Study by KfW Research and Deloitte for COP 30:

• The global market for clean technologies is growing rapidly and, in line with current trends, will double in less than ten years
• Good starting point in Germany – clean technologies with a 13 per cent share in world trade
• Global climate-related damage at more than USD trillion over the past five years
• KfW at the COP: Climate action remains a core issue –commitments of more than EUR 360 billion for climate and environmental protection since 2017

As the global market for clean technologies is growing rapidly, climate action offers opportunities for boosting the competitiveness and resilience of the German economy. Both the demand for clean technologies and the inflow of capital into this sector increased very dynamically, on average by 7.3 per cent between 2010 and 2022, and 9.6 per cent per year between 2019 and 2024, respectively. If the current trend continues, the market volume will double in less than ten years. By 2045, forecasts are even predicting a quadrupling. 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 well placed on world markets. At present, the share of German green tech exports in world trade is 13 per cent – which is significantly more than Germany’s share in global exports (a good seven per cent). The share of green technology in domestic gross value added is nine percent and in German exports eight percent. The figure for jobs is 7.5 per cent. The focus is on products for the generation, storage and use of clean energy, industrial decarbonisation, digitalisation, circular economy and new materials, for example for rotor blades in wind power, or for chip production.

Investments in climate action are also worthwhile because the expected costs of inaction exceed the investments needed to limit climate change. Climate-related damage worldwide has totalled more than USD 1 trillion over the past five years (Source: Emergency Events Database). At the same time, 88 per cent of global investors are currently interested in investing in sustainability.

"In light of the upcoming UN Climate Change Conference, it is important to underscore the economic opportunities of clean technologies,"

said Stefan Wintels, CEO of KfW. Despite the withdrawal of the United States from the Paris Agreement, countries that are 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 risk and creates long-term value. Investments in environmentally friendly technologies offer the opportunity to participate in fast-growing markets."

As a bank committed to responsibility, these results encourage KfW to remain a driving force in climate action and to keep climate and environmental financing in Germany and worldwide at a high level. Since 2017, KfW has pledged around EUR 362 billion for environmental and climate financing. According to Wintels, it has budgeted about EUR 40 billion for 2026.

Hans-Jürgen Walter, Global Lead Sustainable Finance, Deloitte:

"Numerous examples of companies demonstrate that investing in climate action not only helps to reduce operational, financial and reputational risks, but also offers strategic advantages in the course of decarbonisation and climate adaptation. Companies that rely 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 in international competition and needs to further strengthen its innovative capacity.

Further results of the study:

• In addition to access to future growth markets, climate action offers companies further advantages: They benefit from an improved risk position and increased resilience, as they are less dependent on volatile energy and CO2 prices. In view of the decrease in costs of renewable energies and storage facilities, climate action also offers the potential for cost reductions. Furthermore, regulatory requirements combined with increasing interest in sustainable investment opportunities lead to favourable financing options.
• At around USD 2 trillion annually, global investment in clean energy is now twice as much as investment in fossil fuels (around USD1 trillion) – whereas ten years ago more was invested in fossil fuels than in clean energy.
• In the short term, climate change mitigation 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 electricity grids. The lack of a uniform international framework for CO2 prices has a negative impact on the risk-return profile of green investments.

Targeted policy measures are needed to exploit the opportunities offered by climate action. The study recommends in particular:

• reducing investment risks of green projects through risk sharing between public and private capital and tailored financing offers;
• accelerating the market penetration of green products, for example through binding standards and transparent certifications;
• a predictable and reliable path of carbon pricing, coupled with measures to compensate for internationally differing carbon prices;
• increased support for research and development and support for start-ups as drivers of innovation.

The full study "The economic benefits of climate action – How decarbonization can enhance competitiveness and growth" can be downloaded from KfW Studies(PDF, 6 MB, accessible)