A new study released on Wednesday by Climate Policy Initiative has provided the first comprehensive overview of how German businesses, households and government finance renewable energy and energy efficiency.
The report titled, ‘The German Landscape of Climate Finance,’ showed that the country invested 1.5 per cent of its Gross Domestic Product in 2010, or €37bn, in measures to reduce the impact of climate change.
Private capital is of great importance to climate investments in Germany. In 2010, the majority (€22bn) of climate finance came from corporate investors across all sectors of the economy, including farmers, energy utilities, and industrial and commercial enterprises. Private households invested a significant €14bn.
According to CPI, government incentives play a major role in unlocking private climate finance in Germany. Almost half of all private climate investments (€16.5bn) were supported by low-interest loans from public banks, such as KfW or Rentenbank.
“The task of the government is to create the conditions for businesses and households to invest in renewable energy and energy efficiency. And indeed, government-backed low-interest loans and policies such as the feed-in-tariff seem to have played an important role in encouraging these private investments,” says Barbara Buchner, Director, CPI Europe.
The German government has committed itself to reduce greenhouse gas emissions by 80-95 per cent by 2050 and phase out nuclear energy by 2022.
These objectives have positioned Germany as a world leader in national climate mitigation efforts, but also require significant investments that cannot be provided by public funds alone. Therefore, a high share of private finance can be regarded as a positive signal for Germany’s low-carbon strategy.
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Climate change finance: Germany spent €37bn in 2010