Munich Re expands renewable investment programme ahead of Paris climate summit

The re-insurance giant plans to invest up to €8bn in renewables and other infrastructure

German re-insurance giant Munich Re has expanded its renewable investment programme, now saying that it will allocate up to €8bn to renewables and other infrastructure over the mid-term.

Under Munich Re’s RENT (Renewable Energies and New Technologies) programme from 2011, the re-insurer had directed MEAG, its in-house asset manager to allocate €2.5bn to the space. Of the original volume, €1.5bn has been allocated.

Investments made so far include onshore wind parks in Germany, France, the UK and Sweden as well as solar parks in Italy and Spain. MEAG has also acquired stakes in a gas-fired power plant, a gas pipeline and a power grid known as Amprion that was set up by listed German energy firm RWE. A spokesman for MEAG said the returns on these investments had been above current yields on safe government bonds.

In the run-up to the climate summit in Paris (COP 21), Munich Re has decided to expand its programme for renewable and infrastructure investment. According to Peter Höppe, who heads Munich Re’s Corporate Climate Centre, half of the €8bn allocation would be the re-insurer’s own capital and half of it leverage.Höppe presented the new details at a conference organised by Oekom Research in Frankfurt.

Turning to COP 21, Professor Höppe said it was “almost certain” that a deal would emerge from the December summit. “This is simply because the French government has been working hard to ensure that there is accord that can be signed even before COP 21 begins,” he said.

According to Höppe, the agreement to be expected from Paris would include commitments from all 195 member nations of the UN to keep global temperature rise to two degrees Celsius. This means worldwide emissions of carbon dioxide, the main greenhouse gas (ghg), would have to be capped at 1,000 gigatonnes by 2050.

Another key feature of the accord would be a reaffirmation of a plan by the G7 countries to provide $100bn (€88bn) annually to the UN’s Green Climate Fund (GCF) after 2020. Based in South Korea, the UN-administrated fund is to use the monies to finance climate change mitigation and adaptation projects in developing countries.