New ways of financing climate protection in developing and newly industrializing countries

In addition to state financing, private investment is needed to achieve the goal of limiting global warming to 2 degrees Celsius. At the end of a conference on climate protection financing in developing and newly industrializing countries, Federal Environment Minister Norbert Röttgen stated in Berlin: "We have to completely change our economic and production patterns. This also includes investment financing. A structural change towards future-oriented, modern and sustainable economics must be implemented globally. In order to achieve this we must spend tight public funds intelligently so as to ensure that as much private capital as possible will be invested in a climate-friendly future."

Greenhouse gas emissions must be reduced by more than 50 per cent globally. Reductions required in industrialised countries are between 80 to 95 per cent up to 2050. Against this background, KfW Entwicklungsbank and the Federal Environment Ministry launched a two-day international conference on this issue.

More than 150 international and national experts from the public sector, the private sector - in particular financing -, science, civil society from industrialised and developing countries discussed the following core issues: How can public means be used to mobilise private investment in climate protection? How can public funds help to create and improve framework conditions for climate-friendly private sector investment in developing and newly industrializing countries?

It became clear that climate protection financing cannot solely rely on credit lines for developing countries and the carbon market. Conference participants discussed a host of instruments and measures such as:

• the limitation of political and currency risks through government instruments facilitates private investment decisions
• environmental standards as a criterion for decisions on investments
• the promotion of local climate technology markets by strengthening corporate equity building
• the establishment of appropriate political framework conditions creating a "green" investment scenario in industrialised and developing countries.

One characteristic of these approaches is that each public euro is supplemented by a multitude of private euros so as to pave the way for the enormous climate protection investment volume. The conference thus provided valuable impetus for close cooperation between public and private investment to the benefit of climate protection on the path to the upcoming Cancun climate conference.