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01 Nov 2019, 13:26
Benjamin Wehrmann

Finance minister says Germany to issue 'environment bonds'

S眉ddeutsche Zeitung

German finance minister Olaf Scholz has said the government intends to issue state bonds dedicated exclusively to financing sustainable projects by 2020. In an with the S眉ddeutsche Zeitung, Scholz said the bonds Germany issues to refinance its national debt could be complemented with a bond category that feeds into environmental projects, "for example for benefiting the climate." The SPD finance minister said these "environment bonds" should pay the same interest as regular government bonds, thereby rejecting an idea floated by the conservative coalition partner CSU to issue green bonds with higher interest yields to attract buyers. "This would have been a bad deal for taxpayers," Scholz said. Interest rates on German government bonds currently are negative, meaning buyers are charged for holding state debt.

The German government is devising a strategy to better integrate finance and climate policy and has set up an advisory council to sound out possible steps for ensuring that lending and investment decisions contribute to emissions reduction rather than undermining it. The finance ministry (BMF) earlier this year said that the state's budget could be screened for 'green expenses' to back the environmental credentials of future green bonds.

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