Germany’s climate finance: Why it should be a priority now

Photo: C. Krackhardt, Brot für die Welt

The world is under growing pressure from multiple crises: climate change, geopolitical tensions, economic turmoil and rising social inequalities are reinforcing each other. In this situation the decision needs to be taken whether international cooperation remains stable or global risks continue to accelerate.

For Germany, this has a clear implication: a new, binding and ambitious target for its international climate finance is needed – one that goes beyond existing commitments and provides long-term planning security. This target reflects Germany’s international commitments – and is also in Germany’s own immediate interest.

Existing commitments are no longer sufficient

Germany has played an important role in international climate policy in the past, including through its commitment to increase public international climate finance to at least six billion euros annually by 2025 at the latest.

However, the international landscape has changed significantly since then. At COP29, it was decided to increase global climate finance to at least 300 billion US dollars annually by 2035. Against this backdrop, it is no longer sufficient to simply extend existing targets. Germany must define a new, credible financing target and enshrine it in a politically binding commitment.

A new German climate finance target

Such a target is crucial for building trust and showing reliability at a time when many countries in the Global South rely on external support to implement action to combat climate change, adapt to its accelerating impacts and enable structural change. A credible approach must be guided by actual global needs. Against this backdrop, a gradual increase to around twelve billion euros annually by the end of the decade appears to be an appropriate target. To achieve this, funding must rise by at least two billion euros each year from 2028 onwards.

It is not only the amount that matters, but also the quality, access and transparency. A growing proportion should be earmarked for climate adaptation and particularly for vulnerable countries. Climate finance must also be provided in addition to development finance and humanitarian aid.

Why this is also in Germany’s interest

In the German and European context, development and climate finance are increasingly being discussed from the perspective of ‘mutual benefit’. Regardless of how this perspective is judged politically, one thing is clear: robust international climate finance is also in Germany’s own interest – economically, in terms of security policy, and geopolitically.

1. Security and stability

Climate change acts as a risk multiplier. It exacerbates conflicts over resources such as water and land and increases the likelihood of political instability. Investment in adaptation and resilience therefore also serves as crisis prevention. For Germany, global stability reduces long-term security risks in Europe.

2. Economic opportunities

Climate finance opens up new markets for technologies, infrastructure and services. The global transition to climate-neutral energy systems involves investment volumes running into the trillions of euros. Establishing partnerships at an early stage secures economic opportunities while also strengthening stable supply chains.

3. Strategic resources and the energy transition

Many countries in the Global South possess key resources and significant potential for renewable energy. Climate finance enables partnerships that diversify supply chains and reduce dependencies.

4. Geopolitical agency

In a multipolar world, climate finance is an instrument of geopolitical reliability. Countries that invest can secure influence and help shape standards. A substantial new German climate finance target would signal a reliable availability for such partnerships.

Focus on the most vulnerable

The greatest climate risks occur where financial resources are scarcest. Fragile states and particularly vulnerable regions are disproportionately affected, yet have so far often received too little support – especially in the area of adaptation, which should be at the heart of any increase in funding.

At the same time, more investment is needed in climate-resilient infrastructure and food security to safeguard basic supplies and stability under increasingly severe climate conditions. In addition, climate finance should strengthen sustainable development and resilient economic structures to secure supply chains and promote the long-term stability of economic systems.

The 2027 Federal Budget – a missed opportunity? It’s time to turn things around!

For a new target to be credible, it must be reflected in concrete budgetary decisions. According to the framework resolution, the 2027 federal budget plans for a further reduction in the BMZ budget of around 600 million euros. This makes it virtually impossible to honour existing commitments, let alone make new ones.

The Federal Government should reverse this misguided decision as soon as possible in the 2027 draft budget and allocate the necessary commitment appropriations for the coming years. More funds must be made available for bilateral climate finance, for multilateral climate funds and for the International Climate Initiative (IKI).

Exploring new sources of funding

A new climate finance target is also a question of the instruments used. In addition to budgetary funds, greater consideration should be given to additional sources of funding that are increasingly being discussed internationally, such as:

• levies on very high levels of wealth and income,
• levies on particularly climate-damaging luxury goods, or
• levies on windfall profits made by fossil fuel companies.

Conclusion

The crucial question is not whether Germany can currently afford international climate finance, but what the consequences will be if it fails to provide it.

Without sufficient support, there is a risk not only of increasing human and economic damage, but also of an exacerbation of existing global instabilities and inequalities, conflicts over resources, economic risks and, for Germany, a loss of geopolitical agency – at a time of geopolitical restructuring. With a clearly defined new climate finance target, however, Germany can save lives, promote stability, help shape markets, strengthen partnerships and secure its own future.

International climate finance is not a marginal issue, but a central component of modern security, economic and foreign policy.

Therefore, Germany should now adopt a new, ambitious and binding target for its international climate finance – in its own interest and in line with its global responsibility.

Anja Gebel, Germanwatch