German Chancellor Olaf Scholz announced at the Petersberg Climate Dialogue in Berlin that Germany will pledge €2 billion ($2.2 billion) to the United Nations’ Green Climate Fund (GCF). The fund was established in 2010 to distribute money from wealthy countries to climate projects in low- and middle-income countries. The GCF has already spent around $12 billion on climate projects to date but has warned of cutbacks due to a lack of resources. Scholz’s pledge is a third more than Germany’s previous contribution and is expected to support climate investment during the 2024–2027 period.

The GCF’s pledging conference is scheduled to take place in the German city of Bonn in October. Scholz’s announcement sets the bar for other wealthy nations to follow. Austria is the only other major nation to make a pledge so far, contributing €0.16 billion ($0.18 billion).

Scholz’s pledge is seen as a critical signal of support for developing countries and an important step towards a greener future. It is expected to serve as a benchmark for other countries to increase their contributions to the GCF. Joe Thwaites, a climate finance campaigner at the National Resources Defence Council, has said that Scholz’s pledge sets a benchmark for other countries that need to step up with increased contributions.

An internal strategy document prepared for the GCF board labelled $12.5 billion as a middling level of money compared with a “status quo” scenario of $10 billion and a “high” scenario of $15 billion. If all governments increase their contributions by a third, the fund will have around $13 billion to spend between 2024 and 2027. In the “high” scenario, the fund would have enough resources to do more to help developing countries’ financial systems work towards a green transition or to promote clean technology innovation.

Germany is one of the fund’s biggest donors, along with the UK, France, and Japan, which have yet to make their latest pledges. The USA is unlikely to contribute to the pledge conference, as it needs Congressional approval to do so. President Biden recently promised $1 billion to the fund, which is only a partial fulfilment of the $2 billion that President Barack Obama promised before Donald Trump later reneged on it.