Berlin.
Germany promised no more money for fossil energy projects in 2021 – little has happened. Now the Bundestag is putting pressure on it.
In November 2021, the then federal government made a promise at the World Climate Conference in Glasgow: From the end of 2022 there would be no more direct financial support from the state for fossil energy projects from Germany.
Jochen Flasbarth, then State Secretary in the Ministry of the Environment, signed the “Glasgow Statement”, which was also endorsed by 38 other countries, still representing the old federal government. But he knew that the new one, which was just emerging, was behind him – after all, the SPD, Greens and FDP had already stated in their exploratory paper that they see climate protection as a central joint task.
But more than a year later and after the self-imposed deadline of the end of 2022, Germany is far from fulfilling this promise. There is no guideline, no law, no strategy – whether and how Germany will keep its promise is completely open.
Foreign trade instruments were also often used to promote fossil fuel projects
Specifically, it is about new rules for the use of so-called foreign trade instruments, including export credit guarantees, also known as Hermes guarantees, and untied financial loans. These are federal guarantees to support the activities of German companies abroad. “With these instruments in the background, the government provides security and thus reduces the risk for the companies and banks involved,” says Regine Richter, financial expert at the environmental protection organization Urgewald. “This makes financing projects cheaper and the offers that companies can make more attractive.”
The financial power of the state in the background enables transactions that might not have come about without the state. Germany is no exception, other countries also help companies in this way.
But it is problematic that this type of support has repeatedly been used in the past to support fossil energy projects, says Richter. “If the federal government gives guarantees for coal-fired power plants, pipelines, LNG terminals in developing countries, then that will lead these countries onto a fossil path for a long time. Fossil infrastructure is created that will last for a long time.” According to the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), investments in new fossil energy projects are in any case incompatible with the 1.5-degree limit.
Applications for fossil projects with a volume of one billion euros
But what conclusions the traffic light coalition draws from all this has so far been left completely open. In a response to a question from left-wing MP Victor Perli last November, it was said that the federal government had received ten applications for export guarantees in connection with fossil projects at this point in time. Total volume of orders: More than one billion euros, including in Brazil, Iraq and Uzbekistan.
It is unclear exactly which projects are involved, whether these checks have been completed and, if so, what the results are. A corresponding request to the responsible Federal Ministry of Economics remained unanswered for weeks.
The silence gives an idea of how sensitive the issue is, also within the federal government. Because the energy policy situation has changed significantly since the commitment in Glasgow. With Russia’s war against Ukraine, Germany’s energy supply suddenly became precarious – and the federal government was under pressure to develop new sources. Since then, she has had LNG terminals set up in Germany at breakneck speed. Internationally, the cabinet’s top staff, above all Economics Minister Robert Habeck, has accumulated numerous air miles in the past year in an effort to secure fossil and non-fossil energy flows to Germany.
The budget committee is putting pressure on the traffic light government
During a visit to Senegal last year, Chancellor Olaf Scholz himself revealed that Germany could help develop a gas field off the coast of the West African country – and could receive part of the supplies. Such a project could hardly be reconciled with the implementation of the promise made in Glasgow. “Our impression is that the Chancellery is slowing down implementation,” says Richter, referring to the promise made in Glasgow.
The Budget Committee of the Bundestag has now set a deadline for the government. By April 30, it should present a written overall strategy on the compatibility of foreign trade instruments “with the Climate Protection Act and the international Paris Climate Protection Agreement (1.5 degree target) in all sectors,” as stated in the corresponding decision of the committee available to this editor. “In particular, the budgetary and economic issues of climate risks” should be addressed, taking into account “the danger of the speculative carbon bubble and stranded assets”.
“Climate protection does not end at national borders, but must be thought of and tackled globally,” says Green budget politician Sven-Christian Kindler about the decision. “This also applies to the powerful lever of budgetary and financial policy.” At the climate conference in Glasgow, the federal government committed itself to ending public funding for fossil energy projects abroad. The federal government still has a little over a month to explain how it intends to implement this obligation.
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