Just after the Spring Meetings of the International Monetary Fund and the World Bank and a few days before the Petersberg Climate Dialogue, we take a closer look at climate financing: Bernhard Pötter and Malte Kreutzfeldt have collected new figures, the results of the meetings and the call by German climate envoy Jennifer Morgan for a new debate on the subject for you.
Money is also an issue in the unrest on the voluntary carbon market. Our author Tin Fischer explains in detail the reasons behind the dispute in the Science Based Targets Initiative – and why it could even destroy the SBTI.
We also report on the state of the climate in Europe as described by the EU climate service Copernicus. And in today’s opinion piece, Sabine Nallinger, head of the German CEO Alliance for Climate and Economy, explains why Germany also needs an ambitious national circular economy strategy for climate action.
Global funds for fighting the climate crisis nearly doubled in the period from 2021/22, according to a new data collection. Annual global spending on CO2 mitigation and adaptation rose to almost 1.3 trillion dollars compared to about 650 billion dollars in 2019/20, a recent analysis by the climate policy Initiative shows. However, the sums are still far from what is needed to curb climate change.
All expenditures from all sources were calculated – significantly more than the 100 billion dollars that developed countries promised to mobilize for developing countries after a 2009 pledge. The major driver of the doubling was, therefore, the increase in funds for mitigation. According to the statistics, this included, among other things
However, nearly a third of the increase is attributed to new calculation methods, the initiative noted. Furthermore, about 5 to 8 trillion dollars annually are needed, rising to 10 trillion dollars by 2030. “Annual climate financing must at least quintuple as soon as possible to prevent the worst impacts of climate change,” they stated.
Investments are also unevenly distributed: About 90 percent of the funds for mitigation went to the USA, China, EU, Brazil, Japan and India. While the energy sector (44 percent) and transportation (29 percent) received the largest shares, agriculture, the sector with the next highest CO2 emissions, received only 4 percent.
Just last week, the World Bank was equipped with additional capital to fight poverty, pandemics and climate damage at its Spring Meeting. About 11 billion dollars more will now be available to the bank, enabling it to offer up to 70 billion dollars in low-interest loans over ten years.
Following Germany’s example, which pushed for this change with an early pledge of 305 million dollars, Denmark, the Netherlands, the UK, Latvia and Norway also bolstered the bank through “hybrid capital”. The USA, France, Belgium and Japan plan to contribute to a “guarantee platform”. “It’s a strong sign of solidarity,” said German Development Minister Svenja Schulze (SPD). “We’ve managed to make the World Bank not just better, but bigger.” This additional money will also help protect global commons like the climate and biodiversity.
Ideas were also discussed on how to raise more money from new sources for climate protection, sustainability and social security in the future: Brazil, which currently holds the G20 presidency, has proposed a tax on extreme wealth; a task force of countries such as France, Kenya and Barbados wants to present a proposal for global climate taxes by COP30 2025 in Brazil, which could be levied on shipping, fossil fuel production or airline tickets, for example.
At the International Monetary Fund (IMF) meeting, there was no agreement on using Special Drawing Rights (SDR) for debt relief and climate action measures. However, former Maldives President Mohamed Nasheed and Rakesh Mohan, former deputy head of the Indian central bank and World Bank advisor, called for IMF Managing Director Kristalina Georgieva, re-elected for a second term, to align the IMF with the Paris Agreement, gather sufficient capital and give greater consideration to the voices of the most vulnerable countries.
During a live talk on climate finance, Jennifer Morgan, State Secretary and Special Envoy for International Climate Action at the Federal Foreign Office, welcomed the recent developments. “There was a constructive atmosphere at the Spring Meeting,” she said. “There was a lot of progress in a short time.” Morgan also expressed optimism that the 100 billion dollars promised by industrialized nations might be reached this year for the first time. “We’re waiting for the official numbers,” she said. “But projections suggest it’s likely.”
