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25 Jul 2022, 13:26
Sören Amelang

Germany needs public investments worth €500 bln to become climate-neutral by 2045 - report

Clean Energy Wire

The German government will have to invest almost half a trillion euros to reach its 2045 climate neutral target, according to an analysis by consultancy Prognos for public development bank KfW. “The public investment needs to achieve climate neutrality in Germany by 2045 can be estimated at just under 500 billion euros, which corresponds to annual climate protection investments of around 20 billion euros on average,” Kfw said.  The largest public investment requirements are in the energy (297 billion euros), transport (137 billion euros) and building (47 billion euros) sectors. “These amounts can be financed in the public budgets, but still represent a six-fold increase of current investment levels,” the researchers said, who called for a “stringent adjustment of responsibilities, financial flows and competences between the federal, state and local levels” to tackle the necessary climate investment increase.

The total investments – including by private households and businesses – needed to make Germany climate neutral add up to around five trillion euros, said a report conducted by consultancies Prognos, Nextra Consultung and NKI for KfW in late 2021. The sum included investments that were already necessary, but are to be increasingly put into climate-friendly efforts. The climate-related additional investments amount to an average of 72 billion euros annually, or 1.9 trillion euros by 2045.

The KfW investment figures do not take into account benefits from climate investments, such as less expenditure on climate damages and economic growth opportunities. “Effective climate protection is a hedge against various risks of the future and also opens up opportunities: it reduces the probability of extreme weather events and the resulting climate consequential costs overall, makes the country less dependent on fossil energy imports from global crisis regions and ensures participation in green future markets,” KfW said. Consultancy McKinsey said last year that Germany can achieve its 2045 climate target at net zero costs.

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