Coal finance

Climate Policy backwards: German Government insures export of climate killers

Advertizing campaign of the German Ministry of Economics: impeding the Energiewende is already bad, but giving credit guarantees for exports of climate killers is really tasteless. Photo © BMWi

Parallel to providing financial support to developing countries in the fight against climate change, the German government subsidizes the export of climate killers – in essence, that was the federal government’s reply to a written inquiry by the Green MP Ute Koczy.

It stated that in the past five years, over half of the Hermes export credit guarantees in the energy sector were issued to energy projects based on fossil fuels and only a smaller share for solar, wind, hydro and biomass.

The figures not only stand in stark contrast to Germany’s goal of transitioning to renewable energy, they also defeat the purpose of the climate finance measures with which the German government is assisting developing countries in shifting to climate-friendly development paths.

Hermes export credit guarantees of the German government in the energy sector, 2008-2012

*The figures for 2013 are not known – with the exception of an anticipated memorandum of insurance over €1 billion for the Ptolemeida coal-fired power plant in Greece. The chart presents the totals of the memoranda of insurance in the energy sector for all export credit guarantees issued. The chart distinguishes between dams that generate over 20 MW of power and smaller ones, as large dams generally cause significant social and environmental problems and therefore cannot be regarded as a sustainable source of energy. Source (2008-2012 figures): BMWi 2013

The German government grants Hermes export credit guarantees to insure the exports of German companies against the insolvency of foreign buyers. Should a loss occur that is not covered by income from the premiums, the federal budget, and thus the German taxpayer, steps in to cover the shortfall. The Hermes guarantee instrument has been criticized for years for undermining the transition to sustainable energy sources in emerging and developing countries by providing protection for the export of fossil or nuclear power projects that remain online for decades. A reasonable approach would be to stop issuing guarantees for the export of coal-fired power plants and other energy projects based on fossil fuels, and to restructure the instrument to support renewable energy projects exclusively.