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Since 2008, the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) has been financing climate and biodiversity projects in developing and newly industrialising countries, as well as in countries in transition. In the early years of the programme, its financial resources came from the proceeds of auctioning allowances under the emissions trading scheme. To ensure financial continuity, further funds were made available through the Special Energy and Climate Fund. Both funding mechanisms are now part of the Federal Environment Ministry’s regular budget.

The IKI is a key element of Germany’s climate financing and the funding commitments in the framework of the Convention on Biological Diversity. The Initiative places clear emphasis on climate change mitigation, adaption to the impacts of climate change and the protection of biological diversity. These efforts provide various co-benefits, particularly the improvement of living conditions in partner countries.

The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) funds industrial-scale pilot projects in key environmental sectors such as climate protection and resource efficiency. These projects show how innovative technologies can be implemented to help to reduce and prevent harm to the environment.

The so-called Environmental Innovation Programme focuses on projects that are well suited for demonstration purposes and hence for replication. The projects also lead to further refinement both of the technologies involved and of the environmental regulatory framework. Small and medium-sized businesses receive priority funding.

Successful applications receive either a grant to cover interest on a loan from KfW, the promotional bank of Germany, or an investment grant. KfW looks after the administration and financial side of the programme, while the Federal Environment Agency manages environment technology issues.