Germany is facing renewed scrutiny over its international climate commitments as a proposed overhaul of export finance rules could eliminate 40 per cent of climate assessments for projects backed by its export credit agency, Euler Hermes, according to research and advocacy groups. The move comes despite Germany’s 2021 pledge to end international public finance for fossil fuels and its continued engagement with India on climate action and the green transition.
The draft policy, released for consultation until October 9, retains provisions under which some gas power projects can qualify for export finance if they meet hydrogen readiness or carbon capture and storage (CCS) conditions, according to Oil Change International (OCI) and German environmental groups Deutsche Umwelthilfe (DUH) and urgewald.
The proposed changes will allow Euler Hermes to eliminate 40 per cent of the climate assessments it currently carries out, according to Oil Change International, a global research and advocacy organisation focused on ending fossil fuel expansion. OCI says Germany has approved $1.5 billion in fossil fuel finance since joining the Clean Energy Transition Partnership (CETP) at the 2021 UN climate conference in Glasgow, making it the second largest violator of the pledge. OCI last month revealed that German public finance was enabling fossil fuel expansion in Brazil’s Legal Amazon.
Germany’s export credit framework, however, says its climate strategy is aligned with the Paris Agreement’s 1.5°C goal. Since 2023, export transactions subject to the climate review are placed in green, white or red categories. Green projects receive improved cover conditions, projects compatible with the 1.5°C pathway remain eligible, while projects deemed incompatible are excluded from cover. The government also aims to reduce the greenhouse gas footprint of its export credit guarantee portfolio to net zero by 2050.
The wider issue is particularly relevant for emerging markets and developing economies, where international public finance can influence whether new energy infrastructure supports clean energy or extends fossil fuel dependence. By comparison, France, the UK, Canada, Spain and other countries have reduced international public finance for fossil fuels by 78 per cent from pre-CETP levels, according to the International Institute for Sustainable Development, a global research institute focused on sustainable development and climate policy.
The German export credit guidelines contain specific pathways for some gas projects. Existing gas-fired power plants can remain eligible where they are technically designed to shift to up to 50 per cent hydrogen by 2030 and up to 100 per cent by 2035, without major capacity expansion or significant extension of operating life. The guidelines also provide for support for existing gas plants retrofitted with CCS or carbon capture, utilisation and storage (CCUS), subject to requirements including best available technology and evidence of permanent storage of captured carbon dioxide.
The framework also allows, in individual cases, export support for gas turbines during a transitional period where the German supplier is demonstrably 50 per cent hydrogen ready, has evidence of 1.5°C compatibility including Scope 3 emissions, and the power project is shown to deliver significant short-term emissions reductions while avoiding fossil fuel lock-in. A simple shift from coal to gas, however, is not sufficient on its own, according to the official guidelines.
DUH and Urgewald said the proposed framework would therefore make it easier for companies to secure state-backed support for fossil and nuclear power projects abroad. The groups said support could extend to exploration, extraction, transport and storage of fossil gas under certain conditions.
The draft would also allow support for existing nuclear power plants on security grounds, according to DUH and Urgewald. The groups said similar support in the past had contributed to the continued operation of the Zaporizhzhia nuclear power plant in Ukraine.
The groups acknowledged that support for renewables would also increase substantially under the proposal. However, they said the German government had received applications worth more than €1 billion in public funds for gas plants abroad since 2023 and had filed 15 Letters of Interest for gas projects worth another €3 billion. Letters of Interest typically precede formal guarantee applications, according to the groups.
Official German data provide a different picture of recent demand for LNG-related export support. A response from the German government published by the Bundestag on August 26 said that between November 2023 and June 2026, there had been no Letters of Interest or applications to Euler Hermes, PwC or the government for LNG terminals, LNG terminal components or LNG tankers. One request concerning an LNG project in Argentina’s Rio Negro province had been received for assessment of its eligibility for raw materials-related support, but no application for a United Loan Guarantee had followed.
The debate over export finance comes as Chancellor Friedrich Merz’s government faces pressure to balance climate action with efforts to revive Germany’s struggling economy. Speaking at the start of a two-day Cabinet retreat outside Berlin on August 25, Merz said Germany needed to “further curb climate change and at the same time better adapt to the consequences”. He said the country had suffered “significant damage” from extreme weather this summer, according to Agence France Presse.
Germany experienced a heatwave in late June that pushed temperatures above 42°C and broke the country’s all-time temperature record three days in a row, AFP reported. Official data cited by AFP put heat-related deaths at about 14,000 this year. Wildfires, crop losses and low river levels that disrupted navigation have added to the economic impact.
A Greenpeace study estimated the economic cost of the extreme summer of 2026 at least €36 billion, including productivity losses, health costs, poor harvests and disruption to river traffic. An expert commission forecast in May that Germany would miss its legally binding 2030 greenhouse gas emissions targets, according to AFP.
Meanwhile, India and Germany deepen cooperation on climate resilience, resource efficiency and clean technologies. At the fourth Indo-German Environment Forum in New Delhi on September 1, Union Minister for Environment, Forest and Climate Change Bhupender Yadav said environmental challenges, including climate change, biodiversity loss, pollution and resource depletion, require integrated and collaborative solutions.
Yadav said India had been consistently achieving its Nationally Determined Contribution or climate goal commitments ahead of schedule, and India’s circular economy could have a market value of more than $2 trillion and create close to 10 million jobs by 2050, according to an official statement by MoEFCC.
The minister highlighted renewable energy, energy storage, green hydrogen, energy efficiency and sustainable manufacturing as areas with significant potential for India-Germany cooperation.
German Environment Minister Carsten Schneider described India’s rapid expansion of renewable energy as a model for other regions and said the two countries shared the objective of ensuring sustainable development alongside economic growth.
The two countries also signed a Joint Declaration of Intent on the conservation and wise use of wetlands of international importance and agreed to expand cooperation on climate adaptation and wetland protection. The bilateral engagement also includes cooperation on low-carbon industries, biodiversity in wetlands, mountains and forests, resource efficiency and circular economy, sustainable finance, green skills and investment mobilisation.