German private firms asked to pay up for climate protection

Greater private investment is required to combat climate change, German Chancellor Olaf Scholz said on Friday, adding that public money from developed countries isn't enough to stem the tide.

"We need a new approach to financing climate protection," Scholz told the Petersberg Climate Dialogue (PCD) conference in Berlin. "Discussions which focus only on public financial pledges aren't nearly enough."

Scholz pointed out that, according to experts, $2.4 trillion per year until 2030 is required to finance a switch to climate-friendly energy in developing countries.

"That is a gigantic sum," he said. "With the best will in the world, public money from a small group of countries will not be enough for investment on this scale."

While insisting that developed nations should continue to take their share of responsibility and highlighting the €6 billion ($6.4 billion) that Germany invested in climate protection and conversion in developing countries in 2022, Scholz called on the private sector to help shoulder the burden.

Lawmakers pass climate protection reform act

The Chancellor's comments came as lawmakers in the Bundestag, Germany's parliament, on Friday passed a reform of Germany's Climate Protection Act.

The amended law will overhaul how targets for reducing greenhouse gas emissions are implemented. German law requires the country to reduce its greenhouse gas emissions by 65% by 2030 compared to 1990 levels.

The proposed changes have been deeply controversial, pushed primarily by the pro-business Free Democrats (FDP) but with some environmental groups sharply opposed to the changes, complaining that requirements which ensured accountability, such as placing specific responsibility with individual ministries, will be stripped from the law.

The conservative CDU opposition has criticized the reform as "removing the core" of the legislation.

How does Olaf Scholz want to encourage private climate investment?

Scholz said there needed to be a  favorable economic environment for private investments. He also called on development banks to encourage private investments by securing them against local currencies.

"Private investors want reliable regulatory frameworks and good governance," he said, echoing similar calls made by his foreign minister, Annalena Baerbock, and development minister, Svenja Schulze, at the conference.

German Chancellor Olaf Scholz insists Germany will meet its climate commitments, but that public money isn't enoughImage: Florian Gaertner/photothek/Auswärtiges Amt/picture alliance

Scholz also called on emerging economies to contribute along with established industrial countries.

"Countries which have contributed significantly to emissions in the last 30 years should also contribute to public climate financing if they are economically able to," he insisted.

To help such countries do that, he said Germany plans to change its bilateral debt relief framework to enable middle-income countries to benefit from climate investment.

"In future, vulnerable middle-income countries that are willing to reform could also be eligible for a climate debt conversion programme," he said on the sidelines of the PCD.

German Chancellor Olaf Scholz (center) and Foreign Minister Annalena Baerbock (right) sit next to the President of Azerbaijan (Ilham Aliyev) at the Petersberg Climate Dialogue.Image: Juliane Sonntag/photothek/Auswärtiges Amt/picture alliance

COP29 host Azerbaijan defends green credentials

The PCD conference is seen as an important preparatory event for COP29 in Baku, Azerbaijan, later this year. But the choice of host country has been criticized given Azerbaijan's status as a major exporter of gas and oil.

Baku has signed contracts to continue delivering large amounts of gas to the European Union and wants to increase exports by 2027 but insists that it is also following a "green agenda" by investing in solar and wind energy, including potential new wind farms in the Caspian Sea.

Speaking at the conference, President Ilham Aliyev said he hoped that Azerbaijan could export up to five gigawatts of energy from renewable sources by 2030. For context, one gigawatt would be enough to power 500,00-700,000 homes, or a medium-sized western city, for a year.

"In particular countries with large reserves of oil and gas should be on the front line of climate change," said Aliyev.

mf/sms (dpa, Reuters)