Fossil fuel exclusion policies

Paris alignmentReasoning
Some progressKfW has excluded coal from its investment and limits investment in upstream oil & gas in some of its operations. KfW has publicly stated that it may invest up to 1/3 of its energy investment into fossil gas until 2030.
 Alignment and reasoning
Coal policies Excludes all coal investments with minimal exceptions.
Upstream oil and gas policiesExcludes some upstream oil and gas activities. However, KfW IPEX, for instance, still lists oil and gas exploration as part of its business.
Downstream oil and gas policies KfW may invest up to 1/3 of its energy investment in fossil gas.
Supply-side energy efficiency No evidence of efficiency requirements of fossil fuel-fired power generation.
Disclaimer: KfW Group is comprised of four institutions: KfW Development Bank, KfW IPEX Bank (International project and export finance bank), DEG (private sector finance in developing and emerging markets) and a branch for domestic lending and support. Unless specified otherwise, the provided information concern the entire KfW Group.



KfW Group has excluded all coal investments, including for transport and related infrastructure. The refurbishment of existing coal-fired power generation is not excluded. KfW has included a minimal exemption for combined heat and power generation facilities in developing countries, “if there is a particularly high sustainability contribution, major environmental hazards are reduced, and if there demonstrably is no more climate-friendly alternative.”

Oil and gas

KfW has excluded non-conventional prospection, exploration and extraction of oil from bituminous shale, tar sands or oil sands.

However, development of conventional oil and gas fields has not been excluded across the entire bank and continues to be listed as a business field of KfW IPEX.

Investment in non-conventional prospection, exploration and extraction of natural gas is subject to:

  • that no material groundwater drawdown or contamination is to be expected
  • that measures for resource protection (in particular water) and recycling are taken
  • that suitable technology is used for safe drilling, which includes integrated bore piping and pressure testing

KfW’s sectoral guidelines state that the bank will continue to finance natural gas power stations and has set a maximum threshold of 1/3 of total energy investment until 2030. KfW has developed a complex model that calculates reduced emissions through renewable energy investments and emissions from natural gas fired power generation. Applying a scenario by the International Energy Agency, KfW has come to the conclusion that 1/3 of its energy portfolio can be committed for natural gas power generation until 2030. Beyond 2030, KfW may finance gas-fired power stations in limited and individual circumstances. This is strongly in contradiction with the most ambitious net-zero scenario by the IEA. It is, therefore, evident that KfW has used a much less ambitious scenario by the IEA that allows for such an investment threshold.

It is unclear in how far KfW is assessing possible stranded asset risks and lock-in effects of fossil fuel infrastructure.

For international finance through KfW IPEX, DEG and the Development Bank, restrictions will have to come into force since the German government has signed Statement on International Public Support for the Clean Energy Transition at COP26. It states that undersigning countries “will end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”

Recommendation: KfW must urgently review its sectoral guidelines and its Sustainable Finance Roadmap to align with a 1.5°C scenario, as envisioned by the German government undersigning the Glasgow Climate Pact.

Supply-side energy efficiency

There is no evidence that KfW has put thresholds into place for minimum efficiency of any financed fossil fuel power generation projects.


Last Update: November 2022

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