The German federal government is considering providing credit guarantees worth €893 million for gas-fired power plants abroad, according to a response from the Ministry of Economic Affairs to a query from the Green Party parliamentary group, reported by the Funke Media Group newspapers. The government has issued Letters of Interest for five gas projects internationally, including those in Iraq and Mexico.
These Letters of Interest indicate a preliminary willingness to provide export credit guarantees – also known as Hermes guarantees – for a project, but are not legally binding. However, they can improve the likelihood of a project moving forward. The inquiry specifically requested information on letters issued since June 2024, with the number originating from the current federal government remaining unclear.
Export credit guarantees are a component of Germany’s foreign trade promotion, protecting German companies against payment defaults on projects abroad under certain conditions. The governing coalition revised the guidelines governing the issuance of these guarantees in 2023. Since then, projects are evaluated for their compatibility with the 1.5-degree Celsius goal of the Paris Agreement. Gas-fired power plants can be eligible for funding under these guidelines in exceptional circumstances.
Environmental groups are calling for an end to export credit guarantees for gas projects. Moritz Leiner, an energy expert with 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.
He argued that during the upcoming review of the climate guidelines, the federal government must adhere to its commitment to the 1.5-degree limit and consistently end export promotion for gas-fired power plants. The guidelines, revised by the current coalition, are scheduled for review this year. The conservative and social democratic parties in the governing coalition have agreed to “flexibilize” the guidelines.