Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020

Abstract

At the 15th Conference of Parties (COP15) of the UNFCCC in Copenhagen in 2009, developed countries committed to a collective goal of mobilising USD 100 billion per year by 2020 for climate action in developing countries, in the context of meaningful mitigation actions and transparency on implementation (UNFCCC, 2009[1]). The goal was further recognised in the Cancun Agreements adopted at COP16 in Cancun (UNFCCC, 2010[2]). At COP21 in Paris, it was then reiterated and extended to 2025 (UNFCCC, 2015[3]).Since 2015, at the request of donor countries, the OECD has produced analyses of progress towards this goal. These analyses are based on best-available data and a robust accounting framework, consistent with the outcome of COP24 decided by all Parties to the Paris Agreement as regards the funding sources and financial instruments related to reporting of information on financial resources provided and mobilised through public interventions (UNFCCC, 2018[4]). OECD figures capture four distinct components of climate finance provided and mobilised by developed countries 1 :  Bilateral public climate finance provided by developed countries' institutions, notably bilateral aid agencies and development banks;  Multilateral public climate finance provided by multilateral development banks and multilateral climate funds, attributed to developed countries;  Climate-related officially supported export credits, provided by developed countries' official export credit agencies, and  Private finance mobilised by bilateral and multilateral public climate finance, attributed to developed countries.This report adds aggregate figures for 2020 to the previously published 2013-2019 time series 2 (OECD, 2021[5]), thereby providing an assessment against the initial target year of the USD 100 billion goal. A complementary report, to be released in September 2022, will include further disaggregated data analysis, including by exploring key trends within individual climate finance components as well as the distribution and concentration of climate finance provided and mobilised across different recipient country characteristics and groupings. This complementary report will also provide lessons learned from observed trends, and consider questions relating to enabling environments, impacts and effectiveness of climate finance, as well as to meaningful mitigation action and transparency on implementation.

30 Years of International Climate Negotiations: Are They Still our Best Hope?

“…How much would come from public and how much from private sources was left open. The OECD shows that $83.3 billion was mobilized for climate action in developing countries in 2020, still short of the original target but better than previous years (OECD, 2022). But questions raised in earlier years remain, related to double-counting by governments, a dropping share of government grant financing over commercial private sector flows and non-transparent reporting by the private sector using inconsistent criteria to identify what should be considered "climate financing" (Westphal et al, 2015;Bhattacharya & Calland, 2020).…”

“…If the environment were given a price-through pollution fees or taxes-market participants would then find the most cost-effective way to respond (O'Riordan 1997;OECD, 1995). The private sector quickly jumped on board praising the flexibility such policy instruments would provide in principle, but after years of "studying the issue" only a few European countries ever imposed carbon taxes and all of them exempted their energy intensive export sectors (OECD, 2019;Ekins & Speck, 2000).…”

A global just transition through carbon taxation and revenue recycling

“…Here, we use the developed/developing country classification rather than the World Bank's income group classification because high-income countries have a broader scope than developed countries. In past global climate finance practices, it was usually developed countries rather than high-income countries that donated funds 67 . Each developed country's contribution to the fund is determined by their historical cumulative or current emissions and supported by their carbon tax revenue.…”

Climate Finance Provided and Mobilised by Developed Countries in 2016-2020

“…Overall, to generate and scale adaptation investments, it is important to understand and distinguish between adaptation investments that can be provided by the private sector in response to needs and demand for adaptation products and services; and where adaptation investments take the form of public investments that provide economic benefits, but no financial business model. In this regard, access to and the cost of finance have strong impacts on what are economically efficient adaptation investments in a given context (Mullan and Ranger, forthcoming [34]).…”