The new German government – a coalition between the Social Democrats (SPD), Free Democrats (FDP) and Greens that will soon take office – is determined to create conditions to attract investors’ capital, including from pension funds, to move ahead with a digital and green revolution.
“We are setting the course for a socio-ecological market economy” to open up “a decade of investments,” the coalition partners underlined in the agreement to form a government led by social democrat Olaf Scholz.
The partners want to lay the foundations of what they call a “sustainable prosperity”, interconnecting “economic development and ecological responsibility” with innovation, investment and a competitive environment in industry, they said.
“There are so many private initiatives, know-how and private capital in our country that we finally want to unleash [these] to continue our path towards a decarbonised, digitised, technological nation,” the future finance minister Christian Lindner said.
Germany aims to become a leading location for start-ups in Europe and the Future Fund, or Zukunftsfonds, will open up the venture capital market to institutional investors.
The new government intends to facilitate the flow of private capital from institutional investors, including insurance companies and pension funds, to finance start-ups, it said.
The outgoing government of Angela Merkel set up the Future Fund to support start-ups with financing, particularly in the capital-intensive scaling phase.
It had also planned to launch a fund-of-funds for growth capital, with the support of KfW Capital, a subsidiary of the KfW Group investing in German and European venture capital and venture debt funds, to mobilise capital from institutional investors.
The state-owned investment bank KfW is now set to function as “as an innovation [and] investment agency” in artificial intelligence, quantum technology, hydrogen, medicine, sustainable mobility, bioeconomy and circular economy, according to the coalition agreement.
The coalition partners also plan to facilitate IPOs, capital increases and the issue of shares with different voting rights (dual class shares), especially for companies looking to grow and small and medium-sized companies (SMEs).
New business models and technologies can, in the view of the coalition partners, create “climate-neutral prosperity.”
“We have identified concrete measures to achieve the [climate] goals”, said Robert Habeck, Green party co-chair, who is set to take over the post of minister of economy and climate.
He gave as an example the production of 80% of the energy consumed from renewable sources by 2030. The phase-out from coal will happen “ideally” by 2030, the partners said, from a current roadmap leading to an exit from coal in 2038, in a setback from a 2030 promised by the Greens in the electoral programme.
The Friday for Future movement considers the coalition agreement insufficient to contain global warming.
Environmental Action Germany (Deutsche Umwelthilfe e.V.) thinks that the coal phase-out in 2030 and the “massive expansion of renewable energies” is in course to achieve the goals in the Paris agreement but an “ambitious programme is necessary in the first 100 days [of government] so that these projects can be implemented quickly and vigorously,” said managing director Sascha Müller-Kraenner.
The new government wants to implement a “credible sustainable finance strategy” based on the recommendations of the sustainable finance committee, which will continue to operate as an independent body.
It will support the introduction of uniform, transparency standard for information on sustainability for companies at the European level and the European Commission’s plan to develop a Corporate Sustainability Reporting Directive.
But if the European Union has not agreed on an a CO2 minimum price on the emission trading system (ETS), Germany will take appropriate measures at national level to avoid the CO2 price drop in the long term below €60 per ton.