• One third of Germany’s stimulus plan could help lower emissions.
  • Billions are being spent on ‘green hydrogen’ – an energy source that could help to fuel industry – and to subsidise electric vehicles, creating the EU’s most generous EV subsidies.
  • The package reflects widespread calls for a ‘green recovery’.

Germany wants to lead the green recovery – and it’s prepared to spend to get there.

As part of its $145 billion recovery budget, the country's government has allocated some $46 billion to sustainable investments in areas like renewable power and electric vehicles, according to analysis by Bloomberg.

Petrol- and diesel-powered cars – a lucrative industry for Germany – get nothing. Meanwhile, an industry of the future, green hydrogen, stands to benefit from a $9 billion boost.

The move comes as organizations around the world, including the World Economic Forum, call for sustainable growth following the pandemic.

Green transition
Germany unveils plans for a green COVID-19 recovery.
Image: Bloomberg

What’s in Germany’s plan?

If approved by the German parliament, around a third of Germany’s $145 billion spending pledges could help bring emissions down.

The biggest single investment, at around $12 billion, is a commitment to help fund power costs, which have risen steeply in recent years. This is because German consumers have borne the cost of decarbonising the system through green levy surcharges. It’s hoped the investment will translate into more renewable energy.

Perhaps the most eye-catching announcement is a $10 billion bet on “green hydrogen”, or “tomorrow’s petroleum” as the country’s research ministry has described it. Hydrogen stores well as an industrial and vehicle fuel but is energy-intensive to produce – unless sufficient amounts of renewable energy can be used to create it, hence green hydrogen.

Around $9 billion is earmarked for electric vehicle (EV) subsidies, which would – according to Bloomberg – make German EV buyers the most well-supported in Europe.

Other major commitments include public transport, and most notably the rail system which can create less carbon per passenger than other major forms of travel.

The sustainable direction of these measures is part of a longer-term plan for Germany, a country that has ambitions to be carbon neutral by 2050.

What about other countries?

While the EU has pledged to spend 25% of its budget on climate action, it is not yet clear exactly how much money this will mean in practice for green industries. South Korea has also made sizeable green commitments.

Many other nations are still working on their stimulus plans.

What’s the World Economic Forum doing about climate change?

Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum's Global Risks Report continues to rank these environmental threats at the top of the list.

To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.

The World Economic Forum's Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.

This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.

Contact us to get involved.

And the time for climate alleviation measures looks pressing. While carbon emissions plunged at the height of the crisis, they are heading back up – and fast.

A sustainable recovery

Germany’s investment priorities echo those of an increasing number of businesses, organisations and individuals highlighting the global importance of sustainability being at the forefront of economic recovery.

The World Economic Forum is calling for a Great Reset – a commitment to build a fairer, more sustainable and more resilient future following the coronavirus crisis.

And the decisions impacting the future of power and industry are at its heart.

"We have to decarbonise the economy in the short window still remaining and bring our thinking and behaviour once more into harmony with nature,” says Professor Klaus Schwab, World Economic Forum Founder and Executive Chairman.

The question is now: will nations dig deep, risk alienating fossil-fuel-based industries – and follow Germany’s lead?