12 Dec 2017

Climate finance: A brief overview of Germany’s contributions

This factsheet provides information on how much the German government contributes to climate funding – the financial support of projects aimed at mitigating climate change and helping vulnerable countries adapt to its effects.

Contributing to the 100 billion dollar pledge

In Copenhagen 2009, developed countries made a collective commitment to jointly mobilise 100 billion dollars a year by 2020 in climate finance. This goal was extended until 2025 as part of the 2015 Paris Agreement.

Germany will contribute around 10 percent to the 100 billion dollars. Chancellor Angela Merkel announced in Paris in 2015 that the country would double its climate funding from two to four billion euros. Another six billion will be leveraged from the private and financial sectors. A new government is expected to be formed in Berlin in the beginning of 2018 but Germany’s pledges should be honoured by the next administration, which will likely be headed by Chancellor Merkel for another term.

An OECD report found in 2015 that public funding had reached a level of 41 billion US dollars on average in 2013 and 2014. The remaining gap would be filled by an increase both in public (another 26 billion US dollars) and leveraged private funding, donor countries calculated in their “Roadmap to US$100 Billion”, published in 2016.

International climate finance has seen some disarray after President Donald Trump’s administration announced its decision to pull out of the Paris Agreement and to terminate its contributions to the Green Climate Fund. “Luckily, President [Barack] Obama had transferred a big sum to the Green Climate Fund before the end of his presidency,” Jochen Flasbarth, state secretary in the German environment ministry, told the Clean Energy Wire in November 2017. Flasbarth said that Germany was not going to attempt to fill the funding gap left by the US. “One mustn’t reward a lack of solidarity,”, he said. Germany was confident that the 100 billion dollar target could be reached even without further contributions by the US.

Bilateral funding

Germany contributes to climate finance in the three main areas of emission reduction (mitigation), forest protection (REDD+) and adaptation to climate change. Most money is channelled through bilateral development projects in the form of grants and loans.

From 2013 and 2017, Germany gave between 1.7 and 2.1 billion euros annually to bilateral projects related to climate action.

The main sources of climate action-related public funding are the Federal Ministry for Economic Cooperation and Development (BMZ) and the Federal Ministry for the Environment. Some money also comes from the energy and climate funds (Energie- und Klimafonds, EKF).

The two bodies mostly responsible for German projects on the ground are the development bank KfW and development organisation GIZ.

Multilateral funds

A smaller part of the government’s climate finance goes into multilateral climate funds such as the Green Climate Fund, the Adaptation Fund, and the Least Developed Countries Fund, and to multilateral development banks. Between 2013 and 2017 the state paid 371-492 million euros per year into multilateral climate funds.

In Bonn 2017, Germany pledged an additional 50 million euros to the Adaptation Fund and another 50 million euros to the Least Developed Countries Fund.

At COP23 the German government also agreed to contribute 125 million US dollars to the InsuResilience Global Partnership, a climate risk insurance initiative of the German presidency of the G7 (2015) and G20 (2017).

Criticism

NGOs criticise the German government for a lack of a coherent climate finance strategy. They argue that, similarly to several other industrialised countries, it is inclined to label entire development projects as climate finance even when mitigation or adaptation only make up a small part of the engagement.

There are also discrepancies in how contributions to international climate funding are reported on official occasions by the German government, and how they are calculated by organisations like Oxfam, who map the German efforts independently – which is why government figures and NGO figures are not always identical.

Nevertheless, NGOs have praised the development ministry for making more detailed information not only on the amount of funding but also on the individual projects funded available.

All texts created by the Clean Energy Wire are available under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)” . They can be copied, shared and made publicly accessible by users so long as they give appropriate credit, provide a link to the license, and indicate if changes were made.

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