Vote25: Climate adaptation financing must find new footing in next German legislative period

***Please note: this article is part of CLEW's analysis series on the state of play in the green transition across economic sectors. You can find the other articles here.***

In 2024, Germany experienced devastating floods first in the West, then in the South, then in the East, leaving death in their wake and severely damaging vital infrastructure like homes and bridges. All of that occurred during Germany's hottest year on record. Just two years earlier, extreme drought killed crops, damaged forests, and heavily impaired freight transport on the country's most important river. The consequences reverberated all the way down to the country's economic recovery.

2021 also served as a wake-up call for Germany to focus on climate change and its consequences, after heavy and long-lasting rainfall led to devastating floods – the worst extreme weather event in the country in half a century.

Germany's outgoing government made significant progress in climate adaptation during its legislative period. However, solving financing challenges and acquiring skilled personnel remain issues the next government will have to tackle, experts say.

"In the forthcoming legislative period, the most pressing issue is to agree on a joint financing instrument for adaptation activities between the federal government and the federal states to accelerate implementation," Kirsten Sander, scientific policy advisor at the Federal Environment Agency (UBA), told Clean Energy Wire.

So far, the federal government has made it a legal requirement to draw up risk analyses and implement adaptation measures but has not agreed on a tool to provide financial support for this multigenerational task.

Adaptation firmly on the agenda

While Germany has had an adaptation strategy since 2008, implementing climate adaptation measures remained mostly voluntary – until last year.

"2024 marked a significant milestone for climate adaptation policy in Germany: the first Climate Adaptation Act came into force and the government adopted a new climate adaptation strategy with measurable targets," Sander said.

For the first time, the government introduced a binding strategy with measurable targets to better prepare the country for dealing with extreme weather events, which are expected to occur more frequently and at greater intensities due to global warming.

Taking infrastructure as an example, the goal is to optimise transport and logistics provisions for periods of low water in waterways. Companies might have to reorganise their supply chains or use new transport technologies that can navigate low water levels, so the supply of goods can continue. Similarly, by 2050, disruptions to road and rail transport caused by weather events – such as collapsed bridges following floods or derailed trains after landslides – should be reduced.

Additionally, all public administration bodies, whether local authority or federal government, will now have to take precautions against the consequences of climate change. From 2025, all bodies carrying out public functions need to consider climate adaptation in their planning and decision-making.

Next German government will play key role in securing necessary human and financial resources

The climate crisis will play out differently in different parts of Germany, and only so much can be achieved at the national level – actually implementing climate adaptation measures will be more of a local process.

While the federal government can play a key role as a central point of contact and coordinator, as well as a source of information and funds, it is municipalities that will be responsible for measures like replacing concrete and asphalt surfaces with permeable and cooler ones, planting drought-resilient trees and nurturing them, and upgrading sewage systems or greening roofs.

While the vast majority (96%) of municipalities expect to be more affected by extreme weather events by 2050, around half say they will not be able to finance necessary response measures, found a survey by media organisations NDR, BR, WDR and Correctiv.

The findings are echoed by a separate survey carried out by the Federal Environment Agency (UBA), which found that most municipalities say a lack of human and financial resources are by far the biggest obstacles to planning or implementing adaptation measures.

"In Germany, the issue of financing municipal climate adaptation plans has not yet been resolved," Andrea Fischer-Hotzel, an adaptation expert at the German Institute of Urban Affairs (Difu), told Clean Energy Wire. "Implementing measures is very expensive and most municipalities do not have sufficient funds for major investments."

"If the new parliament adopts the constitutional amendment that was actually announced for this legislative period, and adaptation becomes a 'joint task', the federal government could provide more financial support," she explained.

Such a reform to Germany's constitution would secure funds in the long-term, as it would force the federal government to contribute financially on a permanent basis in addition to state funding and, for example, short-term funding programmes.

Researchers, environmental organisations, and trade unions have long called for this reform. While there was talk of implementing it during chancellor Olaf Scholz's legislature, the move ultimately fell through.

"Climate adaptation is a mammoth task for many cities, municipalities, and districts because it entails far-reaching challenges for municipal planning processes and structures," said Thomas Friedrich, who led the UBA survey. "According to their own statements, they often still lack specific knowledge, resources, or support for the creation of climate adaptation concepts or to plan and implement climate adaptation measures."

