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ENVIRONMENT

Germany’s Habeck to promote green production with ‘climate-protection contracts’

Germany plans to promote climate-friendly production by offering so-called 'climate-protection contracts' to industrial firms next year, Economy Minister Robert Habeck said on Sunday.

Published: 4 December 2022 18:33 CET
German Economy Robert Habeck addresses the media in Berlin
German Economy Robert Habeck addresses the media in Berlin on November 21, 2022. Habeck wants to introduce 'climate-protection contracts' for industry next year. Photo: Tobias Schwarz / AFP

The state funding would support companies in transitioning towards cleaner production and the use of hydrogen, encouraging the development of a marketable “green industry”.

“With the climate protection contracts, we are opening a new chapter, with Germany taking on a pioneering role,” Habeck told Germany’s Funke Media Group newspapers, which had sight of the draft directive on the agreements

Climate-friendly production processes are often so costly that companies cannot afford to switch to them.

Habeck wants to compensate large companies with high CO2 emissions for the additional costs they will incur in changing their production processes to lower emissions, thereby bringing new climate-friendly technology to market more quickly.

The proposed climate protection contracts would see both investment and operating costs subsidised over a period of 15 years.

However, not all industrial firms will be eligible. The contracts are intended to finance a few selected large production facilities in a targeted manner. This should, at the same time, drive the transformation of the entire industry.

Once green production becomes cheaper than conventional production, subsidised companies would then pay their additional income to the state.

“Climate protection contracts are therefore a very efficient funding instrument that makes transformative technologies calculable for investors and financiers and, at the same time, prevents the state from continuing to provide funding when it is no longer necessary,” the draft directive stated.

To be eligible for support, the company must exclusively use electricity from renewable sources in its production processes; hydrogen usage must meet strict criteria.

Habeck aims for the funding guidelines to come into force in the first half of 2023.

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POLITICS

‘Dexit’ would cost Germany ‘€690 billion and millions of jobs’

According to the German Economic Institute (IW), Germany's exit from the EU – the so-called Dexit – would cost millions of jobs and significantly reduce the country's prosperity.

Published: 19 May 2024 18:04 CEST
'Dexit' would cost Germany '€690 billion and millions of jobs'

In a study presented by the Cologne-based institute on Sunday, the authors showed that a Dexit would cause real GDP to drop by 5.6 percent after just five years. This means that Germany would lose 690 billion euros in value creation during this time.

In addition, Germany as an export nation is dependent on trade with other countries, especially with other EU countries, warned the authors. Companies and consumers in Germany would therefore feel the consequences “clearly” and around 2.5 million jobs would be lost.

The study is based on the consequences of Britain’s exit from the EU, such as the loss of trade agreements and European workers.

Taken together, the losses in economic output in Germany in the event of a Dexit would be similar to those seen during Covid-19 and the energy cost crisis in the period from 2020 to 2023, the authors warned.

Brexit is therefore “not an undertaking worth imitating,” warned IW managing director Hubertus Bardt. Rather, Brexit is a “warning for other member states not to carelessly abandon economic integration.”

Leader of the far-right AfD party Alice Weidel described Great Britain’s exit from the European Union at the beginning of the year as a “model for Germany.”

In an interview published in the Financial Times, Weidel outlined her party’s approach in the event her party came to power: First, the AfD would try to resolve its “democratic deficit” by reforming the EU. If this was not successful, a referendum would be called on whether Germany should remain in the EU.

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