Germany has fallen short of a funding pledge for global climate action and adaptation, making it harder to plug a financing gap in the Global South left by the US withdrawal.

Budget spending by Europe’s biggest economy on the measures fell by more than one-fifth to €4.75 billion ($5.31 billion) in 2025, from €6.1 billion the prior year, according to government data. That’s below Germany’s target of paying at least €6 billion annually to developing and emerging countries struggling with the extreme floods, droughts and storms that are becoming more frequent with climate change.

The decline leaves the countries most vulnerable to the effects of global warming, already short on options, having to turn to more expensive means to fund critical infrastructure projects and respond to disasters. They had looked to Germany to step up after US President Donald Trump’s sudden retreat, leaving the European nation as the world’s biggest provider of foreign aid last year, according to data from the Organisation for Economic Co-operation and Development.

“These are grim prospects for climate finance,” said Jan Kowalzig, senior policy adviser for climate change at nonprofit Oxfam. Germany is heading to the United Nations’ COP31 climate summit next month in Antalya, Turkey, “having broken its word,” according to Kowalzig.

Germany’s Ministry for Economic Cooperation and Development maintains that it has still contributed its fair share to a global $100 billion funding goal agreed by signatories of the Paris Agreement in 2015. That’s because the government also counts private donations and loans toward its international climate financing, which altogether reached €10.8 billion in 2025. Nearly half that sum included revolving credit lines to local or development banks, equity investments in funds and public-private partnerships, according to the ministry.

“The federal government remains committed to its goals for international climate action,” Reem Alabali Radovan, Germany’s development minister, said in a statement. “At a time of shrinking public budgets, we are increasingly — and successfully — leveraging capital markets and private investment.”Just last month, Germany outlined a road map for its transition away from fossil fuels by 2045, among the first nations to do so. Its retreat from global climate and adaptation finance reveals how Chancellor Friedrich Merz’s government is grappling with competing priorities.

It has boosted borrowing for military and infrastructure and is reining in spending on pensions and healthcare, as the country contends with rising inflation, high energy prices and fierce competition for its businesses from China. The economic challenges have given momentum to the far right, which won two states in recent elections.

Other donors are unlikely to step in. The European Union sees no scope for new climate finance commitments at COP31, according to a draft document about the summit seen by Bloomberg, which says the focus should remain on implementing existing decisions. The UK earlier this year slashed its international climate aid spending by 14% as part of a wider cut of development aid spending, and in July used money allocated to helping poor countries to fund a new cap on bus fares, by switching some international climate grants to loans.

The moves are part of a trend of poor countries having to pay more back to the rich than they receive, with almost 70% of climate finance delivered as loans rather than grants, according to a report published last year by Oxfam. The report finds that for every $5 developing countries receive they are paying back $7, “worsening debt burdens and hindering climate action,” according to the report.