True value of climate finance is just a third of that reported by developed countries – Oxfam

True value of climate finance is just a third of that reported by developed countries – Oxfam

Ireland does well in terms of quality but falls down in terms of quantity

The true value of money provided by developed countries to help developing nations respond to the climate crisis may be just a third of the amount reported, according to Oxfam estimates published today – with Ireland standing out as one of the few countries that provide 100 percent of untied, grant-based climate finance.  

Oxfam’s Climate Finance Shadow Report 2020 estimates that donors reported $59.5 billion per year on average in 2017 and 2018 – the latest years for which figures are available. But the true value of support for climate action may be as little as $19-22.5 billion per year once loan repayments, interest and other forms of over-reporting are stripped out. 

Oxfam’s analysis is being released ahead of a report by the Organisation for Economic Co-operation and Development (OECD) on developed countries’ progress towards the goal of providing $100 billion in climate finance per year by 2020.

An astonishing 80 percent ($47 billion) of all reported public climate finance was not provided in the form of grants – mostly as loans. Around half ($24 billion) of this finance was non-concessional, offered on ungenerous terms. Oxfam calculated that the ‘grant equivalent’ – the true value of the loans once repayments and interest are deducted – was less than half of the amount reported. 

Compared to other countries Ireland also does well in terms of targeting its climate finance grants on those most in need- low income countries. Ireland’s new overseas development aid (ODA) strategy, A Better World, commits to continue this focus.

While the quality of Irish climate finance is high, Ireland is falling short in terms of the quantity and predictability of these financial flows. In 2018, Ireland reported nearly €80 million in climate finance as its annual contribution to the $100 billion a year global climate finance target to be reached by 2020. However, based on estimates using the Eco-Equity Stockholm Environment Institute Responsibility Capacity Index, Ireland’s fair share of this annual figure is over five times this amount.

Michael McCarthy Flynn, Senior Research and Policy Coordinator with Oxfam Ireland, said: “Climate finance is a lifeline for communities facing record heat waves, terrifying storms and devastating floods. Even as governments struggle with COVID-19, they must not lose sight of the mounting threat from the climate crisis. The commitment in the Programme for Government to double the percentage of development assistance that counts as climate finance, without allocating additional funds, risks simply re-labelling existing aid as climate finance rather than committing to providing new and additional finance to support climate action in the poorest countries.

“Developed countries like Ireland need to up their ambition in relation to climate finance and allocate more finance for adaptation and prioritise the most vulnerable countries – including Least Developed Countries and Small Island Developing States. They should also use the COP26 climate summit in Glasgow next November as an opportunity to set a new path for climate finance beyond 2020 by agreeing robust common accounting standards, and a specific finance goal for adaptation.”

END

Contact

Caroline Reid | caroline.reid@oxfam.org| +353 (0) 87 912 3165

Alice Dawson-Lyons | alice.dawsonlyons@oxfam.org | +353 (0) 83 198 1869 

Notes to editors:

  • Spokespeople are available for interview.
  • Download a full copy of the report, Climate Finance Shadow Report 2020: Assessing progress towards the $100 billion commitment
  • The analysis comes ahead of updated estimates and analysis of climate finance provided and mobilised by developed countries prepared by the Organisation for Economic Co-operation and Development (OECD) expected in the coming weeks.
  • In 2009, developed countries committed to mobilise $100 billion per year in climate finance by 2020 to support developing countries to adapt to the impacts of climate change and reduce their emissions. At the COP26 climate talks in Glasgow next year, nations will begin negotiations on a new goal or goals to replace this commitment from 2025.
  • The figure of $59.5 billion is an average of the climate finance reported in 2017 and 2018 towards the $100 billion goal by developed country governments, multilateral development banks, multilateral climate funds and other organisations as reported to the UNFCCC and the OECD. They are the most recent figures available. 
  • Oxfam’s $19-22.5 billion figure includes the estimated grant equivalent of reported climate finance rather than the face value of loans and other non-grant instruments. It also accounts for overreporting of climate finance where action to combat climate change is only part of a broader development project.
  • This is Oxfam’s third Shadow Climate Finance Report. Reported public climate finance has increased from $44.5 billion per year in 2015 and 2016 (OECD) to an estimated $59.5 billion per year in 2017 and 2018. Oxfam’s estimate of net, climate specific assistance showed a more modest rise from $15–19.5 billion per year in 2015 and 2016 to $19–22.5 billion in 2017 and 2018. 
  • The analysis also raises serious concerns about how developed countries are allocating climate finance. Of total reported public climate finance in 2017-18, Oxfam estimates: 
  1. Around a fifth (20.5 percent) of funding went to the Least Developed Countries and just three percent to Small Island Developing States, which face the gravest threat from climate change and have the fewest   resources to cope 
  2. Only a quarter (25 percent) of funding was spent helping countries adapt to the impacts of the climate crisis while 66 percent of funds were spent helping countries cut emissions. However, the volume of funding for adaptation rose significantly from $9 billion per year in 2015–16 to $15 billion in 2017–18. 
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