The BMWK works to implement the Paris Agreement through its participation in multilateral processes and work in international organisations. This includes implementing important decisions from the international climate negotiations under the United Nations Framework Convention on Climate Change (UNFCCC), as well as cooperation in international forums and organisations focusing on climate action and the energy transition, such as the G7/G20, the International Energy Agency (IEA) the International Renewable Energy Agency (IRENA) and the Clean Energy Ministerial. Its work further comprises participation in REN21, multiple implementation initiatives such as the Climate Club and the Glasgow Breakthrough Agenda, as well as the promotion of sub-national climate action.

Key topics of multilateral cooperation

In order to achieve the global Sustainable Development Goals in the 2030 Agenda (Sustainable Development Goals, SDGs), the Federal Government is working to promote the global energy transition in close cooperation with its international partners. The transformation of the global energy system by massively increasing renewables to transition away from fossil fuels – thereby making it more socially equitable, maximising economic opportunities and strengthening energy security - is a cornerstone of effective climate action.

The main tasks at hand include phasing out fossil energy, expanding renewables, making energy use more efficient and economical, driving the market ramp-up of green hydrogen and its derivatives, decarbonising all sectors, offsetting residual emissions that cannot be avoided, and designing decarbonisation pathways to support a just transformation. There is also international cooperation on reducing methane emissions and other greenhouse gases, as well as joint initiatives to cut carbon emissions, raise energy efficiency and reduce energy use.

As a cross-cutting issue, the BMWK works in all these fields of action to ensure that climate measures and the transformation of the energy system also work to strengthen gender equality and the participation of underrepresented social groups. It is essential to do what is required to close the implementation gap and be ambitious enough to implement the Paris Agreement as quickly as possible. Ambitious Nationally Determined Contributions (NDCs) and Long-term Strategies are of key importance here.

International forums

The BMWK uses multilateral forums and processes to work with its partners to achieve the highest possible level of climate ambition and ensure the consistent implementation of the global transformation. In addition to the COP (Conference of the Parties of the UNFCCC), these include the annual G7 and G20 meetings, as well as the Berlin Energy Transition Dialogue (BETD), the Petersberg Climate Dialogue and the annual events linked to the United Nations General Assembly in New York.

An important focus of the ministry’s work is the implementation of mitigation efforts, including support for international projects, programmes, funding and initiatives adopted in international climate negotiations, e.g. as part of the International Climate Initiative (IKI).

The BMWK supports the transformation of energy systems worldwide with the aim of driving climate change mitigation efforts, raising energy security and improving affordability. It does this through cooperation with international organisations, such as the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) in particular, as well as in other forums such as the Clean Energy Ministerial and the Renewable Energy Policy Network for the 21st Century (REN21).

Implementation initiatives

Within the Federal Government, the BMWK is responsible for Germany’s participation in ambitious sectoral implementation initiatives and multi-actor partnerships. These include the following: Powering Past Coal Alliance (PPCA), Glasgow Breakthrough Agenda (in the sectors of energy, transport, steel, buildings, hydrogen), the Global Methane Pledge, the Cities Climate Finance Leadership Alliance(CCFLA), the Global Alliance for Buildings and Construction (GlobalABC), the Southeast Asia Energy Transition Partnership (ETP), the Nitric Acid Climate Action Group (NACAG) and the Climate and Ozone Protection Alliance (COPA). Another important initiative is the open and cooperative international Climate Club, an inclusive, high-level, intergovernmental forum that seeks to help implement the Paris Agreement and particularly focuses on industrial decarbonisation.

Climate Club

Chancellor Olaf Scholz used the German G7 Presidency as an opportunity to establish the Climate Club, which is to support a speedy and ambitious implementation of the Paris Agreement and to accelerate climate measures to reduce emissions. The Climate Club works on the premise that a variety of measures can lead to the goal of achieving greenhouse gas neutrality by around the middle of the century.

Co-chaired by Germany and Chile, the Climate Club is an inclusive forum bringing together industrialised countries, emerging economies and developing countries to drive forward industrial decarbonisation and further develop emissions-reduction measures. The initiative will focus initially on emission-intensive sectors such as steel and cement. The Club is thus a broad action alliance of countries that are moving forward together in implementing ambitious and effective climate policies.

