Oxfam: Lack of climate finance threatens negotiations and undermines climate action

Rich countries are failing to deliver on their promise to collectively allocate $100 billion annually to countries with widespread poverty, to help them adapt to and cope with the impacts of climate change.Inaccurate accounting systems do not give the true picture of climate finance, a new Oxfam report shows.

As global greenhouse emissions continue to rise and climate change wreaks ever greater havoc on the people and places least responsible for the climate crisis, rich polluting countries have failed for the third year in a row to deliver on their promise to mobilize $100 billion a year in climate finance for low- and middle-income countries. Oxfam's new report shows that not only have countries failed to meet the target, but actual support is far less than reported figures suggest, leading to debts that need to be repaid.

Oxfams Climate Finance Shadow Report 2023 shows that the true value of countries' climate finance in 2020 is a maximum of USD 24.5 billion - not USD 83.3 billion as reported by donor countries themselves. The reported figure includes projects where the climate impact is overestimated, as well as pure loans from rich countries to countries. In 2019-2020, loans accounted for as much as 90% of all climate finance from multilateral development banks such as the World Bank.

"Oxfam's report shows that donor countries are recycling up to a third of aid budgets as climate finance rather than putting forward new and additional money, while more than half of all climate finance going to the world's poorest countries is now given in the form of loans. This is a betrayal that has consequences for people already in very vulnerable situations, and helps undermine crucial climate negotiations. And in the long run, we all lose."

Hanna Nelson, Head of Policy, Oxfam Sweden

Oxfam estimates that the real value of funds allocated by rich countries in 2020 to support climate action in low- and middle-income countries was between $21-24.5 billion, of which only $9.5-11.5 billion was specifically targeted at climate adaptation - crucial funding for projects and processes to help climate-vulnerable countries cope with the worsening impacts of the climate crisis.

India, Pakistan and Central and South America have seen record-breaking heatwaves in the last three years, in Pakistan followed by floods that affected over 33 million people, while East Africa is mired in its worst drought in over 40 years, with 28 million people at risk of famine.

"USD 11.5 billion is nowhere near enough to help people in these countries survive more and more floods, hurricanes, fires, droughts and other terrible weather disasters that come with climate change. Every dollar that is not spent is a dollar that the poorest countries do not receive, and every dollar given as a loan increases the debt of these countries, and makes them less able to cope with the next crisis. This leads to loss of lives and livelihoods, and hinders the possibility of an equitable climate transition."

Hanna Nelson, Head of Policy, Oxfam Sweden

Oxfam is also very concerned that financing for lossand damage from climate change, i.e. climate impacts that cannot be adapted to or prevented, still has no place in international climate finance. The financing needs for loss and damage are urgent, with estimates that low- and middle-income countries could face costs of up to USD 580 billion annually between now and 2030.

There are also ongoing discussions under the United Nations Framework Convention on Climate Change (UNFCCC) to set a new global target for mobilizing climate finance from 2025 onwards.

"It is a chance to rebuild trust between rich and low- and middle-income countries. But if past mistakes of unclear guidelines and under-set targets are repeated, this initiative risks having failed from the start."

Hanna Nelson, Head of Policy, Oxfam Sweden