August 25, 2019 / 10:22 AM / 3 months ago

Merkel's Bavarian allies call for German climate bond - BamS

FRANKFURT, Aug 25 (Reuters) - Germany’s Christian Social Union (CSU), the sister party of Chancellor Angela Merkel’s Christian Democrats (CDU), are planning to launch a climate bond to help fund its efforts to reduce emission targets.

“Climate change needs billions of euros of investment in climate friendly technologies,” Alexander Dobrindt, a senior lawmaker from the CSU Bavarian party in Merkel’s coalition, told weekly Bild am Sonntag.

“That’s why we’re planning to incentivise and reward citizens’ investment in climate protection via positive interest rates. For that reason we are planning to launch a climate bond with a return of 2% a year guaranteed by the state which runs until 2030.”

If approved, the bond would have to be issued by German state bank KfW.

Germany plans to cut CO2 emissions by 40% until 2020 compared with 1990 levels, and by 80-95% by 2050. It also plans to spend at least 40 billion euros ($45 billion) in regions affected by a planned exit from coal-fired power generation.

A senior government official told Reuters earlier this month that Germany is considering ditching its balanced budget policy to help finance a costly climate protection programme with new debt. ($1 = 0.8973 euros) (Reporting by Christoph Steitz; Editing by Angus MacSwan)

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