Jan Kowalzig, a finance expert from the aid organization Oxfam, agreed there had been progress, including the new rule that allows for the suspension of debt payments in the event of climate disasters. However, Kowalzig emphasized the shortcomings more. “Progress is too slow,” he concluded. He also criticized the argument that there isn’t enough money in the budget for climate finance due to the debt brake. “It’s a political decision that we allow extremely wealthy people not to contribute to the costs by foregoing a wealth tax,” he said.
There was consensus on the need for wealthy emerging countries to contribute to international climate action financing. Morgan announced this would also be a topic at the upcoming Petersberg Climate Dialogue. Kowalzig agreed this was sensible, but it was crucial that industrialized countries first meet their obligations. “It’s an important signal for making progress on this issue,” he said.
In the world’s leading certification initiative for corporate climate goals, the Science Based Targets Initiative (SBTI), a deep rift is emerging. The current dispute over the approval of CO2 compensations for achieving climate neutrality is dividing the organization into two camps: those interested in market-driven models, and those for whom the scientific integrity of the SBTI is paramount.
The SBTI seal is intended to ensure that corporate climate goals are ambitious and scientifically founded – thus free from greenwashing. The standard is considered strict. Financially, the SBTI is primarily supported by the Bezos Earth Fund, founded by the Amazon creator, as well as the IKEA Foundation. One of its key partners is the WWF.
More than 5,000 companies worldwide have now defined their climate goals with the SBTI, including corporations from various industries, from Apple to Bayer to Edeka and IKEA. The decisions of the SBTI have implications for the global market. The Bezos Earth Fund, founded in 2020 with ten billion dollars and the WWF share the same goal: to protect nature and combat climate change. However, they sometimes differ in their choice of means. Along this line, the rift runs.
The Bezos Earth Fund significantly drives the trade in CO2 certificates, especially in the areas of renewable energy and forest protection. It co-founded the Energy Transition Accelerators, which aims to advance the global energy transition through CO2 certificates. Major US corporations such as Walmart, McDonald’s, and of course, Amazon, are involved.
The public-private LEAF Coalition, which can at least be assumed to be closely linked to the Bezos Earth Fund-Amazon is a co-founder and a driving force of the initiative – aims to collect at least one billion US dollars for the protection of tropical rainforests. Companies can purchase forest conservation certificates based on the ART TREE standard through the LEAF Coalition platform on a large scale, turning not just individual conservation areas but entire regions and states into compensation projects.
“The Bezos Earth Fund is a major supporter of the Energy Transition Accelerators and the LEAF Coalition, two initiatives that will generate significant amounts of CO2 certificates. These will need to be sold somewhere,” says Gilles Dufrasne from the NGO Carbon Market Watch. “So if SBTI were to encourage companies to buy certificates, it would logically fit,” he notes. This context is largely to blame for the initiative that has now shaken SBTI: namely, that certificates may be used under certain circumstances to achieve companies’ climate goals.
The WWF, through Gold Standard, is also involved in certifying compensation projects that could benefit from the SBTI decision but is at the same time a critic of the markets. For instance, Gold Standard does not certify forest protection projects like those from ART TREE because their certificates are based on hypothetical, difficult-to-measure deforestation scenarios. In a statement, the WWF expresses “substantiated doubts regarding the poor track record of CO2 certificates” and demands that SBTI maintain “robust science-based processes”.
These processes are SBTI’s most valuable asset. An independent technical council is supposed to “review and approve” the standards, according to the rules. Until now, this council has rejected certificates. “SBTI took a tough stance that it’s not allowed to count certificates towards climate goals. Companies were expected to support external projects but not to count them,” says Robert Höglund, an expert in carbon removals who serves pro bono as a technical advisor for SBTI.
It was therefore surprising when two weeks ago the board, which holds overall responsibility but is not in charge of technical decisions, suddenly announced that certificates “could serve as an additional tool to combat climate change” and would thus be allowed for Scope 3 emissions.
SBTI staff reacted with an open letter stating that the technical council “was neither informed nor consulted” and had not endorsed this “important decision”. The compensation market, however, is thrilled. After a year of scandals and turmoil, the decision could be a game-changer. David Antonioli, former head of the certifier Verra, under whose supervision most forest protection certificates are issued, wrote about an “enormous boost”.
