KfW launches low-interest loan program for sustainable mobility, including rail

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German state-owned investment and development bank, KfW, has launched a new program which will see a series of low-interest loans given to companies and municipalities to invest in sustainable mobility. The program includes loans of up to €50m per project with a term of up to 30 years.

On behalf of the German Federal Ministry for Digital and Transport (BMDV), KfW’s new sustainable mobility investment loan program offers low-interest financing for schemes including rail transport, as well as for pedestrian and cycling infrastructure, and other climate-friendly passenger and freight transport vehicles.

Digitalization projects that contribute to reducing greenhouse gas emissions, such as those that network existing mobility services, will also be promoted.

The requirements for the eligible measures under the new program are based on the criteria defined in the EU taxonomy. For example, the new program will support buses, trams, and subways for local public transport, as well as trains and inland vessels, if their direct carbon dioxide emissions are zero.

Dr Volker Wissing, federal minister for Digital and Transport, said, “We are striving for climate neutrality, and the transport sector must make a major contribution. We all have a responsibility here – the German Federal Government, the federal states, the municipalities, and the private sector. We need good infrastructure everywhere and climate-neutral mobility services that consider the needs of all.

“KfW’s support facilitates long-term investments by municipalities and companies in the transformation of the transport sector. The program creates the necessary financing basis and planning security for this important undertaking,” he added.

KfW CEO Stefan Wintels continued, “The transport sector has a vital role to play in the transition to a climate-neutral economy and society. If we want to achieve our goals, we need to switch to low-emission forms of mobility as quickly as possible. This requires enormous investments. KfW is meeting its responsibility as a transformative promotional bank and providing suitable financing instruments to this end.”

The new sustainable mobility investment loan is part of the Green Bond Framework, which was expanded at the beginning of 2022 and under which KfW allocates funding to specific promotional programs from its green bonds. Companies and municipalities benefit from KfW’s favorable refinancing conditions.

In addition, KfW has further eased the interest rate conditions of the new program from its own funds. In the standard variant, individual projects can be financed with up to €50m and a term of up to 30 years. The actual interest rates are calculated based on capital market development.