Climate debt: Financial expert warns of overwhelming burdens. Why a climate debt brake is necessary and how high the costs actually are.

Climate debt: Financial expert warns of overwhelming burdens. Why a climate debt brake is necessary and how high the costs actually are.

According to a report from www.fr.de, environmental expert Axel Friedrich is calling for a U-turn in financial policy in order not to crush future generations with the coming climate debt. He argues that the current debt brake in the Basic Law should be replaced by a “climate debt brake” because the debts caused by climate change cannot be easily paid off. This debt results from the costs resulting from CO2 emissions and the resulting climate damage. Technologies for removing CO2 currently cost around 600 euros per ton, which leads to significant climate debt.

The introduction of a climate debt brake could potentially force politicians to make the necessary investments in climate protection in order to reduce emissions and avoid climate debt. Axel Friedrich emphasizes that sticking to the debt brake from the Basic Law hinders climate protection, as investments are necessary to avoid climate debt.

According to KfW, the transformation to climate neutrality by 2045 requires high investments of around 70 billion euros per year, which could only be made possible by abolishing the debt brake for climate and environmental protection. Investment incentives, similar to the US Inflation Reduction Act, could be a way to invest in future technologies and reduce climate debt.

The introduction of a climate debt brake and the associated investments could also influence the financial market and the financial sector if larger sums are made available for climate protection and the CO2 price continues to rise. This could lead to new business opportunities and investments in sustainable technologies.