05 Dec 2023, 13:14
Julian Wettengel

Germany must not hide international climate finance pledges amid budget woes – state sec

Photo shows flags and palms and buildings at the COP28 venue in Dubai. Photo: CLEW/Wettengel.
Photo: CLEW/Wettengel.

Germany must not hide its commitments to international climate finance amid ongoing federal budget problems, said Jochen Flasbarth, state secretary in the development cooperation ministry, at COP28. The German delegation at the UN climate conference in Dubai aims to stick to plans for financial pledges to other countries as, back home, the coalition government is locked in difficult negotiations on the future of the country's budget. Germany faces the prospect of having to make budget cuts in several key areas. While the actual impact of the budget crisis on the country’s commitments for international climate finance is still unclear, observers say it will not influence Germany’s strong diplomacy sway at the UN climate change conference in Dubai.

Germany’s budget woes following a landmark constitutional court ruling leave a mark on the country’s showing at the UN climate change conference COP28, but they are unlikely to hurt how much of an impact the country can make, said politicians and NGOs in Dubai. To what extent the likely budget cuts and reshuffles will hit Germany’s global climate finance abilities will only be clear once negotiations among ruling coalition parties are complete and parliament signs off on the next budget. The German delegation at COP28 aims to largely stick to its planned pledges for future support.

The development cooperation ministry (BMZ), which is responsible for the largest share of climate finance, remained confident. Jochen Flasbarth, state secretary in the ministry, said: “We at the development ministry have reached an agreement with the finance ministry that we can utilise a large part of the future spending commitments.” This ensured that the ministry would not be forced to ditch its planned commitments, added Flasbarth during a press conference.

A constitutional court ruling had declared that the coalition's plan to use 60 billion euros in credit authorisations initially dedicated to respond to the coronavirus pandemic to fill Germany’s long-term Climate and Transformation Fund was unconstitutional. The government has since been in difficult negotiations over the future budget.

It is difficult to say which – if any - of the commitments at COP28 are directly affected by the budget talks. “Some of the planned contributions are backed up by the 2023 budget and may not be affected by the current budget crisis in Germany, for instance the 2023 contribution to the Adaptation Fund,” said Jan Kowalzig of NGO Oxfam. “Yet, since Germany has been a long-standing contributor to a range of multilateral funds, any unusual silence may well be noticed, especially as German pledges have often come ahead of the curve, putting other rich countries under pressure to follow suit.”

Flasbarth said that “the bigger problem is actually that people are already starting to stop naming these commitments at all, because we have a debate in Germany that curiously no longer looks favourably on the international reputation we have. It is as if we have to hide them.” Flasbarth said Germany was far too interwoven in the world to act with a “national first” motto, and said he looked forward to soon having “a different kind of debate again” around global climate finance and the budget.

Budget crisis has not undermined Germany’s credibility at COP28 – Germanwatch

The threat of Germany having to hold back on some financial announcements at the climate conference has so far “not undermined its credibility, because it is perceived as a reliable partner in climate financing,” said David Ryfisch, co-head of international climate policy at NGO Germanwatch.

Conservative MP Thomas Heilmann (CDU), head of KlimaUnion (an alliance of conservative MPs ambitious on climate), said that the budget crisis’ effects at COP28 will not be too great. “After only a couple of hours here in Dubai, my impression is that this is only a side topic. Germans are considered to be dedicated and willing to pay,” he told Clean Energy Wire.

Germany started the conference with a bang. In a scene-setting joint move together with host country UAE, each pledged 100 million U.S. dollars to the new Loss and Damage Fund. The establishment of the fund – which is meant to support poor and vulnerable economies in dealing with unavoidable impacts of the climate crisis – was celebrated as an early success of COP28.

Germany’s contribution signalled to partners that it aims to remain a key supporter of developing economies in tackling the climate crisis. This helps the government build the diplomatic trust necessary to advance key negotiations at UN climate talks. The country has long been a global leader in supplying climate finance to poorer countries. It overshot its own target of providing 6 billion euros from the state budget – originally set for 2025 – in 2022 with a total of 6.4 billion euros.

International climate finance – funds provided or leveraged by richer countries to support climate mitigation and adaptation measures – has traditionally been one of the most important elements of negotiations at UN climate change conferences and are often key to a successful outcome. Climate finance is needed to significantly reduce emissions, but donor countries have been hesitant to commit. At COP15 in Copenhagen in 2009, developed nations promised to mobilise 100 billion US dollars from public and private sources per year by 2020 for climate change mitigation and adaptation in developing countries – and have so far failed. The OECD recently said that the goal was likely met two years late, in 2022, based on preliminary and unverified data.

MP Heilmann told Clean Energy Wire: “If I am interpreting the budget negotiations in Berlin correctly, there will be no cuts to the payment obligations for international climate protection, at least not in the short term in 2024. In the long term, that is still open.”

This also worries Oxfam’s Kowalzig. “To be honest, I am less worried about German financial pledges here at COP28 but more about the implications of the current budget crisis in relation to Germany’s promise to reach six billion euros per year in budgetary allocations for climate finance by 2025.”

Germany leads on international climate finance, could “reduce gap to 2nd place” – finance minister

In Germany, the budget crisis means money is set to be scarcer across the board and could undo some of the goodwill afforded to the country for its pro climate finance stance.  Finance minister Christian Lindner, in an interview with Funke Mediengruppe, named international climate support as one of several areas where he could envision budget cuts. Lindner said Germany was leading on development cooperation and international climate finance but said “a fairer share of burden” should happen globally. “We are happy to stay in first place. But perhaps we can reduce the gap to second place,” Lindner said.

It remains to be seen whether Lindner’s comments are merely a signal to coalition partners about what is on the table when it comes to budget cuts, or if he actually aims to reduce climate finance spending. Officials in Berlin keep emphasising that, as long as the negotiations for the 2024 federal budget were ongoing, the government could “not make binding statements” on future commitments.

During a visit by Brazil’s president Lula da Silva in Berlin, chancellor Olaf Scholz reassured partners. “Germany will continue to be very active internationally; we all agree on that as a government,” he said during a press conference. However, Scholz did not rule out cuts regarding financial support for partners. “There is also no doubt that Germany is very active when it comes to providing support, and if we calibrate our use of funds, this will not change our objectives,” he said.

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