulation sends a signal to investors by spelling out which economic activities can be considered green or not.

The Greens and the SPD are opposed on whether gas should be given a role in the transition towards renewable energy.

“If we cannot finance gas, coal will be prolonged,” said Svenja Schulze, the caretaker environment minister and leading SPD politician, at COP26 in Glasgow on 11 November.

“Investment into fossil gas and nuclear should not be greenwashed by putting it in the taxonomy,” Sven Giegold, a Green MEP who is one of the core negotiators of the coalition agreement, told EURACTIV.

“We accept that there will be some investment in – on an interim basis – fossil gas plants to help the coal phase-out,” Giegold told EURACTIV. “However, the gas must not be included in the taxonomy,” he insisted, saying there is plenty of capital available to finance new gas or nuclear plants without including them in the taxonomy.

German coalition talks stumble over role of gas in EU taxonomy

The scramble over the role of gas and nuclear in the EU’s sustainable finance rules has become a source of tension in the German government talks as the country’s first ever three-party coalition is being negotiated in Berlin.

Single instruments like “the CO2-price or degressive depreciation” were essential but far from sufficient for meeting the 2030 climate target of cutting emissions by 65% relative to 1990 levels.

The association said that investment in necessary infrastructure such as the electricity grid, hydrogen pipelines, and rail would amount to €145 billion alone.

The BDI further advocated cost reductions for “CO2-neutral energy” and grants to energy-intensive industries to make climate-friendly investments. Their instrument of choice would be so-called “carbon contracts for difference,” which would make up the cost difference between climate-friendly and polluting processes until they become economical.

The BDI said current sector emission targets amount to “micro-management by the state,” which leads to inefficient ad-hoc measures. 

“We cannot afford that,” the industry group said.

Germany's steel industry in transition

Germany’s energy-intensive steel industry needs to reinvent itself so that it can meet European climate targets and remain competitive. However, there is still a long road to go before the sector goes green. EURACTIV Germany reports.

[Edited by Alice Taylor and Benjamin Fox]


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Mitsubishi Heavy Industries

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