Policy Context

Climate is a core topic of German development cooperation: According to the BMZ’s Agenda 2030 Thematic Model, climate is one of six core themes of German development cooperation. The strategy highlights three fields of action within the core theme Climate and energy, just transition:

• Climate protection and adaptation to climate change;
• Renewable energy and energy efficiency; and
• Sustainable urban development (mobility, circular economy, and waste management).

The BMZ supports partner countries to adapt to climate change through climate risk management, early warning systems, strengthening institutional capacities, food and water security, as well as climate resilient infrastructure. Sustainable energy transition is also one of the BMZ’s priorities. This includes the expansion of climate-friendly energy sources, creation of climate-friendly jobs, the socio-ecological transformation of the economy, and the strengthening of adaptation measures, including in cities. Germany is currently engaged in three so-called Just Energy Transition Partnerships with South Africa, Indonesia, and Vietnam.

Germany continuously expands investments to climate and environment protection: Since the coalition government took power in 2021, Germany’s focus on climate and environmental protection has increased. In September 2022, Germany announced it would double its funding for biodiversity conservation to US$1.6 billion annually by 2025, relative to its average investment between 2017 and 2021. During COP27 in November 2022, Germany pledged to double its contributions to forest conservation from US$1.1 billion to US$2.1 billion) for the period of 2021-2025.

The BMZ’s budget for international environment and climate protection in 2023 increased by US$49 million) from the previous year to US$877 million, while most other budget lines decreased.

Germany promoted Loss and Damage under its G7 presidency: Under Germany’s G7 presidency, Germany increased its support to LMICs in adapting to climate change, promoted the loss and damage initiative, enhanced climate and energy partnerships with selected partner countries, and supported global biodiversity initiatives. In June and July 2022, Germany hosted the Bonn Climate Change and the Petersberg Climate Conferences, where government representatives met to prepare for COP27 in November 2022. Under its G7 presidency, Germany proposed and launched the Global Shield Against Climate Risks, together with the V20 Group of Finance Ministers, with seed funding of US$179 million. The initiative aims to mobilize additional funding for protection against and compensation for Loss and Damage resulting from climate change.

ODA Spending

How much ODA does Germany allocate to climate projects?

Germany ranks second among DAC donor countries in terms of its spending on projects with some degree of climate focus.

Germany ranks seventh among DAC donors when considering its spending on climate change-related projects, relative to its bilateral allocable ODA spending.

How is German climate ODA changing?

While Germany’s focus on climate change mitigation and adaptation has increased in recent years, total funding in this sector in 2021 was only marginally larger than in 2017. Since 2019, funding with some degree of climate focus has been decreasing. As a share of Germany’s bilateral allocable ODA, spending on climate change-related projects decreased from 38% in 2017 and 43% in 2018 to 32% in 2021.

In 2021, Germany channeled 13% of its bilateral allocable ODA to projects whose principal focus was climate, well above the DAC average of 9%. Funding for projects with climate as a significant goal stood at 19% ( DAC average: 16%). However, 68% of Germany’s bilateral allocable ODA was not screened against the Rio markers in 2021 or did not target climate change ( DAC average: 76%).

How does Germany allocate climate ODA?

Bilateral climate-related ODA

Germany spent US$5.2 billion climate-related bilateral allocable ODA on projects focused on mitigation and US$5.1 billion on projects focused on adaption. Of this, US$2.3 billion had a cross-cutting focus, meaning it focused on both mitigation and adaptation.

Bilateral climate adaptation-related ODA

Between 2017 and 2021, Germany's bilateral ODA to climate adaptation increased by 30%. Increases in both significant and principal funding drove the overall funding increase. The funding increase was not traced to a specific sector or region; however, most sectors and regions increased their funding in line with the overall increase in adaptation-related ODA. A funding peak was experienced in 2019, which was driven by a more than doubling of principal funding, especially to India for infrastructure and agriculture projects.

Germany's adaptation-related ODA to sectors is prioritized towards environmental protection, largely focused on biodiversity, environmental policy, and administrative management, especially in partner countries based in Central and South America. Water supply and sanitation systems are focused on, under WASH, while agricultural development and rural development are prioritized under agriculture funding. Multi-sector funding, which received the largest amount of principal funding in 2021 (US$235 million or 53% of total adaptation-related ODA to this sector), was channeled mostly towards disaster risk reduction.

Multilateral Spending and Commitments

While Germany favors bilateral climate finance, it also channels parts of its climate financing through multilaterals, though not all these funds are counted as ODA. In October 2023, Germany hosted the GCF’s replenishment meeting and pledged US$2.1 billion to the 2024-2027 funding period. More recent pledges to multilateral organizations include:

Funding Outlook

What is the current government's outlook on climate ODA?

In 2015, former German Chancellor Angela Merkel promised that Germany would increase its funding for global climate protection from US$2.2 billion in 2014 to US$4.4 billion by 2020. According to the BMZ, Germany reached this target one year early, in 2019, with a total expenditure of US$4.9 billion for climate protection and adaptation measures. During the G7 Summit 2021, Germany announced an increase in annual climate funding to US$6.8 billion by 2025 at the latest. In 2021, according to the BMZ, Germany contributed US$5.6 billion to climate protection and adaptation.

On September, 29, 2023, the BMZ and the BMWK submitted information to the EU Commission stating that Germany's international climate financing has increased to US$6.7 billion in 2022, exceeding the US$6.3 billion international climate financing pledge, three years ahead of its 2025 deadline. Of this, 44% was provided for adaptation measures, according to the BMZ. However, based on a parliamentary request made to the German government, the governing coalition is expecting German climate finance to only stand at around US$5.4 billion in 2023 and US$5.6 billion in 2024, meaning that the financing pledge would not be met by 2025.

The numbers based on the Rio markers differ from the numbers published by the German government. Countries often only refer to projects principally targeting climate, while the numbers based on the Rio markers incorporate projects both principally and significantly targeting climate.

Key Bodies