The German government will next year issue its first so-called green bonds, borrowing on financial markets to fund projects with "a positive ecological-sustainable effect" as calls grow for climate action.
"In the second half of 2020, the German Federal Government intends to issue Green German Government securities for the first time," Berlin's Finance Agency said in a statement Thursday.
The "twin" bonds will mirror normal debt issued by the German government, with "the same maturity and coupon" (annual interest payment), the agency said.
But proceeds from the green bonds "will completely be allocated to already existing expenditures with a positive ecological-sustainable effect," it added.
The move comes as Germany has stepped up its ambitions for tackling climate change, while at the EU level negotiators this week struck a compromise deal on what spending exactly should be rubber-stamped as "green".
Lawmakers in the German parliament are voting Thursday on a "climate package" that will include a higher price for carbon dioxide (CO2) emissions in transport and construction from 2021 than originally planned by ministers.
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The environmental legislation was assembled over the summer after months of public pressure including "Fridays for Future" demonstrations by school pupils.
In Brussels, negotiators this week agreed to put off for two years a decision on whether to label investments in nuclear power and natural gas as "green", clearing the way for an official classification of climate-friendly investments.
European Central Bank chief Christine Lagarde has underlined the importance of the reform, with sustainable finance deals reaching one half a trillion dollars in 2018.
EU lawmakers have in recent years pressured the ECB to target its "quantitative easing" bond-buying scheme at green debt, but many policymakers say they have a duty not to distort bond markets.