Germany presents a new report in Paris
How can development banks and other investors decide whether an investment is climate-friendly or not? A new study produced in the context of the German G7 presidency provides answers to this question. The paper was presented on the sidelines of the Climate Change Conference in Paris.
It specifically deals with criteria that both public and private investors can use as a guide to ensure that their investments contribute to limiting global warming to below two degrees Celsius.
Federal Environment Minister Barbara Hendricks made the following statement: "More and more investors are realising that policymakers are serious about decarbonisation, and these investors are increasingly basing their decisions on this. The G7 summit in particular has made this clear. But what exactly does the 2°C limit mean in practice for individual investment decisions? The report gives practical information on this issue."
The researchers derive categorisation of possible investments from various 2ºC scenarios. On a positive list there are investments in renewable energies, energy storage and low-carbon transport routes and means, which are important elements in limiting global warming to below two degrees Celsius.
On the negative list, however, are investments in construction of new conventional coal power plants, which in principle are not compatible with the 2°C limit according to scientific scenarios.
But the report also provides guidance for the variety of investments that fall in the grey area between these two poles. The report thus represents an important added value, because most of the investments are not on any positive or negative list, but must be viewed in context. For example, investments to increase energy efficiency will only be compatible with the 2°C limit if they are sufficiently ambitious. Gas power plants, on the one hand, are an important mainstay to compensate for fluctuations in electricity production from renewable energy in the course of transforming the energy system; a power system that is made up of 100 percent gas power plants, would not however be compatible with the 2°C limit.
The researchers also turned their attention to the sectors of energy, buildings and transport. For these areas specific requirements for clear guidance were established on the basis of the global climate goal.
The report is aimed primarily at development banks. To ensure their practicality, the criteria and recommendations were discussed with both public and private investors.