100 billion / German climate finance / Pledges & Commitments

Update: German planned climate finance in 2022 and 2023 remain at odds with Germany’s pledge

With the final adoption of the federal budget by the German parliament, German climate finance is not to grow in 2022 as would be consistent with gradually fulfil the German government’s pledge made the G7 summit in 2021. The German government continues to undermine the trust between rich and with poor countries – and should urgently adjust its plans.

This article is an update to our recent article on the lack of increases for climate finance in the 2022 federal budget.

About a year ago, at the last G7 summit, Germany promised to increase its budget allocation for financially supporting cutting emissions and adapting to a changing climate in poorer countries to around six billion annually by 2025 at the latest, starting from a planned level of slightly above four billion euros annually in 2021. Yet the draft 2022 federal budget by Finance Minister Christian Lindner (the neoliberal party, FDP) envisaged a total level in 2022 of around 4.18 billion euros in budget allocations and grant equivalents of development loans. This would have put the 2022 level even below the 2021 planned level (4.28 billion euros; final figures for 2021 are not yet available), not exactly a trust-building signal from Germany towards poorer countries – in the year of Germany’s G7 presidency.

Figure. 1: Climate finance in the 2022 and 2023 federal budget (update)

Figure. 1: Climate finance in the 2022 and 2023 federal budget

Shown are resources for both bilateral commitments and multilateral contributions, based on budgetary allocations and grant equivalents of development loans, using the accounting method usually practiced by the German government with regard to commitments made (i.e. funds mobilized on the capital market for climate-related loans are not shown here because they are not relevant for fulfilling the six-billion pledge). For 2022, our estimate based on amendments to the original draft budgets is shown. 2023 shows the Federal Government’s prognosis. For orientation, the level of 8 billion euros for 2025 are also given, which in our view would correspond to a fair contribution of Germany to international climate finance rather than the 6 billion euros pledged. Source: Data from the German government

The final meeting of the budgetary committee of the German Bundestag has led to minor changes – that do not improve the overall picture for climate finance. Multilateral climate funds and initiatives will receive 35 million euros more in 2022 than initially planned, and the International Climate Initiative (ICI) will see around 80 million euros more in cash and an increase in commitment appropriations of 140 million euros (the commitment appropriations can be used to make multi-year project commitments). We therefore estimate that the changes could lead to a total increase of at best 150 million euros – compared to the original draft. Official figures from the Federal Government are not yet available, but Green MdB Kathrin Henneberger comes up with similar figures.

This would mean that in 2022 the planned figures for 2021 would only be minimally exceeded – far below what would be needed to gradually increase climate finance towards the six-billion commitment by 2025. For 2023 the Federal Government’s prognosis does not indicate change either, with a total of 4,25 billion euros available in 2023 as per current estimates – even less than the planned figures for 2021 and the now adopted ones for 2022. This puts the fulfilment of Germany’s internationally acclaimed pledge further out of reach. The Federal Government is knowingly and unnecessarily risking a further erosion of the carefully crafted balance of trust between developed and developing countries. Not a good outlook for the upcoming G7 summit, the Petersberg Climate Dialogue and, later in the year, COP27 in Sharm el-Sheikh.

A glimmer of hope may be that State Secretary Bärbel Kofler recently confirmed to the German Bundestag, that the Federal Government is now internally discussing a strategy regarding the six-billion pledge. It is very much hoped that this will lead to robust increases for the coming years and especially for 2023, making good of the 2022 embarrassment. Yet, the strategy should go further and lead to a strengthening of the pledge so that by 2025 a level of at least around eight billion euros annually would be reached. Such a level would be more in line with a fair contribution by Germany. With an announcement to this effect at the upcoming G7 summit or this year’s Petersberg Climate Dialogue, Germany would once again take a leading role, at least with regard to the climate crisis, in a World currently challenged by a host of global crises.

Jan Kowalzig, Oxfam