There are a number of funding programmes available to states and municipalities, however "a lot of funding is not taken up because the municipalities lack qualified personnel to apply for it," Friedrich added.

Acting now to save lives and money in future

Adapting to the already unavoidable effects of climate change is necessary to save lives and reduce the financial burden that comes with damage caused by extreme weather events.

While not all damage can be quantified – as it includes health impacts, loss of biodiversity and a reduction in quality of life – insured losses from extreme weather events reached 5.5 billion euros in Germany in 2024. Although that’s a slight reduction from the 5.7 billion in 2023, it is still well above the long-term average, said insurance association GDV.

Discussions about whether to introduce mandatory natural hazard insurance for homes could roll over into the next legislative period. The topic is divisive, with some arguing that the introduction of mandatory insurance would not solve the problem of risk. Others highlight that just over half of households are currently insured, but homeowners often expect state support if they are affected by climate disasters.

Depending on how much progress Germany and the world makes in reducing emissions, researchers expect the country to experience economic losses of between 280 and 900 billion euros by 2050 as a result of the consequences of climate change. Damages induced by climate change have already cost Germany at least 145 billion euros since 2000.

A report from early 2024 found that the country's towns and cities are insufficiently prepared to deal with more frequent and more severe flooding, periods of high heat, and drought and water shortages.

There are, however, a few frontrunners which are taking steps to address this pressing issue. Following the devastating 2021 floods, which killed almost 200 people and caused widespread damage, the state of North Rhine-Westphalia presented its own Climate Adaptation Act. Other states – including Brandenburg, Hesse, Rhineland-Palatinate, Bavaria, and Saxony-Anhalt – have also implemented their own plans to deal with extreme heat.

"Local authorities are becoming increasingly active too, with many municipalities showing an awareness of the risks of flooding, drought, and heat waves," Difu's adaptation expert Fischer-Hotzel said. "A broad awareness of the consequences of climate change and the need for action has been established."

Rise of populism threatens effective climate adaptation

As the Alternative for Germany (AfD) rises in popularity, both climate protection and effective adaptation come under threat.

"Right-wing populist parties are increasingly using the topic of climate adaptation to promote their ideologies under the guise of environmental concern," wrote Lara Helen Möllney and Vivianne Rau, consultants at think tank adelphi, in a commentary for Klimareporter.

During state elections last year, the AfD exploited natural disasters like floods and wildfires by portraying itself as a saviour and capitalising on people's fears, the consultants added. While the party supports adaptation measures – such as building dams and canalisation – it does so while strongly denying the need for global climate protection.

"Effective climate adaptation and right-wing populist ideologies are incompatible," Möllney and Rau warned. "Effective adaptation requires international cooperation, synergies with climate protection, and the safeguarding of vulnerable groups."

Without taking steps to reduce greenhouse gases, which the party rejects, protecting people and infrastructure against rising temperatures and the resulting extreme weather events will become exponentially more challenging and expensive.

The AfD has not yet entered national or regional government, and all established parties have so far ruled out cooperating with the group. However, even as part of the opposition, the AfD has started to slow certain climate measures at the regional and local level, and climate adaptation could follow suit. While it might seem easy to secure majorities for adaptation by working with the AfD, their nationalistic ideology is incompatible with genuinely effective prevention. 

"The campaign for the early federal election is a crucial opportunity for all democratic parties to clearly distance themselves from right-wing populist narratives in the area of climate adaptation," Möllney and Rau wrote.

Preparing Germany for the heat ahead

Germany, alongside the rest of the world, is feeling the effects of climate change. "Whether heat waves or heavy rain, climate change is now so advanced that comprehensive adaptation measures are necessary," wrote the Friedrich Ebert Foundation (FES), a political foundation associated with the Social Democratic Party (SPD), in a 2024 report.

Germany now has goals for climate adaptation in the areas of human health, urban development and spatial planning, land use, civil protection, infrastructure, water management, and the economy, as well as measures that affect more than one sector simultaneously.

Most targets in the country's adaptation strategy are set for 2030, and as such the responsibility will largely fall on the shoulders of the next government. While there is no single indicator for successful and effective climate adaptation – unlike with mitigation, which can be measured through CO2 reductions – Germany's next government now has clear guidelines.