Climate finance goal of $100 billion close to achievement, but still not met, shows OECD report

The total climate finance provided and mobilised by developed countries for developing countries in 2021 was $89.6 billion, a 7.6 per cent increase over the 2020 figure, according to a new report released by the Organization for Economic Cooperation and Development (OECD) November 16, 2023. 

The report also stated that overall adaptation finance decreased by 14 per cent to $4 billion. In a statement released with the report, OECD also stated that the goal of developed countries providing $100 billion to developing countries may have been met in 2022 — but this was given without conclusive data to support it. 

Why are we talking about these figures?

Published just ahead of the 28th Conference of Parties to the United Nations Framework Convention on Climate Change (COP28), which is to be held in Dubai this month, the latest OECD analysis is significant for many reasons. At COP15 in 2009, developed countries committed to jointly mobilising and providing developing countries with $100 billion per year starting from 2020 through to 2025, in order to address their climate needs. 

Article 9 of the Paris Agreement of 2015 also reiterated this call for developed countries to provide developing countries with financial assistance for mitigation and adaptation. But in no year since 2020 has this goal been met. The OECD’s annual climate finance report is the primary mode for tracking progress on this $100 billion goal. 

Along with the main report representing aggregate trends in climate finance provided by developed countries from 2013-2021, the OECD also released detailed analysis spotlighting two components, namely, scaling up adaptation financing and scaling up private sector finance mobilisation. 

Key highlights from these reports include: 

• A large part of the total $89.6 billion provided in 2020 comprised public climate finance (from both bilateral and multilateral sources). Between 2013 and 2021, this almost doubled from $38 billion to $73.1 billion
• Adaptation finance decreased by 14 per cent in 2021, while cross-cutting finance (supports adaptation and mitigation efforts) increased from $6 billion in 2020 to $11.2 billion in 2021
• Private climate finance mobilised amounted to $14.4 billion in 2021, constituting 16 per cent of the total
• Mitigation finance continued to represent 60 per cent of total climate finance provided and mobilised in 2021, while adaptation comprised 27 per cent and cross-cutting 13 per cent
• Between 2016 and 2021, sectors with the highest climate finance investments were: energy; transport and storage; agriculture, forestry, and fishing; and water supply and sanitation 
• Climate finance from developed countries between 2016 and 2021 reached $73.1 billion. However,  loans continued dominating this component. Loans represented over two-thirds of the total, amounting to $49.6 billion, while grants were under 30 per cent at $20.1 billion, and equity investments remained marginal. The dominance of loans rather than more affordable sources of finance from developed countries has remained a contentious issue, particularly for low-income countries

Climate finance distribution by type of finance (USD billion) 

Source: OECD 

Public climate finance by type of instrument (USD billion) 

 Source: OECD

Has $100 billion goal been met?

A joint statement published by the Minister of Environment and Climate Change of Canada, and State Secretary and Special Envoy for International Climate Action of Germany, also highlighted the findings of the OECD statement which claimed that the $100 bn goal had already been achieved as of 2022.

However, the OECD statement itself highlights a crucial point that is somewhat sidelined by those celebrating the achievement of the goal. The OECD statement reads, “On the basis of preliminary and as yet unverified data available to the OECD to date, the goal looks likely to have already been met as of 2022.” 

The fact remains that even with increases in the provision of climate finance over the years, no publicly available data really supports the claim that it has been met just yet. Further, the quality of finance continues to remain a pressing problem, with market rate loans comprising the largest segment of the overall finance provided by developed countries. This burdens the already debt-ridden developing nations it is supposed to help.

The OECD’s recommendations based on the data so far mainly revolve around the need to increase private finance mobilisation and scaling up adaptation finance. The supplementary technical reports released by the OECD highlight these. 

But the mistrust that has ensued owing to a repeated failure of developed countries to provide on their promise must be addressed first, especially since the $100 billion target has been called a non-negotiated one and one simply non-reflective of the actual needs of developing countries.