German climate financing for next year – the lack of transparency remains

On 25 November 2011, the German parliament approved the 2012 federal budget, and in doing so, cast the die for international climate change financing in the coming year.

How much funding will be available to finance mitigation and adaptation measures, as well as rain forest conservation in developing and emerging countries, cannot be determined clearly from the present budget plans. The lion’s share of climate-related funds is allocated to the budget of the Federal Ministry for Economic Cooperation and Development (BMZ) and earmarked for multilateral aid, as well as bilateral technical and financial cooperation. Upon request, the BMZ designated €1.29 billion as climate-related funds for the coming year. It is not possible to confirm this by looking at its budget, however – a transparent overview of climate-related funds is completely missing.

Other ministries do a better job: German climate-related funds are much more clearly identified in the budget of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The BMU’s funds finance the International Climate Initiative (ICI) – a pioneer in terms of transparency.  For one thing, the amount budgeted for the ICI is clear – €120 million. The ICI also provides project information on a separate website. The BMZ should take this kind of transparency in as an example – a portrayal of the bilateral climate-change projects funded by the BMZ is urgently needed in our view.

The Climate and Energy Special Fund will also be contributing toward financing international climate change measures this year. For 2012, €41.5 million have been earmarked as climate-related funds. In the future, the financial resources in the “international title” of the Special Fund are set to grow in significance. A total of €505 million will be available for international climate change financing until 2017 – i.e. distributed over the next six years. Numerous international observers feel that the Special Fund has contributed to greater clarity in many ways. However, its transparency is not comparable to that of the BMU’s representation of climate-related funding. That would require instruments financed by the international title of the Special Fund to be itemized in future.

German climate change financing will remain at a comparatively high level in the coming year as well. Nevertheless, funding will need to increase around fivefold by 2020. The government must present a clear strategy for increasing those funds in future – and it will need to document climate-related funding more transparently. Such transparency will play a crucial role for Germany’s credibility in future international climate negotiations.