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

Rich countries are reneging 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.Faulty 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 causes ever greater devastation to the people and places least responsible for the climate crisis, rich polluting countries have for the third year in a row failed to meet their pledge to mobilize $100 billion per 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 real value of countries' climate finance in 2020 amounts to a maximum of USD 24.5 billion - not USD 83.3 billion as reported by the 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 made up 90% of all climate finance from multilateral development banks such as the World Bank.

"Oxfam's report shows that donor countries are reusing up to a third of the aid budget 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 in the form of loans. This is a betrayal that has consequences for people who are already in very vulnerable situations, and helps to undermine crucial climate negotiations. And in the long run, we are all losers."

Hanna Nelson, Head of Policy, Oxfam Sweden

Oxfam estimates that the true 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 directed specifically to 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 later followed by floods affecting over 33 million people, while East Africa is stuck in its worst drought in over 40 years, with 28 million people at risk of starvation.

"11.5 billion dollars is nowhere near enough to help people in these countries survive more and bigger floods, hurricanes, fires, droughts and other terrible weather disasters that come with climate change. Every dollar missed is a dollar missed by the poorest countries, and every dollar given as a loan increases the debt of these countries and reduces their ability to cope with the next crisis. This leads to the loss of lives and livelihoods, and hampers the possibility of an equitable climate transition."

Hanna Nelson, Head of Policy, Oxfam Sweden

Oxfam is also very concerned that financing forloss and damage from climate change, i.e. climate impacts that are not adaptable or preventable, 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.

Discussions are also ongoing 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 with unclear guidelines and underestimated targets are repeated, this initiative risks having failed from the start."

Hanna Nelson, Head of Policy, Oxfam Sweden