Many donors are over-reporting the value of the climate finance they provide to the world’s poorest countries by a large margin, an Oxfam analysis published today has found.
Oxfam estimates the net, climate specific public finance in 2015 and 2016 is around $16 to $21 billion (approx. £11 -15 bn) per year. This is significantly lower than the estimated $48 billion (approx. £34 bn) per year in public climate finance if donor numbers are taken at face value. There are just two years before the deadline for developed countries to provide $100 billion (approx. £72 bn) per year to tackle climate change in developing countries by 2020.
Climate Finance Shadow Report 2018, which analyses donor figures for 2015 and 2016, found that:
- Increases in climate finance are largely due to an upsurge in loans, especially to middle-income countries. Loans constitute an estimated two-thirds of funds
- Government grant money isn’t meeting needs and isn’t rising fast enough. Grants represent an estimated $11 to $13 billion, (approx. £8 bn to £9 bn) compared to $10 billion (approx. £6 bn) in our last assessment covering 2013 and 2014
- Funding for adaptation continues to be neglected, making up only an estimated 20 percent of public climate finance, virtually unchanged from 19 percent in 2013 and 2014
- The share of the pie going to least developed countries has barely increased and remains less than a fifth of total public finance
Tracy Carty, Oxfam’s senior climate change policy advisor said, “Despite people in poor Caribbean islands staring down supercharged hurricanes and others in Africa reeling from brutal droughts, the money flowing to the world’s poorest and most vulnerable to climate change remains sadly inadequate.”
One of the major problems described in the report is how many donors over report the value of the funds they’re providing. One way this happens is when donors overcount the climate change value of a development project where climate change is just one aspect of a broader program. Another involves counting loans and other types of non-grant financing at full face value, obscuring the actual level of assistance developing countries receive by a huge margin.
Oxfam is urging governments to end this practice and count the “grant-equivalent” of their climate loans, meaning only counting the net transfer of finance to a developing country once repayments, interest and other factors are accounted for. The OECD recently agreed on similar standards for counting development aid.
Carty continued: “There’s no reason why rules for calculating climate should be more lax than those for aid. Governments have to agree new accounting standards for climate finance under the Paris Agreement at this year’s COP climate conference in Poland, this is an opportunity to agree fair and robust standards.”
The Oxfam report also shows how much money different governments are providing as grants. While the Netherlands, the United Kingdom, Sweden and others provided more than 90 percent of their climate finance in 2015 and 2016 as grants, others – including France – have fallen far behind.