The framework conditions for industrial decarbonisation vary from country to country. The opportunity to share experiences is therefore of great benefit to all members. Committed developing and emerging countries that join the Club can be supported in driving forward the transformation of their industries with the goal of climate neutrality.

The Climate Club will also strengthen high-level policy exchange on international frameworks for industrial decarbonisation. This will accelerate work on common standards, methodologies and strategies for key industrial sectors. The Climate Club will contribute to ensuring that investments are made in sustainable industrial technologies, that demand for green products grows and that lock-in effects in fossil production processes are prevented in the investments that are now imminent. In these ways, the Climate Club also aims to ensure that countries that take the lead on climate action do not suffer competitive disadvantages and their domestic industries do not come under pressure to relocate. The Climate Club’s current work programme can be found here.

There is no predetermination in the Climate Club as to what measures or instruments are to be used. Rather, the focus is on the common goal to significantly reduce greenhouse gas emissions, particularly in the industrial sector.

The Climate Club has been met with great interest around the world and is growing continuously. An up-to-date membership list can be found on the Climate Club’s website. An interim secretariat has been established at the OECD and IEA. It supports the Climate Club in terms of substance and administration.

Climate action at sub-national level

For climate policy to be successful, socially just and thus in line with the Paris Agreement, climate action and climate adaptation also need to be organised at sub-national level. This is why the BMWK works to strengthen sub-national actors (towns and cities, municipalities and regions) in their climate ambition, helping them build capacity and knowledge, develop networks and dialogue, and gain better access to climate and infrastructure financing. It also seeks to improve multilevel climate action and create a stronger role for sub-national actors in (inter)national climate policy processes.

Redirecting financial flows

The Paris Agreement sets three long-term goals: limiting global warming to 1.5°C, implementing climate adaptation measures, and “making financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (Article 2.1c of the Paris Agreement). To achieve the first two goals, it is clear that global financial flows, both public-sector and private, need to be aligned accordingly.

To bring global financial flows in line with the goals of the Paris Agreement, investments that harm the climate must be halted and financing for areas supporting the transformation increased. The key tasks include designing framework conditions that mainstream climate action and factoring climate risks into investment decisions. This involves increasing the promotion and volume of green and sustainable finance and reducing both public and private sector subsidies and investments harmful to the climate. On issues of sustainable finance, the Federal Government receives advice from the Sustainable Finance Advisory Council. The BMWK also supports the creation of framework conditions that allow for transformative investments, redirect financial flows and promote green and sustainable finance in developing and emerging countries, e.g. as part of the International Climate Initiative (IKI) project 30-by-30 Zero, which aims to increase the share of green financing across four countries through the International Finance Corporation. Implementing Art. 2.1.c of the Paris Agreement also includes reducing financing for activities that are harmful to the climate. Underlining this commitment, Germany signed the Statement on International Public Support for the Clean Energy Transition at COP26.

International climate finance

The goals of the Paris Agreement as a whole can only be achieved through significantly scaling up future proofed investment. Public funds are crucial but are not sufficient alone to implement this fundamental economic transformation. They are however essential in supporting developing and emerging countries in their climate ambitions and can also serve as a catalyst for mobilising private funds, depending on the activity and financial instrument involved.

Industrialised countries have pledged to collectively provide US$100 billion per year from 2020 to 2025 from a wide range of sources (public and private, bilateral and multilateral) to finance measures to reduce emissions and adapt to climate change in emerging and developing economies. According to surveys by the OECD, the annual target has been met for the first time in 2022 (in 2022, approx. US$115.9 billion). In addition, developed countries have committed to collectively doubling their shares of adaptation finance up to 2025 compared with 2019 levels to achieve a balance between mitigation and adaptation in the provision of scaled-up financial resources. A new international climate finance target, the so called New Collective Quantified Goal on Climate Finance, is to be determined for the time after 2025.

