Germany has improved its enabling environment.
The government has long been providing financing instruments and subsidies, with the German development bank KfW as a key distributor of incentives. KfW has been actively supporting the green bond market by issuing green bonds regularly since 2014.
Next to KfW, Germany issued its first-ever sovereign green bond in September 2020, raising 6.5 billion Euros.
Germany has further adopted its Climate Change Act (Klimaschutzgesetz – KSG) in December 2019. The KSG affirms the goal of working towards climate neutrality by 2050 and sets emission reduction targets of minus 55% by 2030 compared with 1990 emission levels. In light of the Covid-19 pandemic, the German Government included further incentives to support green finance in its recovery package, e.g. supporting the implementation of its hydrogen strategy through a dedicated investment package. Despite revised targets for renewables, there have been no additional incentives for financing green energy projects.
The German enabling environment could benefit from a more active role on climate-related disclosure by the German central bank (Bundesbank). The German government could introduce a more granular plan and a clear transition pathway to decarbonise its economy along the Paris Agreement and align its investment decisions with that plan.
Next to its own actions, Germany benefits from the EU sustainable taxonomy and the planned EU Ecolabel for financial products as similar public initiatives are currently neither in place nor planned at the national level.