World needs more donor countries, private funds to finance climate action – German chancellor

The world needs a "new approach to climate finance," German chancellor Olaf Scholz said at his government's Petersberg Climate Conference in Berlin. He said more countries should contribute to climate finance – until now seen as the responsibility of developed countries, as these have historically put the biggest strain on the environment while having the financial resources to do something about it. However, over the past decades, many emerging economies have become major emitters with increasing economic power, Scholz said. "Countries that have contributed significantly to emissions over the past thirty years must also contribute to international climate financing if they are in an economic position to do so." Germany is planning to modernise its bilateral “debt-for-climate” swaps programme, in which countries invest in climate action instead of repaying their debt. "This is not a panacea, but in future, vulnerable middle-income countries that are willing to reform could also be considered for climate debt swaps," Scholz said. The chancellor added that public funds were not enough, and that more private capital had to be unlocked for sustainable growth, for example through development banks providing security for private investments in local currencies.

International climate finance – funds provided or leveraged by richer countries to support climate mitigation and adaptation measures – is a key element of global climate diplomacy. Developed countries had promised to mobilise 100 billion US dollars from public and private sources per year by 2020 for climate change mitigation and adaptation in developing countries – but they failed to do so, likely reaching the target only in 2022 according to a preliminary estimate by the OECD. On the first day of the Petersberg Climate Conference, foreign minister Annalena Baerbock said Germany would continue to aim to provide six billion euros annually in funds to developing countries for climate mitigation and adaptation by 2025, despite a currently tight national budget.

Head of the Berlin office of NGO Germanwatch, Lutz Weischer, commented that, overall, the chancellor's speech at the event was "disappointing". Scholz avoided clear statements on crucial issues, such as whether Germany would support an ambitious EU climate target for 2040 (Baerbock had said as much one day earlier), or whether it is in favour of international levies on profits of fossil fuel corporations, Weischer said. He welcomed the announced reform of the debt-for-climate swap programme, but said this was a small step only.