HUE-5: International finance for climate adaptation (from budgetary funds)
2023 Monitoring Report on the German Strategy for Adaptation to Climate Change
HUE-5: International finance for climate adaptation (from budgetary funds)
In recent years, there has been a distinct increase in the endeavour to support adaptation in an international context. The proportion of adaptation-relevant funding compared to the overall international climate finance has increased from just short of 25 % in 2010 to 49 % in 2021. The demand for adaptation funding will further increase in future.
The illustration HUE-5 ’International finance for climate adaptation (from budgetary funds’ contains a biaxial chart. Two lines illustrate – for the period from 2010 to 2021 – the development of German climate finance from budgetary funds in total as well as the proportion from this used for adaptation-relevant projects. Both lines indicate a significantly rising trend. In 2021 the German climate finance amounted to 5.34 billion Euros, 2.59 billion of which went towards adaptation-relevant projects. The share of adaptation-relevant projects as part of German climate finance is illustrated in terms of bars and has also increased significantly. In 2021 this share amounted to 48.6 per cent.
Climate change adaptation is a global challenge
In view of the global dimension of climate change and associated impacts, Germany has for years campaigned for wide-ranging international cooperation on adaptation efforts. This includes cooperation at the international level and the bilateral and regional levels, in order to make people, living spaces, ecosystems and economies more resilient to climate change impacts thus avoiding damage and loss. As far as the wider international environment is concerned, German activities take their cue from international processes and cooperations including the IPCC. In particular, emerging economies and threshold countries are affected by those impacts as they often lack the resources and capacities to protect themselves from extreme weather events as well as the creeping progress of climate change and its associated impacts. For the sake of climate-related justice, providing support for developing countries in solidarity is a must, not least because – compared to industrialised states and threshold countries – they are responsible for just a small proportion of greenhouse gas emissions that impact on the global climate. Germany provides assistance with adaptation measures in developing and threshold countries within the framework of cooperation at a development and climate-political level. In that light, Germany assists with devising and implementing national adaptation plans (NAP) and adaptation objectives framed in the nationally determined contributions (NDC) under the Paris Climate Agreement. This assistance is provided, for example, via the NDC partnership. In 2021, 88 % of the German contribution to international climate funding was disbursed from the budget of the Federal Ministry for Economic Cooperation and Development (BMZ). Further funding is made available by BMWK, BMUV and the Federal Foreign Office (AA) predominantly within the framework of the International Climate Initiative (IKI). Other ministries, such as the BMBF or BMEL, contribute to projects by way of research cooperations. Germany strives to achieve the balance of mitigation and adaptation – mentioned in the Paris Climate Agreement – within the framework of international climate funding, also in its contributions from budgetary funds.
At the 2009 UN Climate Change Conference (COP) in Copenhagen the industrialised countries gave an undertaking to mobilise, from 2020 onwards, funds in the amount of USD 100 billion annually. At the COP 2015 in Paris this commitment was reviewed and the target year was extended to 2025. Within the framework of COP 26 in Glasgow in 2021 the industrialised states were requested to double their adaptation aid to developing countries in the run-up to 2025. A differentiation is made between financial contributions to multilateral programmes and bilateral development cooperation.
As far as multilateral funding is concerned, several states contribute to international funds held in multilateral development banks (MDBs) and international organisations. The Least Developed Countries Fund (LDCF) was launched in 2001 and is subordinate to the Global Environment Facility (GEF). Since 2009 this Fund has been supporting concrete adaptation projects exclusively in the Least Developed Countries (LDCs). With its contributions via the BMZ Germany has been the foremost donor, having contributed some 424 million Euros since the Fund was launched. The establishment of the Green Climate Fund (GCF) results from a decision taken at the 2010 Cancún Climate Conference. It is the GCF’s declared objective to drive the transformation forward in order to achieve a low-emission sustainable development worldwide. The GCF is a key building block in the architecture of international climate funding. The GCF therefore plays a crucial role in implementing the Paris Climate Protection Agreement. When the GCF was set up and the first time its budget was replenished, the donations promised amounted to USD 20 billion. To date, 216 projects have been awarded funding totalling USD 12 billion. The GCF projects help to reach more than 900 million people, and in the process 2.5 billion tonnes of CO2 emissions are prevented. Considering that the portfolio consists of 51 % adaptation projects and 49 % mitigation projects, it is almost completely balanced. Germany contributed to the first replenishment of the GCF for the period from 2015 to 2019 in the amount of 750 million Euros, and to the next replenishment in respect of the period from 2020 to 2023 (GCF-1) with 1.5 billion Euros. In 2022 the second replenishment phase was initiated for the period from 2024 to 2027 (GCF-2). At the Petersberg Climate Dialogue in May 2023 in Berlin, Germany’s Bundeskanzler Olaf Scholz announced that Germany would donate 2 billion Euros to GCF-2. To date this is the highest single contribution since the GCF was launched239. Another tool in the multilateral funding toolkit was added in 2008 within the framework of the Kyoto Protocol when the adaptation fund was launched. This fund will now also implement tasks arising from the 2015 Paris Climate Agreement. Considering donations totalling some 540 million Euros, Germany is an important donor.
Within the framework of bilateral funding for projects and programmes, Germany makes contributions to specific projects promoting carbon-poor and climate-resilient economic growth. Projects are implemented predominantly by a banking group consisting of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the Kreditanstalt für Wiederaufbau (KfW) but also by private, civil-society and church sources of finance as well as political foundations in developing countries. Apart from projects whose key objective is the adaptation to climate change, there are some projects on development cooperation which include cross-sectional references to climate change. For example, numerous projects are concerned with the objectives of fighting poverty, safeguarding food security and diversification of a country’s economic structure, while these projects also address the adaptation to climate change. The adaptation to climate change is an important building block in sustainable development. Conversely, sustainable development enhances the resilience to climate change impacts. The implementation of the Paris Climate Agreement plays a key role in this scenario. Moreover, linking sustainable development and climate change adaptation enhances the effectiveness of public funds. However, it is a crucial prerequisite for approving an adaptation project for international climate funding that the adaptation objectives be phrased distinctly and explicitly and that specific measures be implemented in a way as to reduce the vulnerability of systems and the risks involved in climate change, thus increasing their climate resilience. This includes measures addressing information, awareness-raising and capacity-building as well as measures in legal, planning and programmatic respects, as well as implementation measures such as the conversion to water-saving irrigation systems, the cultivation of more drought-tolerant crops, the introduction of sustainable practices in fisheries or measures concerned with malaria control.
The sum total contributed by Germany towards international funding for climate protection in terms of mitigation and adaptation measures from budgetary funds has increased from 471 million Euros in 2005 to 5.34 billion Euros in 2021. Germany had promised prior to the 2015 Paris Climate Conference that public climate funding from budgetary funds inclusive of ‘gift equivalents’ would be increased by 2020 to four billion Euros annually. This promise was fulfilled as early as 2019. At the Petersberg Climate Dialogue in July 2022 the Bundeskanzler promised to increase this amount by 2025 to at least six billion Euros annually. Since 2010 Germany has been recording the adaptation share contributed to international climate funding separately. Measures taken for the adaptation to climate change in 2021 amounted to 2.59 billion Euros and were therefore seven times higher than the amount of 355 million Euros provided in 2010, thus representing 49 % of the entire international climate finance provided from budgetary funds.
239 - Pressemitteilung über den deutschen Beitrag zum GCF 2023: https://www.greenclimate.fund/news/germany-makes-record-eur-2-billion-pledge-green-climate-fund
