Germany to Massively Spend on and Profit from Climate Protection

November 2021

Amidst the crucial COP 26 summit in Glasgow, two studies indicate the extent to which Germany will have to invest in climate protection – and how it stands to benefit economically.

To start with the latter: A new study by the research division of Germany’s developmental bank KfW, German firms producing domestically and abroad account for 14 percent of the global market for green technologies. By comparison, Germany’s total share was 4.5 percent in 2020.

And experts predict that this strength will only increase in the years to come:

“The commitment of many countries to net zero emissions will lead to a significant increase in global demand for low-emissions technologies,” KfW Chief Economist Fritzi Köhler-Geib said in a statement. “For German businesses that will generate substantial opportunities for future growth and employment as the transition to a net zero economy involves high amounts of investment. Germany alone will have to mobilize around EUR 5 trillion. There is potential for Germany as a leading provider of environmental and climate-smart technology to participate in the transition on the supply side as well.”

The growth in the sector will be accelerated in Germany by the government, which needs to invest if the country is to be able to meet its legal commitment to climate neutrality by 2045. A study by the Federation of German Industries (BDI) and the Boston Consulting Group reckons that public spending in this area will have to increase to EUR 47-50 billion by 2030 and a total of EUR 230-280 billion between 2021 and 2030. The study says additional investments of around EUR 860 billion will be needed from both the public and private sectors.

But such investments, wrote the study’s authors, will be worth it.

“Achieving Germany’s legal climate target is a massive undertaking for society at large, which requires an immediate course correction already in the first months of the new legislative period. At the same time, successful implementation of the comprehensive modernization program described here offers a historic opportunity for Germany to transform into a climate-neutral industrial country and to make an ambitious contribution toward limiting the effects of climate change, thereby securing the prosperity of this and future generations.”

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