FÖS warns: Without clear climate criteria there is a risk of expensive bad investments!

FÖS warns: Without clear climate criteria there is a risk of expensive bad investments!

The Ecological-Social Market Economy Forum (FÖS) supports the federal government's generous investment offensive, which includes up to 500 billion euros by 2036 for the special fund “Infrastructure and Climate Neutrality” (SVIKG). Nevertheless, FÖS expresses concerns about the lack of ecological and social guardrails that are necessary to ensure that the funds actually benefit climate protection. Without clear climate protection criteria, there is a risk that investments will favor climate-damaging projects and miss their actual goal Sunny side reported.

FÖS criticizes the fact that the current draft law aims for climate neutrality, but does not set any specific criteria for climate protection. This gap could mean that climate-damaging investments are not excluded, especially in areas such as digitalization, energy and transport, which are seen as particularly problematic. FÖS calls for the introduction of the “Do No Significant Harm” principle for all investments.

Necessary measures in the transport sector

In the transport sector, FÖS sees an urgent need to renovate the existing infrastructure and criticizes the lack of a plan to reduce private transport. A structural shift in transport performance towards trains, buses and cycling is required in order to promote environmentally friendly alternatives. There are also calls to exclude climate-damaging projects such as non-hydrogen-capable gas power plants and new motorway construction.

While investments are supported with the aim of additionality and planned performance monitoring, this is not enough for FÖS. Clearly defined indicators for climate, environmental and distributional impacts must be established in order to avoid false incentives. Clear incentives are crucial to support the transformation into a climate-friendly economy and to convert environmentally harmful subsidies to promote sustainable projects.

Financing for greenhouse gas neutrality

In the context of comprehensive economic solutions to climate change, the transition to a green economy is discussed. During the 2021 UN Climate Change Conference in Glasgow, it became clear that market prices do not adequately reflect the negative externalities of greenhouse gas emissions. Therefore, government intervention is necessary to reduce emissions, which is also supported by the Bundesbank is confirmed.

To achieve greenhouse gas neutrality, massive investments of 1.2 trillion euros are forecast annually for the EU, which corresponds to around 8% of the EU's GDP. In Germany, it is estimated that annual investments of around 390 billion euros will be necessary by 2030 to reduce emissions by 65% ​​compared to 1990. There is also an additional financing requirement of around 120 billion euros.

Funding must come from a mix of internal (e.g. savings) and external sources (e.g. bank loans). Politicians are required to develop clear and reliable plans in order to secure these necessary investments and not to waste resources unnecessarily. A robust banking structure is highlighted as crucial to financially supporting the transition to greenhouse gas neutrality, and banks could play a larger role than is currently recognized.