The pledge reaffirmed by Federal Chancellor Olaf Scholz to increase Germany’s international climate finance to at least an annual €6 billion by 2025 was reached in 2022. In 2022, the Federal Government provided a total budget of around €6.39 billion towards international climate financing. Beyond federal budget funds, the Federal Government also provided publicly mobilised climate finance (loans through KfW and DEG) amounting to €3.09 billion in 2022, as well mobilising private funds totalling €479 million. Including these market resources and mobilised private resources, Germany’s climate financing in 2022 totalled approx. €9.96 billion. In addition to the Federal Ministry for Economic Cooperation and Development (BMZ), the International Climate Initiative (IKI) makes a significant contribution to this in particular.

Private capital mobilisation

The Federal Government strives to raise the level of private investment for mitigation and adaptation measures in emerging and developing countries through the use of public funds. This especially includes blended finance to reduce the hurdles and risks for the private sector in projects under the International Climate Initiative (IKI).

Effective climate action depends on the coordinated use of different instruments. Carbon markets can play an important role in this. Essentially, two different instruments can be distinguished that lead to the creation of carbon markets: emissions trading and crediting mechanisms. Both approaches rely on price signals to achieve their desired effect. Emissions trading systems work by setting a cap on emissions and lowering it over the trading period, resulting in an increasing scarcity of emission allowances and rising prices. This creates incentives for companies to invest in reducing emissions from their own production facilities. International cooperation mechanisms (crediting mechanisms) work the other way around, with investments as the starting points. Rising prices of internationally traded carbon credits allow for sustainable and transformative mitigation projects that would otherwise not have been implemented in the host country. Because of their major potential, market-based instruments are a key component of the Federal Government’s strategy to combat climate change. The Paris Agreement marks an important milestone for the development of international market-based mechanisms for climate action. Further information

The International Climate Initiative (IKI) is part of the Federal Government’s international commitments to fund climate action. In this funding programme, which was established in 2008, the Federal Government brings together three ministries and their remits for supporting ambitious climate action and biodiversity conservation at a global level. Since 2022, the IKI has been implemented by the Federal Ministry for Economic Affairs and Climate Action in close cooperation with the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection and the Federal Foreign Office.

The funding is used to support implementing organisations for emerging economies and developing countries across four areas of funding:

• I. Mitigation of greenhouse gas emissions;
• II. Adaptation to the impacts of climate change;
• III. Preservation and restoration of natural carbon sinks; and
• IV. Conservation of biodiversity.

This allows for close systemic relations and interdependencies between the global climate and biodiversity crises to be analysed and addressed together. In its funding activities, the IKI focuses on 14 countries. These countries account for almost 50% of global greenhouse gas emissions whilst also belonging to the world’s top-25 biodiversity hotspots.

To date, more than 1,000 climate and biodiversity projects in over 150 countries across the globe have been accepted under the initiative and some €6 billion approved in funding.

Within the context of the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC), the Federal Ministry for Economic Affairs and Climate Action is especially responsible for IKI funding area I ‘mitigation of greenhouse gas emissions’. Its task is to support the IKI partner countries as they ambitiously develop and implement their Nationally Determined Contributions (NDCs) and their Long-Term Strategies.

At the centre of the IKI funding provided by the Federal Ministry for Economic Affairs and Climate Action are the global energy transition, the decarbonisation of the industrial sector and the transport transition. With regard to its funding policy under the IKI as of 2024, the Federal Ministry for Economic Affairs and Climate Action is focusing on the expansion of renewables (cf. G20 target of tripling capacity by 2030), energy efficiency improvements, energy storage, sector coupling, grid expansion and cooling/heating systems. Support for the restructuring and modernisation of industries focuses on the setting of ambitious standards for countries and sectors, on accounting frameworks for quantifying greenhouse gas emissions, on green procurement systems, and on CO2 pricing mechanisms for industry. To support the global transition in transport, the Federal Ministry for Economic Affairs and Climate Action and its IKI focus on replacing combustion engines with alternative drives. It also supports the incorporation of this change into the NDC and the implementation of regulatory and direct measures.

Support for ambitious target-setting by the partner countries in policy fields that are relevant to the climate is part of the strategy underpinning the IKI itself. Three horizontal priorities apply across the funding areas I to IV:

• Support for international negotiation processes
• Support for the social and ecological transformation
• Development of sustainable and climate-friendly urban and peri-urban areas