Germany Adopts More Ambitious Emissions Targets

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Stockholm (NordSIP) – On Wednesday, May 5th, Germany’s Finance Minister, Olaf Scholz (Pictured) announced his country’s new goal to achieve a 65% reduction in CO2 emissions by 2030, followed by a 88% reduction by 2040. Under the new targets, Germany will also aim for nearly net-zero emissions by 2045, rather than 2050 as initially planned,

The decision takes place in the build-up to the German parliamentary election due to take place on September 26th, 2021, which has recently seen the green party top voter intention surveys since April 20th. The announcement also follows a ruling by the German Constitutional court at the end of April, which demanded the government update the climate law by the end of 2022 to clarify how it will bring net carbon emissions down to almost zero by 2050.

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“This decision clearly strengthens climate action. It provides momentum for tackling the difficult tasks ahead. The Federal Constitutional Court has reaffirmed the mechanism that we introduced with the Climate Change Act and that lays down annually decreasing emissions targets for all sectors. I would have liked to include an additional interim target for the post-2030 period but there was no majority support at the time. This is why it is a positive development that the Federal Constitutional Court is now ruling out the option of shying away from future action. The Federal Constitutional Court gives the legislator a clear mandate to establish clear legislative provisions beyond the year 2030 for the path to climate neutrality. To ensure we do not lose any time, I will present key elements for an updated Climate Change Act before the end of the summer to create long-term planning certainty,” Scholz commented on that occasion.

“The German government has taken many steps to improve climate action in recent years. During Germany’s Presidency of the Council of the European Union in 2020, we were able to reach agreement on a significantly more ambitious EU climate target and to submit this to the United Nations. The new EU climate target will also make a considerable contribution to more climate action in Germany in the period up to 2030. For example, a stricter emissions trading scheme will greatly accelerate the energy transition away from fossil energy sources and towards renewable energies in the years ahead. By doing this, we can comply with the call from the Federal Constitutional Court to ensure that climate action measures are not delayed until a much later point in time,” Scholz concluded.

 

Image courtesy of the German Finance Ministry

 

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The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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