Germany missed its own benchmark for funding global climate action and adaptation. Government budget spending for these programs fell by over 20%, landing at €4.75 billion in 2025 versus €6.1 billion the year earlier. That misses the promise to deliver a minimum of €6 billion per year to developing and emerging economies facing ever more frequent floods, droughts and storms. The gap matters because vulnerable nations already squeezed for options end up leaning on pricier financing to build infrastructure and respond to disasters.
As the US pulled back, OECD figures show Germany ranked as the top foreign-aid donor last year. "These are grim prospects for climate finance," said Jan Kowalzig, a senior policy adviser on climate change at the nonprofit Oxfam. He added that Germany is heading to next month's United Nations COP31 summit in Antalya, Turkey "having broken its word."
Berlin argues it is still pulling its weight toward the global $100 billion climate finance goal established under the Paris Agreement because it counts private funding and loans alongside budget spending. On that basis, the Ministry for Economic Cooperation and Development says total international climate finance reached €10.8 billion in 2025, with nearly half taking the form of revolving credit lines through local or development banks, stakes in funds, and public-private partnerships. "The federal government remains committed to its goals for international climate action," said Germany's development minister, Reem Alabali Radovan, in a statement. "At a time of shrinking public budgets, we are increasingly - and successfully - leveraging capital markets and private investment."
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Germany rolled out a plan last month to phase out fossil fuels by 2045, making it one of the early movers with a detailed pathway. Yet the pullback in international climate and adaptation funds highlights the squeeze on Chancellor Friedrich Merz's government. Berlin has ramped up borrowing for defense and infrastructure while tightening spending on pensions and healthcare, all while dealing with inflation, high energy costs and tough competition from China. Those strains have helped the far right gain ground, with victories in two state elections.
Hopes that others would fill the gap look slim. A draft seen by Bloomberg indicates the European Union does not see room for fresh climate finance commitments at COP31 and wants to stick to implementing prior decisions. The UK earlier this year cut international climate aid by 14% as part of broader development reductions, and in July diverted funds intended for poorer countries to support a new cap on bus fares, converting some international climate grants into loans.
An Oxfam report last year found nearly 70% of climate finance arrives as loans, not grants, and that for every $5 received by developing countries they pay back $7, "worsening debt burdens and hindering climate action," according to the report. More lending and fewer grants mean higher long run costs when climate disasters hit, which can ripple into emerging market debt risks and the pace of rebuilding projects tied to infrastructure and resilience. Watch how the mix of grants versus loans and overall donor commitments shift after 2025, because that backdrop shapes where capital flows next.
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