An achievable horizon for the energy transition. It was this that gave the push to KfW Development Bank and the German government to create a new investment fund. The equipment, according to what he reported Bloomberg, is 1,1 billion dollars aimed at ensuring the national industry has critical materials. In reality, an achievable horizon for industrial sustainability has also been set by the European Union with law'European Critical Raw Materials Act , but Germany decided to take a motorway.
The EU Commission has decided to reach 2030 with raw materials produced in member countries, but the plans are not yet visible. Does German industry want to cross the finish line first? It seems so, otherwise the solo race wouldn't make much sense. Perhaps it will have to compete with France which has a similar initiative in the pipeline.
Economy in trouble
In December 2023, German industrial production is dropped by 1,6% and the government of Olaf Scholz has decided to intervene on the pillars of the national economy. Two days ago the Ministry of Economy announced an allocation of 16 billion euros for new gas power plants to be subsequently converted to hydrogen. Reassuring news for the 2024 recovery which is linked to the green conversion.
The KfW Development Bank is controlled by the state and will support the entire national supply chain. At the forefront is the automotive sector with Volkswagen and BMW determined to slow down imports of lithium, silicon, manganese and cobalt for electric cars. On the other hand, it is becoming difficult to maintain the main objectives of the Green Deal, in this case those of the Critical Raw Materials Act. It is a provision that still lacks a series of indications valid for all countries. L'Italy, for example, is the reflection of hesitations about a real industrial policy that should be overcome in favor of the decisive sectors. Unlike Germany, it doesn't put any money on the table, perhaps because the government believes little in the new economy.
The German fund also wants to acquire equity investments in companies who extract the raw materials. An operation which, if it were to be done with the EU's main provision, would require a long time, as well as a clear political direction. On this front, the Commission's backtracking on the rules on pesticides in agriculture (which never came into force) illustrates the situation within the governing body of the Union is good.
The shadow of the European elections
But the German government, by deploying financial resources, shows that it wants to protect its industry in transformation also from anti-transition backlashes that may arise from the European elections next June. The operation will extend its effects to the countries producers of critical materials, where China landed years ago, and first of all, to acquire them.
They can't even be ruled out bilateral agreements with Chinese companies for a balance in the availability and distribution of extracted materials. Finding free spaces will not be easy, the game is global, however the German choice is supported by the strong ambition to bring the national economy back to the top.
