The German federal government is considering providing credit guarantees totaling €893 million for gas-fired power plant projects abroad. This information stems from a response by the Ministry of Economic Affairs to a parliamentary inquiry from the Green Party, as reported by the Funke Media Group publications. The government has issued Letters of Interest for five gas projects internationally, including ventures in Iraq and Mexico.
These Letters of Interest signify a preliminary willingness to provide export credit guarantees – also known as Hermes guarantees – for specific projects, but do not constitute a legally binding commitment. However, they can substantially improve the prospects of a project moving forward. The inquiry specifically concerned Letters issued since June 2024, though it remains unclear how many originate from the current administration.
Export credit guarantees are a component of Germany’s foreign trade promotion, protecting domestic companies against payment defaults on projects undertaken abroad under certain conditions. The governing coalition revised the guidelines governing the issuance of these guarantees in 2023. Since then, projects are assessed for their compatibility with the 1.5-degree Celsius target of the Paris Climate Agreement. Gas-fired power plants are eligible for funding under these guidelines in exceptional circumstances.
Environmental groups are calling for an end to export credit guarantees for gas projects, arguing they are inconsistent with the climate goals outlined in the Paris Agreement. Moritz Leiner, an energy expert at the organization Urgewald, stated that state funding for new fossil fuel infrastructure is incompatible with the 1.5-degree limit to which the current government committed in its coalition agreement.
Leiner urges the government to adhere to its commitment to the 1.5-degree limit when revising the climate guidelines later this year and to consistently end export promotion for gas-fired power plants. The revised guidelines, initially implemented by the current coalition, are slated for review this year. The governing parties, a coalition of Social Democrats and Greens, previously agreed to “flexibilize” the guidelines.