The decision not only divides the market and the staff, as well as the Bezos Fund and the WWF. It also tests the numerous NGOs and institutes that advise the SBTI and lend it credibility. Stephan Singer from the Climate Action Network has already left the organization. Others are struggling.
“Right now, we think: There are many good people among the staff, who impress with their dedication and integrity,” says Dufranse from Carbon Market Watch, who also advises the SBTI. “We see a role in staying and making clear that the current processes are not acceptable.” The NGO from Brussels demands that the board’s decision be reversed.
However, it doesn’t look like that will happen. On Friday, the SBTI leadership followed up, declaring the certificate issue a “strategic” matter – thus outside the technical council’s competence. In July, they plan to present drafts on how the use of certificates might look. Should significant NGOs leave the organization, the SBTI would fall apart, and the world would lack a seal for reliable climate goals. Tin Fischer
Reduced emissions, less resource consumption, more growth and better supply of critical raw materials – many hopes in Germany are pinned on scaling up the circular economy. For instance, concerning CO2, the circular economy could lead to substantial savings in hard-to-avoid industrial emissions. According to Agora Industrie, the total emissions of the steel, cement and plastic sectors could be reduced by 25 percent through the circular economy by 2030, as many of the solutions are technically mature and easily scalable. That’s the theory. In practice, however, companies still lack the reliable frameworks needed to make their investments. Product passports, recycling quotas and procurement law are among the many unresolved issues.
The circular economy indeed has the potential to become a real boom market. For instance, the Federation of German Industries (BDI) estimates an additional annual gross value added of twelve billion euros starting in 2030. Less CO2, more growth – a rare combination, which is why the Foundation for Climate Economy and its supporting companies are advocating for an ambitious National Circular Economy Strategy (NCES).
Mandatory recycling quotas could be a key pillar of this strategy. However, this requires robust return systems for all types of raw materials to provide companies with sufficient recycled materials. If not available, there is a risk that products will be recycled before the end of their useful life just to meet quotas. This particularly affects durable products and materials where the demand for recycled materials far exceeds supply. To prevent this misincentive, resource-specific quotas tailored closely in consultation with the affected industries are necessary. Also crucial to addressing the scarcity of recycled materials is the removal of legal obstacles at the end of waste status.
Whether steel sponges, copper scrap or plastic waste, these are the raw material reserves of the future. Utilizing them as such is not so simple, as transitioning from waste to product law is still fraught with many obstacles. Unlike raw materials from mining that can be used freely everywhere, recycled materials must go through numerous approvals before they can be utilized. While environmentally understandable, this practice leads to a significant bottleneck in recycled materials.
To defuse this conflict, especially for transformation-critical raw materials, more pragmatism and a legal departure from the concept of waste are necessary. The EU has already laid important groundwork with the Do-No-Significant-Harm Principle, used for taxonomy, which should also serve as a blueprint for the NCES.
Another area of action for the NCES is digital product passports. These would make the transition of a product from its use phase to recycling more predictable. In the construction industry, for instance, it would allow for tracking which raw materials are bound in buildings and for how long. The goal: to align future raw material needs with the availability of recycled materials, turning the city into a resource mine. Urban mining, instead of aimless demolition and rebuilding.
Our supporting companies have already realized initial pilot projects in this area. However, to implement the concept on a large scale, uniform standards are still lacking. When is a material considered circular, how is circularity measured, and how should the data be stored? To avoid isolated solutions, standards and a central data platform are needed.
Furthermore, a stronger alignment of procurement practices with the circular economy would be important for the construction industry. Currently, life cycle costs are rarely considered, leading to short-term cheaper options being preferred over more durable circular solutions. This is bad for modular construction and costly for disposal. In future procurements, circularity should be considered alongside price.
As with all aspects of the NCES, speed and predictability take precedence over perfectionism. The goal for the federal government this legislative term should therefore be to pass initial laws alongside the NCES. Then Germany can also assume the international leadership role in the circular economy as demanded by Olaf Scholz.
Sabine Nallinger is a board member of the Stiftung KlimaWirtschaft, a climate policy initiative of CEOs, managing directors and family entrepreneurs.
