Germany needs 290 billion euros annually for climate neutrality, says KfW study
Germany must invest 290 billion euros per year to achieve climate neutrality by 2045, according to a new KfW study. The transport sector requires the largest share of these investments.
Berlin – Germany faces an annual investment requirement of 290 billion euros to reach climate neutrality by 2045, according to a new study commissioned by the German development bank KfW. The total investment needed by 2045 is estimated at six trillion euros.
This figure represents a significant increase from previous estimates, driven by recent price inflation and ongoing underinvestment. The transport sector is projected to require the largest portion, approximately 45 percent of the total, followed by energy (25 percent), buildings (22 percent), and industry (8 percent).
The study suggests that the German economy can benefit from the climate transition. Germany is already the second-largest exporter of climate protection goods globally, with rapidly growing markets offering opportunities for domestic companies. The shift to cleaner technologies could also reduce energy costs for both businesses and households. Conversely, the economic risks posed by climate change, such as extreme weather events, could significantly hinder economic performance.
Annual investments in climate protection between 2018 and 2023 averaged 110 billion euros. At this rate, a shortfall of approximately 180 billion euros per year is projected to meet the 2045 goal. However, the study clarifies that the additional investment needed compared to conventional fossil-fuel technologies is lower, around 65 billion euros annually, which is less than two percent of the gross domestic product.
Nearly half of the total investment, approximately 140 billion euros per year, is expected from private and public companies, including both large corporations and small and medium-sized enterprises. Energy companies face substantial investment needs, around 1.3 trillion euros, for infrastructure and renewable energy. Households are expected to contribute through building renovations and the adoption of electric vehicles. The public sector's contribution is estimated at 33 billion euros annually, primarily for energy infrastructure and transportation.