Climate neutrality: Politicians must get the damaging bank blockade under control

Created: 01/29/2022, 09:59 am

Prof. Michael Hüther: The doctor of economics (born in 1962) has been the director of the employer-oriented Institute of German Economics (IW) in Cologne since 2004.

© N. Bruckmann/M.

Litzka/dpa

With the EU taxonomy, the Commission risks transferring a moral hazard to banks and investors.

There is a lack of openness to technology and trust in the market economy, writes the director of the German Economic Institute (IW), Prof. Michael Hüther, in the guest article.

Cologne - It is largely undisputed that we will have to make our lives climate-neutral in the future.

Meanwhile, the way to get there is causing almost endless debates and ideologically heated discussions – most recently, the EU angered numerous people with its so-called taxonomy, which classifies certain economic activities as ecologically sustainable on the basis of technical criteria.

In addition to existing real economic instruments such as emissions trading, the taxonomy is intended to establish a binding and transparent sustainability standard on the financial market.

Investors and borrowers should receive a uniform basis for decision-making in order to assess what will help to implement the EU's Green Deal.

This should eliminate information asymmetries and avoid greenwashing.

The question under which conditions and signs bridging technologies such as gas and CO2-neutral nuclear energy are to be classified is currently controversial in Germany.

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Climate change, supply bottlenecks, corona pandemic: Rarely before has interest in the economy been as great as it is now.

This applies to current news, but also to very fundamental questions: How do the billion-euro Corona * aid * and the debt brake fit together?

What can we do about the climate crisis without jeopardizing our competitiveness?

How do we secure our pension?

And how do we generate the prosperity of tomorrow?

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Financial market players with moral coquetry

There is a consensus that on the way to climate neutrality we are dependent on technologies that are not yet working in a climate-neutral manner. Without these bridging technologies, the energy supply is not secured. At the same time, politicians, banks and investors are in a field of tension in which there is a lack of openness to technology and trust in the market economy. Entrepreneurs are increasingly being disadvantaged when it comes to financing, because financial market players hardly dare to break cover and occasionally even seem to be subject to a kind of moral coquetry.

For example, it contradicts all logic to refuse paper producers the necessary funds for energy modernization of their production lines or not to support petrol station operators if they want to invest in fast charging stations - in each case on the grounds that the traditional business area is not sustainable.

Here, the banks act as if they had industry-specific knowledge that they, in turn, cannot have - because they have not yet collected it.

As a result, they are more likely to be guided by moral judgments when making their decisions.

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Transformation can only succeed together

At this point, politicians are required to design control instruments such as taxonomy so flexibly and openly that a joint transformation to climate neutrality can succeed.

The aim must be for all those involved – industry, banks, interest groups, associations – to pull together and not for some to rise up morally while the others fall by the wayside.