Just after the Spring Meetings of the International Monetary Fund and the World Bank and a few days before the Petersberg Climate Dialogue, we take a closer look at climate financing: Bernhard Pötter and Malte Kreutzfeldt have collected new figures, the results of the meetings and the call by German climate envoy Jennifer Morgan for a new debate on the subject for you.
Money is also an issue in the unrest on the voluntary carbon market. Our author Tin Fischer explains in detail the reasons behind the dispute in the Science Based Targets Initiative – and why it could even destroy the SBTI.
We also report on the state of the climate in Europe as described by the EU climate service Copernicus. And in today’s opinion piece, Sabine Nallinger, head of the German CEO Alliance for Climate and Economy, explains why Germany also needs an ambitious national circular economy strategy for climate action.
Global funds for fighting the climate crisis nearly doubled in the period from 2021/22, according to a new data collection. Annual global spending on CO2 mitigation and adaptation rose to almost 1.3 trillion dollars compared to about 650 billion dollars in 2019/20, a recent analysis by the climate policy Initiative shows. However, the sums are still far from what is needed to curb climate change.
All expenditures from all sources were calculated – significantly more than the 100 billion dollars that developed countries promised to mobilize for developing countries after a 2009 pledge. The major driver of the doubling was, therefore, the increase in funds for mitigation. According to the statistics, this included, among other things
However, nearly a third of the increase is attributed to new calculation methods, the initiative noted. Furthermore, about 5 to 8 trillion dollars annually are needed, rising to 10 trillion dollars by 2030. “Annual climate financing must at least quintuple as soon as possible to prevent the worst impacts of climate change,” they stated.
Investments are also unevenly distributed: About 90 percent of the funds for mitigation went to the USA, China, EU, Brazil, Japan and India. While the energy sector (44 percent) and transportation (29 percent) received the largest shares, agriculture, the sector with the next highest CO2 emissions, received only 4 percent.
Just last week, the World Bank was equipped with additional capital to fight poverty, pandemics and climate damage at its Spring Meeting. About 11 billion dollars more will now be available to the bank, enabling it to offer up to 70 billion dollars in low-interest loans over ten years.
Following Germany’s example, which pushed for this change with an early pledge of 305 million dollars, Denmark, the Netherlands, the UK, Latvia and Norway also bolstered the bank through “hybrid capital”. The USA, France, Belgium and Japan plan to contribute to a “guarantee platform”. “It’s a strong sign of solidarity,” said German Development Minister Svenja Schulze (SPD). “We’ve managed to make the World Bank not just better, but bigger.” This additional money will also help protect global commons like the climate and biodiversity.
Ideas were also discussed on how to raise more money from new sources for climate protection, sustainability and social security in the future: Brazil, which currently holds the G20 presidency, has proposed a tax on extreme wealth; a task force of countries such as France, Kenya and Barbados wants to present a proposal for global climate taxes by COP30 2025 in Brazil, which could be levied on shipping, fossil fuel production or airline tickets, for example.
At the International Monetary Fund (IMF) meeting, there was no agreement on using Special Drawing Rights (SDR) for debt relief and climate action measures. However, former Maldives President Mohamed Nasheed and Rakesh Mohan, former deputy head of the Indian central bank and World Bank advisor, called for IMF Managing Director Kristalina Georgieva, re-elected for a second term, to align the IMF with the Paris Agreement, gather sufficient capital and give greater consideration to the voices of the most vulnerable countries.
During a live talk on climate finance, Jennifer Morgan, State Secretary and Special Envoy for International Climate Action at the Federal Foreign Office, welcomed the recent developments. “There was a constructive atmosphere at the Spring Meeting,” she said. “There was a lot of progress in a short time.” Morgan also expressed optimism that the 100 billion dollars promised by industrialized nations might be reached this year for the first time. “We’re waiting for the official numbers,” she said. “But projections suggest it’s likely.”
