German climate finance / International climate finance / Pledges & Commitments

Why being a pioneer for international climate finance pays off!

Increasing climate finance is slow without pioneers. Photo: Pixabay

When it comes to pledges for international climate financing, there is always a need for pioneers who set an impulse in the right direction. In the past, Germany has repeatedly taken on this pioneering role and thus increased the pressure on other industrialised countries to follow suit with their announcements. The following three examples (overall pledges for international climate finance and pledges for the Green Climate Fund and the Adaptation Fund) clearly show that being a pioneer works, builds trust in the negotiation context and sets standards for other countries. It also shows that being a pioneer can refer not only to the level of announcements but also to continuous and predictable support and the quality of pledges – and what this means in terms of expectations for Germany’s climate finance pledges for the upcoming climate conference in Egypt.

Overall pledges for international climate finance

When it comes to overall pledges for international climate finance, Germany has always come forward in the past. In 2015, then-Chancellor Angela Merkel promised to double financial support for poorer countries in the fight against climate change from 2 billion euros in 2014 to 4 billion euros annually by 2020. At the G7 Summit in 2021, the German government announced a further increase in total German climate finance to 6 billion euros of the annual federal budget by 2025 at the latest.

The industrialised countries have committed to jointly mobilise 100 billion US dollars annually between 2020 and 2025 to support developing countries in climate protection and in the fight against the negative consequences of the climate crisis. So far, however, industrialised countries have not met this target, which has clearly damaged the confidence of developing countries in the context of international climate negotiations. Against this background, there are calls for Germany to once again take on a pioneering role and increase its annual climate financing to at least 8 billion euros by 2025. This is the only way to rebuild the damaged trust and increase pressure on other industrialised countries to follow suit with further announcements.

There are also examples of international climate finance pledges by other countries: France initially pledged to increase its annual climate finance from 3 billion euros in 2015 to 5 billion euros per year in 2020. After reaching this target, France committed to increase its climate finance to 6 billion euros annually between 2021 and 2025. Canada announced at the G7 Summit in 2021 that it would double its annual climate finance to a total of 5.3 billion US dollars by 2026. Examples of other countries that announced doubling their climate finance in 2021 include the US, UK, Sweden and Norway.

The above examples of announcements clearly show that pioneers can set a benchmark for the rest of the international community to follow.  Many countries have also made specific pledges to increase adaptation finance as part of their announcements, thus setting qualitative benchmarks for their climate finance.

Pioneers in pledging to the Green Climate Fund (GCF)

At the Petersberg Climate Dialogue in 2014, the then German Chancellor Angela Merkel announced that she would contribute 750 million euros to the Green Climate Fund (GCF). Germany’s contribution corresponded to about 10 per cent of the total amount of the initial replenishment of the fund, which was launched in 2010 at the World Climate Conference in Cancun to finance projects in developing countries for climate protection and adaptation to climate change. Although some developing countries criticised Germany’s pledge of 750 million euros as being too little and not Germany’s fair share, this pledge has clearly contributed to increasing the pressure on other industrialised countries. Germany’s announcement of pledges to the GCF was then followed by announcements from France, the UK, Norway, Sweden, Japan and the US, among others (even if the US ultimately only paid one billion of the originally announced three billion US dollars into the fund). Even some emerging economies announced financial contributions to the GCF at the time, among them Mexico. With the announcement of Belgium to pay 50 million euros into the GCF, the targeted minimum sum of ten billion US dollars for the fund was finally reached. In the end, however, only 8.3 billion US dollars of the pledged 10.3 billion US dollars were paid due to the failure of the USA.

For the first replenishment of the GCF, Germany doubled its contribution to 1.5 billion euros in 2019. Germany announced this doubling at the end of 2018 at the climate conference in Katowice, whereupon Norway also announced that it would double its pledge to the GCF. And although the US and Australia did not contribute to this initial replenishment, 27 countries made pledges totalling over US$9.77 billion.

The pledges to the GCF also show that it pays to take the lead early on. This sets guidelines for other countries’ pledges and creates pressure on other countries to follow suit. This should also be an incentive for Germany to set standards for other countries in the upcoming second replenishment of the GCF with a significant early pledge.

Pioneers in pledging to the Adaptation Fund

The Adaptation Fund is of central importance to developing countries and usually finances small, concrete and local adaptation measures with a focus on particularly vulnerable population groups. Compared to the GCF, the Adaptation Fund has no replenishment mechanisms and depends annually on renewed funding commitments from individual industrialised countries. Germany is by far the largest overall donor to the Adaptation Fund and has supported the fund with annual pledges in 2010 and since 2013. The following table shows very well that over the years Germany was often only one of very few contributors. While there were only three more contributors to the Adaptation Fund in 2014, there were finally a total of 17 contributors in 2021. Germany’s continuous support for the Adaptation Fund in recent years finally proved its worth at the 2021 Climate Change Conference in Glasgow.  Indeed, many more countries made an announcement for the Adaptation Fund for the first time and some more countries announced a renewed announcement for the Adaptation Fund after a break of a few years.

Table: Funding pledges for the Adaptation Fund

In the past, individual cities and subnational governments (e.g. Brussels, Wallonia, Flanders or Quebec) have also taken the lead among cities and subnational governments in contributing to the Adaptation Fund. It remains to be seen whether other cities and subnational governments will join in with additional announcements at the climate conference in Egypt. In addition to the federal government, governments at the state and municipal level could also play an important pioneering role.

The example of the Adaptation Fund clearly shows that being a pioneer does not only refer to the amount of financial commitments, but also to their continuity and predictability. Germany should follow Sweden’s example at the climate change conference in Egypt and also make a significant multi-year contribution to the Adaptation Fund. Only through multi-year pledges can the predictability of financial resources for the Adaptation Fund be strengthened. This predictability of financial resources will be essential in the future for the Adaptation Fund Board to take concrete steps to significantly expand its activities. Norway and Switzerland have already followed Sweden’s lead in this regard and have also announced multi-year commitments.

A pioneering role can also be of a qualitative nature.  In line with a feminist foreign policy, Germany should ensure that climate finance contributions meet certain quality standards, such as gender equality. In the past, Sweden has justified its own contributions with the strong gender strategy of the Adaptation Fund and corresponding guidelines. A renewed, increased and this time also multi-annual announcement of a commitment to the Adaptation Fund would be an important way to ensure quality standards.

Expectations of Germany for the Climate Conference in Sharm El-Sheikh

In November 2022, the 27th World Climate Conference will take place in Sharm El-Sheikh, Egypt, and it is very likely that the industrialised countries will not fulfil their 100 billion pledge there either. Germany must do even more to ensure that the industrialised countries achieve their promise to mobilise 100 billion US dollars annually from 2020 as soon as possible and on average over the period 2020 to 2025. At the climate conference in Egypt, Germany now has the opportunity to take on a pioneering role and thus also provide an incentive for the remaining industrialised countries to also fulfil their responsibility.

The examples mentioned above show: Being a pioneer works! Especially in view of the upcoming climate conference in Egypt, the current German government should become aware of its responsibility and further expand its efforts in the field of climate finance.

Hannah Fuge (Germanwatch) & Julia Grimm (Germanwatch)