The German 2015 federal budget: turnaround in climate finance?

In 2015 – the year in which a new, comprehensive agreement on climate change is set to be adopted in Paris – the volume of climate finance from Germany could increase again slightly. For the current year 2014, the Bundestag complied with the proposals of the federal government and cut financial climate aid to developing countries by several hundred million euros. With regard to the industrialized countries’ goal of raising climate finance to at least $100 billion annually, Germany thus moved further away from bearing its fair share.

An increase is now apparently planned in the government’s draft budget for 2015 (see also Oxfam policy brief, in German only). That’s good news. However, the increase is not enough to offset this year’s cuts vis-à-vis the 2013 financial year. In other words, Germany is only taking baby steps toward contributing its share of the $100 billion pledge of the industrialized countries.

Fig. 1: Bilateral climate finance, 2015

The graphic shows budgetary appropriations for bilateral measures via the Federal Ministry for Economic Cooperation and Development (BMZ), the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) and (up to 2013) the Energy and Climate Fund (EKF). The figures for 2013-2015 are projected. Source: Oxfam

The growth is due to slightly higher allocations for bilateral climate projects via the budget of the Ministry for Economic Cooperation and Development (BMZ), and especially a significant increase in funding of the International Climate Initiative (ICI) of the Ministry for the Environment (BMUB). The ICI not only supports bilateral projects with a strong climate focus, it is also a strategic tool of the German government for establishing pioneering alliances with countries that take a progressive stance in global climate protection and in international negotiations being led by BMUB. In this respect, the increase is appropriate.

A less favorable development is the fact that contributions to multilateral climate funds are set to decrease further in 2015 – despite the German chancellor’s major multi-year commitment of €750 million to the Green Climate Fund, the first payment of which is due in 2015 but amount to less than €20 million. Payments to the vital Adaptation Fund are not planned for 2015, even though the fund is successfully financing concrete climate change adaptation projects and has the political backing of both the industrialized and the developing countries, but no secure funding base. Germany’s most recent contribution to the fund was €30 million in 2013.

Fig. 2: Multilateral climate finance, 2015

The graphic shows budget appropriations for payments to multilateral climate funds. The figures for 2014-2015 are projected; the remaining figures represent actual payments. Source: Oxfam

We can hope that the 2015 federal budget marks a turnaround and that the unfortunate cuts of 2014 were merely an episode – the German government had, after all, agreed to a resolution at the last UN Climate Change Conference in Warsaw in late 2013 that specifically calls on the industrialized countries to steadily increase the public funding for supporting the developing countries.

To date, the government has not yet presented a plan for the further growth of climate finance until 2020, however. For years, industrialized countries have refused to comply with this demand by developing countries. This has adversely affected the predictability and reliability of climate finance. Developing countries need both, however, in order to plan effective climate protection efforts.

Fig. 3: Growth path until 2020

This graphic shows a theoretical, linear path towards 2020. The planned increases for the 2015 budget point into the right direction but are too modest to make real progress towards Germany’s fair share of the $100 billion goal. Source: Oxfam

Germany’s fair share of the $100 billion goal would be around €7-8 billion in the year 2020. The planned increases are thus a move in the right direction, but far from sufficient. Action on the part of the Bundestag will be required to ensure that overall growth is more pronounced, both in bilateral climate projects and in contributions to multilateral climate funds.

More information: Oxfam policy brief on climate finance in the German federal budget in 2015 (German)

Jan Kowalzig / Oxfam