Jan Kowalzig, a finance expert from the aid organization Oxfam, agreed there had been progress, including the new rule that allows for the suspension of debt payments in the event of climate disasters. However, Kowalzig emphasized the shortcomings more. “Progress is too slow,” he concluded. He also criticized the argument that there isn’t enough money in the budget for climate finance due to the debt brake. “It’s a political decision that we allow extremely wealthy people not to contribute to the costs by foregoing a wealth tax,” he said.
There was consensus on the need for wealthy emerging countries to contribute to international climate action financing. Morgan announced this would also be a topic at the upcoming Petersberg Climate Dialogue. Kowalzig agreed this was sensible, but it was crucial that industrialized countries first meet their obligations. “It’s an important signal for making progress on this issue,” he said.
In the world’s leading certification initiative for corporate climate goals, the Science Based Targets Initiative (SBTI), a deep rift is emerging. The current dispute over the approval of CO2 compensations for achieving climate neutrality is dividing the organization into two camps: those interested in market-driven models, and those for whom the scientific integrity of the SBTI is paramount.
The SBTI seal is intended to ensure that corporate climate goals are ambitious and scientifically founded – thus free from greenwashing. The standard is considered strict. Financially, the SBTI is primarily supported by the Bezos Earth Fund, founded by the Amazon creator, as well as the IKEA Foundation. One of its key partners is the WWF.
More than 5,000 companies worldwide have now defined their climate goals with the SBTI, including corporations from various industries, from Apple to Bayer to Edeka and IKEA. The decisions of the SBTI have implications for the global market. The Bezos Earth Fund, founded in 2020 with ten billion dollars and the WWF share the same goal: to protect nature and combat climate change. However, they sometimes differ in their choice of means. Along this line, the rift runs.
The Bezos Earth Fund significantly drives the trade in CO2 certificates, especially in the areas of renewable energy and forest protection. It co-founded the Energy Transition Accelerators, which aims to advance the global energy transition through CO2 certificates. Major US corporations such as Walmart, McDonald’s, and of course, Amazon, are involved.
The public-private LEAF Coalition, which can at least be assumed to be closely linked to the Bezos Earth Fund-Amazon is a co-founder and a driving force of the initiative – aims to collect at least one billion US dollars for the protection of tropical rainforests. Companies can purchase forest conservation certificates based on the ART TREE standard through the LEAF Coalition platform on a large scale, turning not just individual conservation areas but entire regions and states into compensation projects.
“The Bezos Earth Fund is a major supporter of the Energy Transition Accelerators and the LEAF Coalition, two initiatives that will generate significant amounts of CO2 certificates. These will need to be sold somewhere,” says Gilles Dufrasne from the NGO Carbon Market Watch. “So if SBTI were to encourage companies to buy certificates, it would logically fit,” he notes. This context is largely to blame for the initiative that has now shaken SBTI: namely, that certificates may be used under certain circumstances to achieve companies’ climate goals.
The WWF, through Gold Standard, is also involved in certifying compensation projects that could benefit from the SBTI decision but is at the same time a critic of the markets. For instance, Gold Standard does not certify forest protection projects like those from ART TREE because their certificates are based on hypothetical, difficult-to-measure deforestation scenarios. In a statement, the WWF expresses “substantiated doubts regarding the poor track record of CO2 certificates” and demands that SBTI maintain “robust science-based processes”.
These processes are SBTI’s most valuable asset. An independent technical council is supposed to “review and approve” the standards, according to the rules. Until now, this council has rejected certificates. “SBTI took a tough stance that it’s not allowed to count certificates towards climate goals. Companies were expected to support external projects but not to count them,” says Robert Höglund, an expert in carbon removals who serves pro bono as a technical advisor for SBTI.
It was therefore surprising when two weeks ago the board, which holds overall responsibility but is not in charge of technical decisions, suddenly announced that certificates “could serve as an additional tool to combat climate change” and would thus be allowed for Scope 3 emissions.
SBTI staff reacted with an open letter stating that the technical council “was neither informed nor consulted” and had not endorsed this “important decision”. The compensation market, however, is thrilled. After a year of scandals and turmoil, the decision could be a game-changer. David Antonioli, former head of the certifier Verra, under whose supervision most forest protection certificates are issued, wrote about an “enormous boost”.
