Germany falls short on climate finance promise, risks credibility

Germany suddenly breaks its major promise to the world.

Germany has promised to provide 6 billion euros annually from public funds for global climate financing starting in 2025. However, the government’s current budget draft falls short of this goal by about one billion euros.

The federal budget for 2025, approved by the cabinet on July 17, fails to meet Germany’s self-imposed target for global climate protection financing. Instead of the promised 6 billion euros from public funds starting in 2025, the current budget only amounts to about 5 billion euros, according to initial analyses.

The government claims to have already reached and exceeded the 6 billion euro target in 2022, with 6.39 billion euros. There are no official data for the subsequent period as these are only collected retrospectively. Since the budget has been under extreme pressure to save money following the Federal Constitutional Court’s ruling in late 2023, there were concerns that the target might not be met for 2025. Chancellor Olaf Scholz (SPD) had stated at the Petersberg Climate Dialogue that Germany could be relied upon for financing.

The significant gap mainly stems from cuts in the budget of the Development Ministry (BMZ). The BMZ budget has shrunk to 10.3 billion euros, down from its peak of 13.4 billion in 2022. At that time, the BMZ contributed about 5.5 billion to climate financing.

Other ministries have also seen cuts, particularly affecting the International Climate Initiative (IKI), which supports climate projects in the Global South. The IKI budget has been reduced from 735 million in the last budget to 635 million now.

Oxfam finance expert Jan Kowalzig estimates that the current budget totals about 4.9 billion euros for climate financing. He warns that the German government risks breaking its internationally noted promise, which could cause damage to international climate diplomacy.

This potential failure to meet its financial promise comes at a crucial time, as UN member states are set to decide on a new climate financing goal (NCQG) for the period after 2025 at the World Climate Conference in Baku. Germany has been one of the most important and reliable contributors and advocates for increased financial engagement from industrialized countries and emerging economies.