Climate change mitigation and adaptation Germany again contributes fair share of climate finance for emerging economies and developing countries
Joint press release by the Federal Ministry for Economic Cooperation and Development (BMZ) and the Federal Ministry for Economic Affairs and Climate Action (BMWK), 27 September 2024 | In 2023 again, Germany contributed its fair share of the global climate commitment to mobilise 100 billion US dollars a year to support developing countries and emerging economies in their efforts to implement climate change mitigation and adaptation measures. This is evidenced in the data which the German government reported to the EU Commission today. In 2023, Germany made a total of 9.9 billion euros available. Of that total, 5.7 billion euros are from budget funds. Measures for adaptation to climate change make up 43 per cent, those for adaptation 57 per cent. In 2023, more loans were successfully issued by KfW and DEG for energy transition projects. The German government committed at the international level to provide six billion euros in climate finance annually from budget funds, starting in 2025.
Development Minister Svenja Schulze commented, “Germany is and continues to be a reliable partner in international climate action. This is a question of solidarity, but also a matter of common sense. Climate change can only be stopped if it is on the agenda of all countries worldwide – including those that require support for these efforts. Adaptation to climate change is essential, too, to ensure that people can safeguard their livelihoods despite climate change. In view of the forthcoming climate conference it is important that, alongside the industrialised countries, more action is taken by those that have so far not been among the traditional donors. This concerns in particular countries that have become major greenhouse gas emitters themselves in the meantime and have the necessary financial capacity. Given the tense budget situation in many traditional donor countries at the moment, I am making a plea for tapping into new sources of funding. Brazil’s proposal to launch a globally coordinated approach to tax the ultra-rich should be an integral part of the solution.”
Federal Minister for Economic Affairs and Climate Action Robert Habeck said: “We industrialised countries have committed to solidarity with and support for developing and emerging economies. Ultimately, it is a question of empowering the countries of the Global South to meet their own climate obligations. First and foremost, this means orienting our energy supply to be climate-neutral. COP28 has paved the way for this, adopting the global movement away from fossil fuel, along with a tripling of renewable energy and a doubling of energy efficiency by 2030. This is a great success, and now needs to be rigorously implemented by all countries. Germany’s contribution to international climate finance is a crucial lever for this. Via the funded projects, we are advising numerous countries about specific steps to expand renewable energy, hydrogen production and sustainable, climate-friendly infrastructure. And we are targeting our funding to facilitate private-sector investment in the transition, for example via risk-sharing. We are following our words with deeds, because it is clear that climate change mitigation will only be successful if everyone pulls in the same direction, together and globally.”
Most of the funding provided by Germany is invested in climate projects agreed on between Germany and its partner countries at their bilateral negotiations. This partnership-based approach means that projects are selected which are in line both with partner countries' priorities and with Germany’s concerns. In 2023, the German government agreed new climate partnerships with Brazil, Colombia, Côte d´Ivoire and a regional climate partnership with the countries in the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia). The cooperation is aimed, in particular, at expanding renewable energies and power grids, enhancing energy efficiency and protecting forests and peatlands.
Facts and figures in detail
Germany’s contribution to the 100-billion-dollar commitment amounts to a total of 9.9 billion euros and consists of budget funds including grant equivalents, and of loans and private investments which were mobilised with public funding. In 2023, the German government made a total of 5.7 billion euros available from budget funds for international climate finance. This was less than in 2022, which had been a remarkably strong year (2022: 6.4 billion euros). One reason is that the overall budget of the Development Ministry was higher in 2022 than in 2023 (2022: 13.8 billion euros; 2023: 12.1 billion euros).
Mobilised market funds, however, have increased. These are, for instance, KfW and DEG loans for energy transition projects, which involve very little or no tax money at all. Compared with 2022, these funds were increased by 700 million euros, bringing them to a total of 3.8 billion euros. This is in part due to the Just Energy Transition Partnership with South Africa under which KfW can offer attractive loan terms to South Africa for making necessary investments in renewable energies and power grids. In addition, 475 million euros have been mobilised for climate finance from private funds (2022: 479.1 million euros).
Of the total amount of budget funds made available (5.7 billion euros), 78 per cent (that is 4.4 billion euros) were for programmes and projects implemented by the German Development Ministry (BMZ) with its worldwide partners. For the most part, these funds are implemented in bilateral cooperation measures. Another part is contributions to multilateral funds such as the Green Climate Fund, the Global Shield against Climate Risks and the Global Environment Facility.
The rest, i.e. 1.2 billion euros (2022: 0.9 billion euros), comes mainly from the International Climate Initiative (ICI), which is coordinated by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and in which the German Foreign Office and Federal Environment Ministry are also involved. The ICI funds initiatives to promote climate and biodiversity projects in developing countries and emerging economies. In this way the ICI is reacting to relevant developments in climate negotiations and supporting countries in making their Nationally Determined Contributions (NDCs) more ambitious, encouraging their financial sectors to embrace sustainable, climate-friendly investments, expanding their use of renewable energies and decarbonising industry.
In 2023, 43 per cent of the budget funds of all ministries for international climate finance were earmarked for climate adaptation. That is approximately 2.4 billion euros out of the 5.7 billion euros. This way the German government remains on track to deliver its contribution towards the internationally agreed target of doubling financing for adaptation between 2019 and 2025.