The decision not only divides the market and the staff, as well as the Bezos Fund and the WWF. It also tests the numerous NGOs and institutes that advise the SBTI and lend it credibility. Stephan Singer from the Climate Action Network has already left the organization. Others are struggling.
“Right now, we think: There are many good people among the staff, who impress with their dedication and integrity,” says Dufranse from Carbon Market Watch, who also advises the SBTI. “We see a role in staying and making clear that the current processes are not acceptable.” The NGO from Brussels demands that the board’s decision be reversed.
However, it doesn’t look like that will happen. On Friday, the SBTI leadership followed up, declaring the certificate issue a “strategic” matter – thus outside the technical council’s competence. In July, they plan to present drafts on how the use of certificates might look. Should significant NGOs leave the organization, the SBTI would fall apart, and the world would lack a seal for reliable climate goals. Tin Fischer
Reduced emissions, less resource consumption, more growth and better supply of critical raw materials – many hopes in Germany are pinned on scaling up the circular economy. For instance, concerning CO2, the circular economy could lead to substantial savings in hard-to-avoid industrial emissions. According to Agora Industrie, the total emissions of the steel, cement and plastic sectors could be reduced by 25 percent through the circular economy by 2030, as many of the solutions are technically mature and easily scalable. That’s the theory. In practice, however, companies still lack the reliable frameworks needed to make their investments. Product passports, recycling quotas and procurement law are among the many unresolved issues.
The circular economy indeed has the potential to become a real boom market. For instance, the Federation of German Industries (BDI) estimates an additional annual gross value added of twelve billion euros starting in 2030. Less CO2, more growth – a rare combination, which is why the Foundation for Climate Economy and its supporting companies are advocating for an ambitious National Circular Economy Strategy (NCES).
Mandatory recycling quotas could be a key pillar of this strategy. However, this requires robust return systems for all types of raw materials to provide companies with sufficient recycled materials. If not available, there is a risk that products will be recycled before the end of their useful life just to meet quotas. This particularly affects durable products and materials where the demand for recycled materials far exceeds supply. To prevent this misincentive, resource-specific quotas tailored closely in consultation with the affected industries are necessary. Also crucial to addressing the scarcity of recycled materials is the removal of legal obstacles at the end of waste status.
Whether steel sponges, copper scrap or plastic waste, these are the raw material reserves of the future. Utilizing them as such is not so simple, as transitioning from waste to product law is still fraught with many obstacles. Unlike raw materials from mining that can be used freely everywhere, recycled materials must go through numerous approvals before they can be utilized. While environmentally understandable, this practice leads to a significant bottleneck in recycled materials.
To defuse this conflict, especially for transformation-critical raw materials, more pragmatism and a legal departure from the concept of waste are necessary. The EU has already laid important groundwork with the Do-No-Significant-Harm Principle, used for taxonomy, which should also serve as a blueprint for the NCES.
Another area of action for the NCES is digital product passports. These would make the transition of a product from its use phase to recycling more predictable. In the construction industry, for instance, it would allow for tracking which raw materials are bound in buildings and for how long. The goal: to align future raw material needs with the availability of recycled materials, turning the city into a resource mine. Urban mining, instead of aimless demolition and rebuilding.
Our supporting companies have already realized initial pilot projects in this area. However, to implement the concept on a large scale, uniform standards are still lacking. When is a material considered circular, how is circularity measured, and how should the data be stored? To avoid isolated solutions, standards and a central data platform are needed.
Furthermore, a stronger alignment of procurement practices with the circular economy would be important for the construction industry. Currently, life cycle costs are rarely considered, leading to short-term cheaper options being preferred over more durable circular solutions. This is bad for modular construction and costly for disposal. In future procurements, circularity should be considered alongside price.
As with all aspects of the NCES, speed and predictability take precedence over perfectionism. The goal for the federal government this legislative term should therefore be to pass initial laws alongside the NCES. Then Germany can also assume the international leadership role in the circular economy as demanded by Olaf Scholz.
Sabine Nallinger is a board member of the Stiftung KlimaWirtschaft, a climate policy initiative of CEOs, managing directors and family entrepreneurs.
