100 billion / Federal budget / German climate finance

Climate finance in the German Coalition Agreement: Business-as-usual or hope for more ambition?

Does the German Coalition Agreement advance climate finance?

Regarding the domestic climate action in Germany the coalition agreement gives great cause for criticism. But what about the climate finance, thus the financial support for the poorer countries for the mastery of climate change? A brief look into the 179 pages.

The next government is set to de facto abandon the German goal for cutting emissions by 40% by 2020, merely trying to close the gap as much as possible. The coalition agreement does not contain a binding phase-out date for ending coal power, and the long-overdue policy change in the transport and agriculture sectors is unlikely to happen, and also the long-term climate targets will not be adjusted to the Paris Agreement: Regarding domestic climate action the coalition agreement negotiated between chancellor Angela Merkel’s parties (CDU/CSU) and the Social Democrats (SPD) gives great cause for criticism, despite appreciated steps like the planned climate protection law or the greater expansion of renewable energies. But what about climate finance, i.e. the financial support for the poorer countries for dealing with climate change?

Will climate finance increase now?

In the coalition agreement’s chapter 12 (Germany’s responsibility for peace, freedom and security in the world) the next government is determined to “support developing and emerging countries in their efforts in climate protection and adjustment to climate change as well as in the protection of biological diversity”. That is important, but basically nothing new, because Germany belongs to the rich industrial countries, which entered an obligation under international law to such assistance already in the UN Framework Convention on Climate Change 1992. Germany’s ratification of the Paris Agreement basically confirms this obligation.

More interesting is this sentence (chapter 11, Responsible handling of our resources):

“We profess ourselves to the German responsibility for international climate protection and provide a further increase of international climate protection financing by Germany in the course of the increase of the Official Development Assistance (ODA) resources.”

In 2009 Germany and all other developed countries promised to raise climate finance to at least 100 billion USD per year by 2020. Currently, climate finance levels stand at nearly 60 billion USD per year (according to the counting method of the donor countries, which can however be criticised in many points). A further increase of climate finance from Germany is therefore significant. But the intention as formulated in the coalition agreement remains too vague. For example it fails to reinforce the promise of the German government (given by German Chancellor Angela Merkel at the G7 summit in Heiligendamm in 2015) to double climate finance by 2020, compared to 2014 levels.

To that end, especially the budgetary resources for climate finance now ought to be at least doubled, step by step, till 2020. Much remains to be done. In the past budget for 2017, the climate finance increases turned out to be too weak for achieving a doubling by 2020. The previous German government had planned to achieve the fulfilment of the promise by calculation tricks, counting the base level 2014 differently than the target level 2020. It is to hope, that the new government coalition develops more ambition here. Furthermore, climate finance will still be counted towards Germany’s ODA commitment, a controversial practice, as climate change causes additional costs and therefore appropriate resources should come on top (something the SPD had demanded in their election programme but apparently given up now).

In any case, it is questionable, if the ODA resources will indeed increase in the coming years. Robust steps for the fulfilment of the target to provide at least 0.7% of the gross national income for development cooperation were largely absent also by the previous German government, which instead whitewashed their calculations by crediting the refugee costs in Germany. What’s more, the coalition agreement now links any further increases of the development cooperation budget (and thereby also of climate finance) to increases of the defence budget. This makes the urgently needed increase of support in the fight against climate change dependent on agreeing increases in the defence budget – this is totally inadequate.

Future funding priorities

Regarding possible priorities of the use of future climate financing, the coalition agreement says (again Chapter 12) that the new German government will consistently focus “on the support of renewable energies and decentralised supply, especially in rural areas, as well as on access to clean, affordable and safe energy” and in addition will “enter further partnerships with developing and emerging countries”. These all are reasonable things, primarily serving mitigation action. The International Climate Initiative of the Federal Environment Ministry (chapter 9, Liveable cities, attractive regions and affordable living) is expected to “expand substantially” the support in sustainable urban development (hopefully via a significant overall increase of the International Climate Initiative and not via cutting down other equally important funding areas). Considering the challenges of many cities in developing countries, this has to integrate emission reductions, cleaner air and adaptation to climate change impacts.

It’s a missed opportunity that the coalition agreement does not clearly change course compared to past and to plan for significant increases especially for adaptation, to assist poor countries secure their harvests against droughts or protect their people from future weather disasters. Less than a fifth of German climate finance supports adaptation, despite its central role for maintaining the livelihoods in poor countries and despite the fact that the goal of achieving a balance between mitigation and adaptation has been repeatedly agreed at the annual UNFCCC climate talks.

All in all, the outcome for climate finance is rather moderate – but nevertheless the coalition agreement includes the potential to expand support provided by Germany significantly. That this happens would be most desirable; for Germany’s international reputation, for new dynamics for an ambitious implementation of the Paris Agreement and for the formation of strategic alliances with poorer and especially vulnerable countries as well as with the emerging economies. The first credibility test for the new German government regarding this topic will be the negotiations around the federal budget 2018 – watch this space for more.

Jan Kowalzig, Oxfam, and Sven Harmeling, Care