Germany increases climate finance for developing and emerging economies – 2021 commitments totalled 5.34 billion euros

In 2021, the level of Germany’s international climate finance reached a new all-time high. In total, the German government provided 5.34 billion euros last year in budget funding for climate finance for developing countries. And for the first time, it managed to invest about half of that amount in adaptation to climate change, which is an important priority for many developing countries.

2021 thus saw a continuation of the rising trend of previous years. Counting the market resources mobilized through public funding and the private climate finance mobilized via KfW and DEG, total German climate finance comes to 8.1 billion euros. Prior to the 2015 climate conference in Paris, Germany had made a commitment to bring its public climate finance to four billion euros a year by 2020, a target which it significantly exceeded in the end. At this year’s Elmau G7 Summit, Federal Chancellor Olaf Scholz announced that Germany would increase this amount to a minimum of six billion euros per year by 2025.

State Secretary Jochen Flasbarth said, “Most developing countries’ contribution to climate change has been negligible, but many of them are severely affected by its consequences. That is why the industrialized countries in particular have a responsibility to assist them in climate change mitigation and adaptation. Worldwide, Germany is one of the largest providers of international climate finance. The new figures show that Germany is increasing its efforts against the climate crisis in all parts of the world. We will have to stay the course so as to make sure that Germany can deliver on its promise to bring international climate finance from public resources to a minimum of six billion euros per year by 2025. This will require significant additional efforts in the 2024 and 2025 budget years.”

88 per cent of Germany’s public climate finance comes from the BMZ‘s budget. That is a nearly seven per cent increase over the previous year’s levels. The bulk of Germany’s climate finance – about 80 per cent – has been provided via direct bilateral cooperation with developing and emerging economies. The BMZ holds regular government negotiations with its partner countries to reach an agreement on bilateral projects. This partnership-based, decentralized approach means that the projects which are implemented are in line with partner countries’ interests and development plans. Due to this way of proceeding, the BMZ is unable to provide exact projections of its climate finance. Part of Germany’s climate finance is channeled through multilateral funds such as the Green Climate Fund, the Adaptation Fund, and the Global Environment Facility (GEF).

One important concern of many developing countries and of the High Ambition Coalition, of which countries such as the Marshall Islands and Germany, too, are members, is to ensure that funding for adaptation to climate change will be increased, as many developing countries are particularly vulnerable to the impacts of climate change. Germany wants to spend its climate finance in a balanced way – half for climate change mitigation, half for adaptation. In 2021, this goal was achieved for the first time, with 49 percent of budget funding going towards support for adaptation. Germany also provides funding to address losses and damages caused by climate change in developing countries that are particularly affected. Further increases in this funding are to be achieved via the Global Shield against Climate Risks.