Financing climate mitigation and adaptation measures

The global community formulated the goal of bringing financial flows into line with mitigated greenhouse gases and climate-resilient development in the Paris Agreement of 2015. As early as 2009, the industrialised countries in the Copenhagen Accord committed themselves to mobilising 100 billion US dollars per year from 2020. These funds will be channelled from public, private, bilateral, multilateral and alternative funding sources. This commitment was endorsed by the Paris Agreement until 2025. From that year on, even more ambitious targets will apply, but agreements have still to be reached in that respect.

In addition to international public climate funding, national public funds are particularly important, which is why emerging and developing countries are encouraged to make public investments. Reliable framework conditions and further economic incentives are also needed to boost private investments.

The consideration of climate change is particularly important in the case of long-term planned infrastructure investments. This is why the International Climate Initiative (IKI) supports projects which, together with their partners, target capital investment in climate-friendly technologies and the integration of climate-relevant aspects into investment decisions. Funding is provided for sustainable business models (inter alia) and innovative financing instruments that mobilise private investment for climate change and create the greatest possible transformative impact. One vital component is the provision of start-up financing for climate change projects, with the aim of minimising risks to the economic and technical feasibility of the projects’ development and creating incentives for investors. There is ultimately a global shortage of financially mature projects in which private investors can invest. Emerging and developing countries are also being supported to help them meet the demanding criteria of the Green Climate Fund (GCF). This will enable them to successfully apply for climate funding. The transparency of climate funding flows is also promoted and plays a key role for investors.

Selected projects:

Green Climate Fund

The Green Climate Fund was set up in 2010 by the 194 member states of the UNFCCC as a global financing mechanism to support climate action in developing and emerging countries. As part of the Paris climate change agreement, the GCF also received a mandate to support the paradigm shift towards a low-carbon society adapted to climate change.

After the first donor conference in Berlin in November 2014 and COP20 in Lima, the GCF had already received pledges by late 2014 totalling 10.2 billion US dollars. This makes the GCF the largest multilateral climate fund dedicated to providing equal support to both mitigation and adaptation measures. The GCF is also unique in that its Board consists of developing and developed countries in equal numbers. As with the UN Adaptation Fund, developing countries have direct access to GCF finance provided they successfully achieve accreditation.

The GCF project pipeline continues to grow and currently includes 58 project proposals, with an application volume totalling 3.4 billion US Dollars, as well as 196 concept notes, generating a potential application volume of up to 10.2 billion US dollars (as at July 2017).

Germany has so far approved a grant of 750 million euros towards the fund and as such is the fifth largest donor in absolute terms after the USA, Japan, the United Kingdom and France. The German Government had paid EUR 88.88 million into the GCF by 2016, and a further 12.52 million euros are to follow in 2017 (as at October 2017).

NAMA Facility (NF)

The United Kingdom and Germany have jointly established the NAMA Facility to support developing and emerging countries, which take a leading role in combating climate change and want to implement NAMAs (Nationally Appropriate Mitigation Actions). The current funding amounts to €261 million. The German contribution comes from the International Climate Initiative (IKI) of the German Ministry for Environment (BMUB). Denmark and the European Commission have also been donors since 2015. Four selection rounds for NAMA support projects have meanwhile taken place most recently in 2016, and a total of 21 NAMA support projects have been pre-selected, nine of which are now being implemented.

Developing and emerging countries have prepared many ambitious climate change measures in recent years – also with the support of the IKI. The aim of the NAMA Facility is to meet the need for tailor-made climate change funding by supporting the implementation of ambitious NAMAs in each country, which will enable local greenhouse gas emissions to be specifically reduced. Several countries see NAMAs as an essential element in the implementation of Nationally Determined Contributions (NDCs) as part of the Paris Agreement.

IKI Key Area

Further information