The European Union (EU) and its 27 member states allocated in 2023 €28.6 billion (approximately $30.6 billion) in climate finance sourced from public funds, while also mobilizing an additional €7.2 billion ($7.7 billion) in private financing. This support is aimed at assisting developing nations in reducing their greenhouse gas emissions and adapting to the effects of climate change. The Council released these figures in anticipation of the upcoming United Nations Climate Change Conference of the Parties (COP29), scheduled to take place from November 11 to 22 in Baku, Azerbaijan. These statistics adhere to the EU’s climate finance reporting regulations established in the governance regulation.
Focus on adaptation and mitigation
Data compiled by the European Commission indicates that around half of the public climate funding directed towards developing countries is focused on climate adaptation or encompasses cross-cutting actions that involve both mitigation and adaptation efforts. Grant-based finance constitutes a substantial portion—nearly 50 percent—of the public contributions from the EU and its member states. Concurrently, the EU is actively working to broaden the range and effectiveness of financial sources and instruments, aiming to attract more private investment. These strategies are essential for bolstering international climate initiatives and will enable the EU to continue supporting developing nations in fulfilling the commitments of the 2015 Paris climate agreement. The 2023 figures reaffirm the EU and its member states’ strong commitment to meeting their international climate finance obligations, particularly in alignment with the collective goal of mobilizing $100 billion annually through 2025.
Read more: Denmark to introduce first-ever carbon tax on agriculture
Investment in offshore industry
In September 2024, the European Commission announced its approval of €200 million (around $221 million) in state aid from Germany, aimed at constructing additional berths in the port of Cuxhaven. This initiative is intended to strengthen the region’s offshore industry capabilities, as reported by the German news agency dpa. The new docking facilities, located on Germany’s North Sea coast, are designed to improve the handling of heavy loads, including components for wind farms, in the northern German city. The European Commission emphasized that this infrastructure will also aid Germany in achieving its renewable energy goals and enhance supply security.
The €200 million in grants is set to be complemented by an additional €100 million investment from NPorts, the state-owned port authority. The anticipated completion date for the new terminal is 2028. While state aid is strictly regulated within the EU, Brussels can allow national governments to provide financial assistance for economic development under certain conditions. Last month, Germany secured significant funding for its “Federal Action Plan on Nature-based Solutions for Climate and Biodiversity,” ensuring its implementation in the coming years. Environment Minister Steffi Lemke announced that over €3.5 billion ($3.89 billion) will be allocated to this plan until 2028, marking the largest investment ever made in nature and climate protection in Germany.
Major funding for nature-based solutions
In August 2024, Germany made a pivotal move towards environmental protection and climate change mitigation by securing substantial funding for its “Federal Action Plan on Nature-based Solutions for Climate and Biodiversity.” Environment Minister Steffi Lemke revealed that over €3.5 billion ($3.89 billion) will be allocated to this initiative through to 2028, representing the largest investment in nature and climate protection in the country’s history. Furthermore, the funding for this action plan, which received approval in 2023, is drawn from Germany’s Climate and Transformation Fund (CTF). This dedicated government fund supports projects aimed at advancing climate protection and fostering the development of key industries, such as semiconductor manufacturing.
Global economic opportunities in climate transition
Achieving net-zero emissions remains a top priority. In July 2024, U.S. Treasury Secretary Janet Yellen asserted that the global transition to a low-carbon economy requires an annual infusion of $3 trillion in new capital until 2050, a figure significantly higher than current financing levels. However, addressing this shortfall represents the most substantial economic opportunity of the 21st century. During her remarks at the G20 finance leaders’ meeting in Rio de Janeiro, Yellen reiterated that the pursuit of a low-carbon economy and net-zero emissions goals remains a central focus for the U.S. administration. She emphasized the necessity for cooperative leadership that extends beyond U.S. borders and reiterated the multifaceted impacts of climate change on both the environment and the economy, highlighting the critical nature of the transition to a low-carbon economy.
In 2022, wealthier nations provided a historic $116 billion in climate finance to developing countries, with 40 percent of that funding sourced from multilateral development banks (MDBs). Currently, institutions like the World Bank and the Inter-American Development Bank (IDB) are establishing new targets to further this cause.
For more news on sustainability, click here.
