- Global market for clean technologies is growing rapidly and, based on current trends, will double in less than ten years
- Good starting point in Germany – clean technologies account for 13 percent of global trade
Global climate-related damage exceeds one trillion dollars over the past five years - KfW at COP: Climate protection remains a core issue – out of a sense of responsibility, the bank has committed more than EUR 360 billion to climate and environmental protection since 2017
Climate protection offers opportunities for the competitiveness and resilience of the German economy, as the global market for clean technologies is growing rapidly. Both demand for clean technologies and capital inflows into this sector rose very dynamically between 2010 and 2022 and between 2019 and 2024 (by an average of 7.3 percent and 9.6 percent per year, respectively). If the current trend continues, the market volume will double in less than ten years. Forecasts even predict a fourfold increase by 2045. This is the conclusion of a new study published by KfW Research and Deloitte shortly before the 30th World Climate Conference (COP30).
Domestic clean technology industries are in a good position on the global markets. German green tech exports currently account for 13 percent of world trade – significantly more than Germany’s share of total global exports (just over seven percent). Green tech accounts for nine percent of domestic gross value added and eight percent of German exports. In terms of jobs, the figure is 7.5 percent. The focus is on products for the generation, storage, and use of clean energy, industrial decarbonization, digitalization, the circular economy, and new materials, for example in the field of wind power for rotor blades and in chip production.
Investments in climate protection are also worthwhile because the expected costs of inaction exceed the investments required to limit climate change. For example, climate-related damage worldwide has totaled more than one trillion US dollars over the past five years (source: Emergency Events Database). At the same time, 88 percent of globally active investors are currently showing interest in investing in sustainability.
“Shortly before the UN Climate Change Conference, it is important to emphasize the economic opportunities offered by clean technologies,”
said Stefan Wintels, CEO of KfW. Despite the US withdrawal from the Paris Climate Agreement, countries responsible for around three-quarters of global economic output and CO2 emissions have committed to achieving greenhouse gas neutrality targets.
“Integrating sustainability into corporate strategy strengthens companies’ resilience, reduces risks, and creates long-term value. Investments in environmental technologies offer companies the opportunity to participate in rapidly growing markets.”
The results reinforce KfW’s commitment as a responsible bank to remain a driving force in climate protection and to maintain a high level of climate and environmental financing in Germany and worldwide. Since 2017, KfW has committed around EUR 362 billion to environmental and climate financing. According to Wintels, it has budgeted around EUR 40 billion for 2026.
Hans-Jürgen Walter, Global Leader Sustainable Finance, Deloitte:
“Numerous corporate examples show that investments in climate protection not only contribute to reducing operational, financial, and reputational risks, but also open up strategic advantages in the course of decarbonization and climate adaptation. Companies that focus on sustainable business models at an early stage strengthen their competitiveness and can make targeted use of new growth markets.”
Germany has significant innovation potential in many of these areas, but is under pressure from international competition and needs to further strengthen its innovative capabilities.
Further findings of the study:
- Beyond access to future growth markets, climate protection offers companies further advantages: They benefit from an improved risk position and increased resilience due to lower dependence on volatile energy and CO2 prices. In addition, climate protection offers the potential for cost reductions in view of the cost degression of renewable energies and storage. Furthermore, regulatory requirements and growing interest in sustainable investment opportunities are leading to advantageous financing options.
- Global investment in clean energy, at around US$2 trillion, is now twice as high as investment in fossil fuels (around US$1 trillion) – whereas ten years ago, more was invested in fossil fuels than in clean energy.
- In the short term, climate protection activities are associated with a number of challenges. One-third of the emission reductions required by 2050 are based on technologies that are currently still in the demonstration or prototype phase. Future electricity prices depend in particular on the efficiency of the energy system and the speed of investment in existing power grids. The lack of a uniform international framework for CO2 pricing has a negative impact on the risk-return profile of green investments.
Targeted policy measures are needed to exploit the opportunities offered by climate protection. In particular, the study recommends:
- reducing the investment risks of green projects through risk sharing between public and private capital and tailor-made financing offers;
- accelerating the market penetration of green products, for example through binding standards and transparent certifications;
- a predictable and reliable path for CO2 pricing, coupled with measures to compensate for international differences in CO2 prices;
- increased funding for research and development and support for start-ups as drivers of innovation.