Climate finance Activities to mobilise private climate finance

Financing requirements for realising the goals of the Paris Agreement are high in many developing and emerging economies. According to estimates, investment requirements up to 2030 are around 2.4 trillion US dollars a year. The Independent High-Level Expert Group on Climate Finance has confirmed these figures. The Expert Group was launched by the presidencies of COP26 and COP27 and by the UN Climate Change High-Level Champions. Its task was to draft policy recommendations to channel public and private investment into climate-friendly development.

The New Collective Quantified Goal adopted at COP29 in Baku in 2024 takes account of that estimate. Parties made a call for enabling the scaling up of climate finance for developing countries to at least 1.3 trillion US dollars by 2035. A roadmap is currently being drafted and will be presented at COP30 in November 2025. The roadmap is to serve as a practical tool for mobilising private capital for investment to propel the necessary transformation forward.

The 2015 Addis Ababa Action Agenda and, most recently, the outcome document of the Fourth International Conference on Financing for Development in Seville highlighted the importance of blended finance. According to the OECD definition, blended finance is “the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries” – especially in instances where private investment would otherwise not take place.

According to an OECD report published in May 2024, 2022 was the first year in which international climate finance reached the level pledged. That year, international climate finance provided and mobilised by developed countries rose to 115.9 billion US dollars (2021: 89.6 billion US dollars). Mobilised private climate finance grew to 21.9 billion US dollars, significantly more than the level of 14.4 billion US dollars reached in 2021. So far, multilateral development banks have proven to be the strongest leveraging mechanism for mobilising private investment through public climate finance.

In 2024, the German government provided some 11.8 billion euros for climate finance. Of this amount, some 1.11 billion euros (about 9 per cent of the total) was private climate finance that had been mobilised by the German government through public funding deployed via DEG and KfW Development Bank. Most of this private funding (98 per cent) has gone towards mitigation, which is often more attractive for private investment. The German government is working to increase the level of private funding mobilised for adaptation in the future.

Since 2017, there has been a uniform OECD reporting methodology for private finance mobilised by various instruments such as guarantees, reduced-interest loans, direct investment, credit lines and structured funds. Germany applies this methodology when reporting on private sector resources mobilised for climate finance by KfW Development Bank and DEG.

Multilateral development banks and multilateral climate funds – such as the Green Climate Fund (GCF) (External link), the Global Environment Facility (GEF) (External link) and the Climate Investment Funds (CIF) (External link) – mobilise significant levels of private funding, too – and Germany, as a significant contributor to these institutions, has a big part in this.

At the United Nations Climate Action Summit in 2019, the multilateral development banks announced they would provide at least 65 billion US dollars for climate finance annually up to 2025. Moreover, they formulated a shared goal of leveraging 40 billion US dollars in private capital.

The multilateral development banks' joint report on their climate finance activities in 2022 indicates an upward trend. Overall co-financing arrangements totalled some 120 billion US dollars, including an amount of about 69 billion US dollars (approximately 58 per cent; 2021: 45 billion US dollars) in mobilised private finance.