Germany - Climate

Download
Download

Germany is the largest donor country to climate projects

Germany is the largest donor country to climate projects. US$8.3 billion of its official development assistance (ODA) was spent on targeted action against climate change as a principal or significant objective in 2019 (see box). This corresponds to 43% of Germany’s bilateral allocable ODA, which is well above the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) average of 23% for climate projects and makes Germany the third-largest donor in relative terms.

Germany’s funding in this sector has increased over the last years, rising by 49% since 2015 when it allocated US$5.5 billion. Funding spiked by 29% between 2015 and 2016 following the Paris Climate Agreement.


Climate finance: funding for projects tagged in the OECD’s Creditor Reporting System (CRS) database with the Rio markers for climate change mitigation and/or climate change adaptation. Projects can be tagged with either or both markers.

Each marker has three possible scores:

  1. Principal, for projects in which climate change mitigation or adaptation is a fundamental and explicitly stated goal;
  2. Significant, for projects in which climate change mitigation or adaptation is not a key driver but still an explicitly stated goal; or
  3. Not targeted, meaning the project does not address climate change mitigation or adaptation.

Not all projects are screened against the Rio markers; this funding falls into the ‘not screened’ category.


In 2015, German Chancellor Angela Merkel promised that Germany would increase its funding for global climate protection from €2.0 billion (US$2.2 billion) in 2014 to €4.0 billion (US$4.5 billion) by 2020. According to the German Federal Ministry of Economic Cooperation and Development (BMZ), this target was already reached in 2019, with a total expenditure of €4.3 billion (US$4.8 billion) for climate protection and adaptation measures to climate change. (The numbers based on the Rio markers differ from the numbers published by the German government, since countries often only refer to projects principally targeting climate, while the number based on the Rio markers incorporate projects principally and significantly targeting climate; see box for more information.)

To reach its international climate goal, the 2020 budgets of the BMZ and the Federal Ministry for the Environment (BMU) were increased by €500 million (US$560 million) and €100 million (US$112 million), respectively. The additional €500 million (US$560 million) for the BMZ was mainly used to expand renewable energies in Africa, invest in rain forest protection measures, and support adaptation measures to strengthen agriculture in drought regions.

At the virtual Climate Ambition Summit, co-convened by the UN, on December 12, 2020, Merkel pledged an additional €500 million (US$560 million) for 2020 and 2021 to support low-income countries (LICs) in their climate protection efforts. The funding will come from the BMZ’s budget and will mostly be channeled via the World Bank and other development banks to strengthen the expansion of renewable energies in LICs, primarily on the African continent.  At the January 25, 2021, Climate Adaptation Summit (CAS) Merkel pledged another €220 million (US$246 million) to support the lowest income countries’ efforts to adapt to the effects of the climate crisis.

In May of 2020, the BMZ released its new strategy ‘BMZ 2030’ defining climate as one of five future core topics of German development cooperation, underlining Germany’s increasing commitment to climate on the international stage. The strategy lays out three fields of action within the core topic ‘Responsibility for our planet - climate and energy’:

1) Climate protection and adaptation to climate change;

2) Renewable energy and energy efficiency; and

3) Sustainable urban development (mobility, circular economy, and waste management).

Germany’s climate-related ODA predominantly focuses on climate change mitigation

The majority of Germany’s climate-related ODA flows into projects targeting climate change mitigation (65%). Measures focusing on adaptation to climate change account for 57% of Germany’s climate financing. As is apparent from the relative size of these percentages, there is also significant overlap between the two markers; a project can target both adaptation and mitigation. In 2019, 22% of Germany’s funding in the climate sector was channeled toward projects tagged with both markers. (For more information on the markers, see box.)

German civil society organizations (CSOs) have criticized Germany’s strong focus on mitigation, emphasizing that increased funding in adaptation projects is pivotal to safeguard the livelihoods of the population affected by climate change in low-income countries.

