Germany to pay into climate funds despite budget crisis

Germany’s foreign minister Annalena Baerbock has said Berlin will stand by all its international financial commitments to tackle climate change, despite a budget crisis that has thrown its 2024 spending plans into disarray.

“We will always be a reliable partner,” Baerbock told the Financial Times ahead of the UN’s COP28 climate summit in Dubai. “That’s why we agreed within the federal government that we will fulfil our international obligations.”

These included €6bn in international climate finance that Germany had committed to provide by 2025, €2bn for the UN’s Green Climate Fund, and Berlin’s contribution to a new global fund to address climate-related loss and damage in developing countries, she added.

Baerbock was speaking as the German government scrambled to plug a €60bn hole in its public finances created by a bombshell judgment by the country’s constitutional court on November 15 that plunged chancellor Olaf Scholz’s three-party coalition into crisis.

Judges struck down a 2021 move by ministers to repurpose funds earmarked for dealing with the Covid-19 pandemic to fighting climate change. The court ruled it violated the rules of the “debt brake”, a strict curb on new borrowing enshrined in the German constitution.

Baerbock said the most sensible solution to the fiscal problem was to reform the debt brake itself, which limits the federal government’s structural deficit to 0.35 per cent of gross domestic product.

It has been suspended since 2020, initially because of the pandemic and then later because of Russia’s war on Ukraine and the sharp drop in Russian gas supplies to Europe.

“Its original authors could not have anticipated that it would end up leaving us wholly unable to deal effectively with the kind of emergencies and crises we’re going through now,” the foreign minister said.

She added that it needed to be expanded to include an “investment component” that would allow for spending on big infrastructure projects.

The opposition Christian Democrats have said they would not co-operate in any attempt to amend the debt rule, a move that would require a two-thirds majority in parliament.

But Baerbock said that several Christian Democrat regional governors had “indicated that [reform] would be a good idea”.

“The regions are . . . asking if it’s a good idea to just patch up crumbling infrastructure or whether it might be better to really invest in the railways, the expansion of broadband, things that will make the regions strong,” she added.

Germany’s first female foreign minister and one of its most prominent Green politicians, Baerbock has long played a big role in international climate diplomacy.

She has been a strong advocate of the idea of a “loss and damage fund” to compensate developing countries for climate-related damage — an idea that finally came to fruition at the start of COP28 in Dubai on Thursday when Germany and the United Arab Emirates announced they were both contributing $100mn to the fund.

Baerbock called the announcements a “breakthrough”, adding she was “really hopeful that other big emitters like Saudi Arabia and China will also show responsibility at COP28 and contribute”.

The summit comes amid growing concern among scientists about the speed of climate change and the increasingly frequent extreme weather events it is causing.

According to a UN report released last month, the world is heading for a temperature rise of between 2.5C and 2.9C by 2100. That is far off the goal set in Paris in 2015 to limit global warming to 1.5C above pre-industrial levels. 

“With the war in Ukraine and the crisis in the Middle East, the international community is facing almost unprecedented challenges, and that’s why this COP is so unbelievably important in geostrategic terms,” Baerbock said.

“We’ve seen in this year alone how wounded the world is, with the forest fires in Rhodes, or the drought in the Amazon basin.”

Baerbock said Germany would use COP28 to press for agreement on a gradual phaseout of all fossil fuels, a position that is likely to encounter strong opposition from major oil and gas-producing countries such as Russia and Saudi Arabia.

She added that a phaseout was needed to achieve the Paris climate goals. “Fossil fuels make the biggest contribution to global warming,” she said.

Sultan al-Jaber, chief executive of the Abu Dhabi National Oil Company and president of COP28, has said he will seek support for an agreement to triple renewable energy capacity and double energy efficiency. But Baerbock said that was not enough.

Only by combining those two goals with a fossil-fuel phaseout “can we hold off the worst of the destruction”, she added. “Otherwise, we won’t be able to deal with the damage caused by climate change.”

Jaber has faced criticism over his closeness to the hydrocarbons industry, with allegations that he will use the UAE’s role as host of COP28 to discuss oil and gas deals. Jaber has said these claims were “false”.

Baerbock dismissed the criticism of the COP28 president. “Obviously countries which have built their wealth on fossil fuels won’t wake up one morning and give up that wealth — until they have an alternative,” she said, noting the UAE were also investing heavily in renewables.

Baerbock said she was in “favour of trying to overcome the old divisions in climate diplomacy”, pointing to Germany’s membership of the High Ambition Coalition, which calls for more aggressive action on climate change and brings together nations as disparate as France, Kenya, Jamaica and Fiji.

“We have to try to bridge the gaps that have always existed between north and south, between industrial nations and developing countries,” she added.