Worrying that rich countries are reneging on climate finance promises

Only a third of the promised aid went to countries with widespread poverty, to help them adapt to and cope with the impacts of climate change.

The world's rich countries have pledged to collectively allocate $100 billion a year to countries with widespread poverty, which are particularly vulnerable to climate change. A new report by Oxfam shows that this pledge is far from being fulfilled. By 2020, climate finance will have reached a total of $83.3 billion (of which $13.1 billion came from private donors), according to donor countries' own figures. 

But Oxfam's new report Climate Finance short-changed, which looked at rich countries' reported climate finance 2019-2020, reveals a serious betrayal. Oxfam estimates that the true value of climate finance is only a third of what countries themselves have reported and only amounts to between $21 billion and $24.5 billion. The reasons for the over-reporting are unclear rules and an overestimation of actual climate finance and that an increasing share of climate finance, nearly two-thirds, is given in the form of loans and increasingly as non-concessional loans.

"This is a betrayal that has consequences for people who are already in very vulnerable situations. Instead of supporting countries that are particularly vulnerable and exposed to worsening droughts, cyclones and floods, this action will worsen their ability to cope with the next crisis and increase their debts. As a result, the most vulnerable countries remain unable to cope with and adapt to the severe impacts of the climate crisis."

Hanna Nelson, Head of Policy, Oxfam Sweden

Urgent action is needed to rebuild confidence in climate finance, and it is vital that this is taken seriously at the upcoming climate summit, COP27, which takes place from 6-18 November in Sharm el-Sheikh, Egypt. Oxfam wants world leaders to act to correct the miscalculations, restore confidence in climate finance, and ensure that countries that are particularly vulnerable to climate change and countries with widespread poverty receive the financial support they are entitled to and need if they are to have a chance of dealing with the too enormous consequences of the climate crisis they contributed least to causing in the first place.

"Every dollar missed is a dollar missed by the poorest countries, resulting in loss of lives and livelihoods, and hampering the possibility of a just climate transition."

Hanna Nelson, Head of Policy, Oxfam Sweden

Oxfam's demands to world leaders ahead of COP27: 

• Clarify and improve rules for reporting on climate finance 
• When reporting, all donors must report the percentage of a loan that is a gift versus a loan. To avoid "bloat" and allow for comparison, all countries should include a clarification of how they have estimated the climate relevance of their financing. Finally, non-concessional loans should not be included as climate finance going forward.  
• Deliver on promises of US$100 billion in climate finance 
• Compensate for the years between 2020-2025 that the pledge has not been met, by increasing future years' climate finance. Increase the grant share of climate finance, and ensure that the share going to climate adaptation increases to at least 50% of all climate finance - and adopt a plan to deliver on the target of doubling funding for climate adaptation.  
• Adopt a post-2025 climate finance target 
• Address the gaps in current financing targets and make a clear commitment on what constitutes climate finance and how climate finance should be accounted for and reported. Adopt a target that specifically addresses climate adaptation financing.  

About the report:

The Climate Finance short-changed is another in a series of reports showing the enormous impact the climate crisis is having on people in countries with widespread poverty, who have done the least to cause climate change. Wealthy countries that have a long history of high greenhouse gas emissions and thus a heavy responsibility for the climate crisis also have a responsibility and an obligation to help countries with widespread poverty to cope with the climate crisis.