In 2019, Germany channeled 22% of its bilateral allocable ODA to projects whose principal focus was climate, well above the DAC average of 7%. Funding for projects with climate as a significant goal stood at 20% (DAC average: 16%). However, 57% of Germany’s bilateral allocable ODA was not screened against the Rio markers in 2019 or did not target climate change (DAC average: 77%).

The largest share of Germany’s climate financing was spent on energy-related projects (27%) in 2019, followed by projects focusing on agriculture (17%; including forestry, fishing, rural development), water and sanitation (15%), and environmental protection (12%).

In line with Germany’s focus on energy-related projects, German Development Minister Gerd Müller has repeatedly called on the EU to support the transformation of the African continent into a cluster of low-carbon economies. The EU’s own “green deal” should be expanded to include funding for the same process of transformation in Africa to a “green continent”, Müller has said.

Germany is committed to multilateral climate finance

While Germany puts a strong focus on bilateral climate finance, it also channels parts of its climate financing through multilaterals, though not all these funds are counted as ODA. This includes contributions to the following multilaterals:

  • Green Climate Fund (GCF): The BMZ contributed €750 million (US$840 million) for the GEF’s strategic period 2015-2018.  For the 2020-2023 period, Germany has doubled its contribution to €1.5 billion (US$1.7 billion) in funding.
  • Global Environment Facility (GEF): Between 2018 and 2022, the BMZ will have contributed €420 million (US$470 million) to the GEF, making it the second-largest donor in absolute terms, after Japan.
  • Least Developed Countries Fund (LDCF): Until 2020, the BMZ had contributed a total of €315 million (US$353 million), making it the largest donor. At the Climate Adaptation Summit in January of 2021, Merkel pledged an additional €100 million (US$112 million) to the LDCF.
  • Climate Investment Funds (CIFs): As of April of 2020, Germany has contributed US$778 million to the CIFs since its establishment in 2008.
  • Forest Carbon Partnership Facility (FCPF): Germany has contributed €360 million (US$403 million) to the FCPF as of April of 2021, channeled through the BMZ (approx. €350 million) and the Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU, €10 million). The FCPF is the largest multilateral initiative to compensate for emission reduction through preventive deforestation (REDD +) in low-income countries.
  • Special Climate Change Fund: As of April of 2021, Germany has contributed US$120 million, making it the largest donor to the Fund.
  • Adaptation Fund: Germany is the top contributor to the Adaptation Fund, with US$456 million committed to date. At the Climate Adaptation Summit in January of 2021, Merkel pledged another €50 million (US$56 million) to the Fund.

Germany also supports the InsuResilience Global Partnership committed to providing climate risk insurance to protect 500 million of the world's poorest people annually against climate risks, such as floods or crop failures, by 2025. As of January of 2021, the BMZ has provided €670 million (US$750 million) to support various risk financing and insurance solutions, making it the largest donor to the Partnership. The Global Partnership was launched by Germany, together with other partners at the 2017 UN Climate Conference in Bonn, Germany.

BMZ leads on Germany’s climate strategy and contributes 80%-90% of Germany’s climate funding

The BMZ drives the German development strategies, including on climate, and between 80% and 90% of Germany’s global climate funding comes from the BMZ's budget. Within the BMZ, the Directorate 42 ‘Climate policy and climate financing; Commissioner for climate policy and climate financing’ defines Germany’s priorities around climate. It is part of the Directorate General 4 ‘International development policy; 2030 Agenda; climate’, which is led by Dr. Jürgen Zattler. The BMU also supports comprehensive climate protection measures through the International Climate Initiative (IKI). The Federal Ministry of Economics and Labor, the Federal Ministry of Education and Research, and the Ministry of Foreign Affairs also contribute to German climate finance, however with small shares.

On the operational level, GIZ and the German development bank (KfW) support partner countries to access international climate financing through the Climate Finance Readiness Programme (CF Ready). The program supports countries in building up organizational, technical, and personnel capacities to be able to apply for and use strategic funds, e.g., from the GCF.

 

Unless otherwise indicated, all data in this section is based on commitment. For more information, see our Donor Tracker Codebook.