German climate finance

German Federal Budget 2014: Cutbacks Hit Climate Aid

© Deutscher Bundestag/Achim Melde

Only in late 2013, at the UN climate conference in Warsaw, Germany signed a resolution that specifically called on the industrialized countries to ensure a continuous rise in funding, especially public funding, over the coming years. Apparently, since then the German government has been thinking: So what? In fact, it is planning the precise opposite. The draft of the 2014 federal budget, which has just passed its first reading in parliament, includes severe cuts to financial assistance for climate projects in the developing nations, with regard both to new pledges for bilateral climate projects and contributions to multilateral climate funds.

The reduction results primarily from the discontinuation of budget authorizations for bilateral climate projects within the Energy and Climate Fund (EKF), which amounted to €480 million in 2013. Budget authorizations, a peculiarity of German budgetary legislation, allow the federal government to make bilateral commitments to partner countries for climate projects lasting multiple years. Without these authorizations for future funding, the volume of potential commitments for new projects falls.

The cuts are compensated only partially in various other points of the draft 2014 budget. Because the federal government does not publish the full budget figures, we can only estimate the scale of the planned reductions. In the very best-case scenario they will be at least €240 million, but they could amount to as much as €440 million. A detailed analysis of the cuts (in German) can be found here.

Federal Government’s Tricks: “No Reductions in 2014”

The cuts are well hidden. The Federal Development Ministry (BMZ) budget is set to remain at about the same level as the previous year, and that of the Environment Ministry (BMUB) will even rise—and isn’t the lion’s share of German climate finance drawn from these two departmental budgets? The federal government is making good use of this. It denies the planned cutbacks, and claims that climate finance from Germany in 2014, at around €1.8 billion, will remain at 2013 levels.

However, this claim rests on a clever sleight of hand. Since the end of 2012, the government has calculated bilateral funding from the Energy and Climate Fund (EKF) on the basis not of the (now axed) volume of commitments for new climate projects, in line with the OECD standard, but of actual disbursements, almost all of which are payable to fund the commitments made in earlier years. These disbursements will still be reasonably high in 2014. A further source of confusion is that this component of EKF funding is being transferred to the environment and development budgets. As a result, German climate finance appears to remain stable overall, whereas in reality the loss of the budget authorizations for future years means that the 2014 federal budget adds up to drastic cuts—whichever way you count.

Gloomy Prospects for 2015

With these budget plans, the federal government is turning its back on pledges it has already made instead of moving step by step towards their fulfillment. The prospects of Germany making its fair contribution to the $100 billion promise do not look good. All this may seriously damage the vital process of confidence-building between rich and poor countries and thus the progress of the international talks that are intended to culminate, in late 2015, with a new agreement to combat climate change.

It remains to be hoped that enough deputies in the German parliament, on both the government and the opposition sides, will recollect Germany’s responsibilities and block the planned reductions.

This brief analysis (PDF, in German) describes the cutbacks and the clever accounting systems the Federal Government is using to conceal them.

Jan Kowalzig, Oxfam