Climate finance figures in detail The methodology behind the BMZ’s reporting
Actions can be assigned three different values, or scores, under each marker. To score “2”, an action should have reduction of greenhouse gases or adaptation to climate change as its principal objective, meaning that the project would not otherwise have been planned. In this case, 100 per cent of the project budget volume is reported as being for the climate sector in question. A score of “1” means that mitigation or adaptation is a “significant” objective of the project. For such projects, 50 per cent of the project budget is reported as being for the climate sector in question. A score of “0” means that the activity does not significantly contribute to climate goals. Funding for such projects cannot be reported as climate finance.
In line with international practice, the BMZ reports its bilateral climate finance in terms of annual funding committed. For its multilateral activities, by contrast, it reports in terms of funding disbursed. Contributions from Germany's Energy and Climate Fund and from its successor budget lines are also reported in terms of disbursements.
The BMZ has, since 2014, included in its calculations of Germany's climate finance that share of the funding provided to the relevant funds of various multilateral organisations that can be counted as climate finance (“imputed climate relevant contributions”). This includes contributions to the World Bank’s International Development Association (IDA), the African Development Bank (AfDB) and the Asian Development Bank (ADB). This option became available in 2014 when these funds started publishing data on the proportion of their spending that goes towards climate-related measures.
When reporting on its bilateral climate finance, the German government has since 2013 reported not only public funds provided from the government budget but also on mobilised public climate finance. That covers the climate-relevant loan funding by KfW Development Bank and from Deutsche Investitions- und Entwicklungsgesellschaft (DEG) for which market funds are used. Since 2015, this reporting has been project-specific. Reporting on the figures for individual projects is more transparent than providing an aggregated sum.
In order to make reporting as transparent as possible and guarantee that no funding is counted twice, three categories are applied to development loans. One category is the budgetary funding used to subsidise the interest rates on development loans. The second category is the grant equivalents, which are shown separately. Since the budgetary funds used to subsidise the interest rate of development loans serve to increase their concessionality and are shown separately, those funds are deducted from the grant equivalent total. The third category shows the volume of the development loan minus the interest-rate subsidies and grant equivalents, which have already been reported separately.
For reasons of bank confidentiality, the subsidy elements included in the individual development loans may not be published. The interest subsidies are therefore reported as a total for each region (e.g. Africa). For public climate finance provided by DEG, the figures provided are also aggregated figures for entire regions.
Since the reporting year 2017, the BMZ has also published the grant equivalents of its development loans with a view to measuring the degree of concessionality of these development loans compared with loans at market conditions in a more transparent and precise way than in the past. The grant equivalents are calculated using a mathematical formula. It uses the grant element (a percentage indicating the concessionality of the loan), the volume of the market funds and the Rio markers for the particular project concerned. This is in line with the rules agreed for ODA (official development assistance) by the OECD Development Assistance Committee (DAC).
Mobilisation of private climate finance
Currently, Germany reports on climate finance mobilised from private funds only in areas for which reporting methods have already been agreed. KfW and DEG apply the instrument-specific DAC methodology (External link). The reporting on private climate finance is therefore incomplete to the extent that there are many other options for mobilising funds that are not yet taken into account, for example capacity-building through Technical Cooperation.
As at: 29/09/2023