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Rich countries meet US$100 billion climate financing target
Developed countries donated almost $116 billion in climate finance in 2022, but experts and activists questioned how the target was met
For the first time, rich countries in 2022 fulfilled a long-standing promise to channel $100 billion a year in climate finance to developing countries — two years later than originally promised, official figures showed on Wednesday.
Its failure to meet the target on time has been a sore point in UN climate negotiations, fuelling distrust between rich governments and poorer countries, which have struggled to cover the costs of switching to cleaner energy and adapting to the worsening impacts of climate change.
According to new data from the Organization for Economic Co-operation and Development (OECD), developed countries provided and mobilized $115.9 billion in climate finance for developing countries in 2022, up from $89.6 billion in 2021.
OECD Secretary General Mathias Cormann former Australian finance ministersaid that “exceeding” the annual commitment was “an important and symbolic achievement that goes some way to making up for the two-year delay” and “should help build trust.”
The annual increase of around 30% was the largest to date and was driven by significant increases in financing from multilateral development banks – which contributed a further $50.6 billion – individual governments and private financing mobilized through the use of public money to reduce investment risk.
Climate finance analysts have criticized the quality of climate finance and the way the OECD calculates the numbers.
Harjeet Singh, a veteran climate justice activist, said the process of sourcing and accounting for climate finance “is fraught with ambiguity and inadequacies” – a complaint long echoed by developing countries, which have called for more clarity and transparency about how numbers are calculated.
“Much of the funding is repackaged as loans rather than grants and is often intertwined with existing aid, blurring the lines of true financial assistance,” Singh said.
The OECD report showed that in 2022, as in previous years, public climate financing mainly took the form of loans, which represented 69% or US$63.6 billion. Not all of these loans were concessional, some were on market terms.
Grants, on the other hand, accounted for just 28 percent of the total, $25.6 billion, with equity investments much smaller, $2.4 billion.
Development aid renamed?
Climate finance experts have also raised concerns about donor countries redirecting existing aid flows to meet the $100 billion target. A recent analysis by the Center for Global Development (CGD), a Washington-based think tank, estimated that more than a third of the money provided by developed countries in 2022 came from existing aid funds.
“A significant part of the increase is due to providers extending, redirecting and rebranding existing development finance,” said Ian Mitchell, senior policy researcher at CGD and one of the report’s authors.
In February, an independent watchdog found that the UK had budgeted an additional £1.7 billion ($2.15 billion) to meet its £11.6 billion climate finance target. without giving more money to vulnerable countries, mainly through the reclassification of other forms of aid, in an attempt to combat fiscal pressures related to the COVID-19 pandemic.
How donor countries’ climate finance contributions are accounted for and monitored will be part of this year’s negotiations on a new finance target to be agreed at the COP29 climate summit in Azerbaijan in November.
O new collective quantified goal (NCQG) for finance is the most important decision expected to be taken at this year’s COP and will replace the current $100 billion commitment, which is set to expire in 2025.
Experts believe an ambitious agreement could play a crucial role in pushing developing countries, especially the poorest, to commit to stronger action on emissions and adaptation as they draft their new national climate plans, expected for the beginning of 2025.
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Melanie Robinson, global director of climate, economics and finance at the World Resources Institute, said closing the funding gap for the poorest nations should be “the top priority” for the NCQG negotiations at COP29, but success will depend on more than which just guarantee a much higher top. -dollar value of the line.
“For example, it is crucial that the new climate finance target ensures that finance is affordable and does not burden developing countries with more unsustainable debt,” she said, calling for strong measures to report progress, hold countries accountable for meeting their obligations on time, and increase transparency of all climate finance.
‘Progress in financing adaptation’
Next to latent tensions Given the push by rich nations to expand the pool of donor countries, and divergent views on whether the new target should include broader sources of climate finance, the most vulnerable countries have called for a specific target for adaptation finance.
Financing to help countries adapt their economies and societies to more violent heatwaves, droughts, storms and floods, as well as rising seas, has always lagged far behind investment in clean energy and other measures to reduce emissions – even as these climate impacts accelerate faster than scientists expected.
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Under pressure at the COP26 climate talks in 2021, developed countries urged each other to at least double their provision of adaptation finance to developing countries through 2025, from the approximately $19 billion they donated in 2019.
This week, OECD figures showed that by mid-2022, adaptation finance from developed countries had increased to $28.9 billion – the highest ever – with an additional $3.5 billion mobilised from the private sector.
The Paris-based watchdog said progress towards the target “has been made and needs to be maintained”.
Activist Singh said climate-vulnerable people and ecosystems need rich nations to urgently step up and offer “real and substantial financial support”.
“It’s not just about numbers; it’s about integrity and genuine support,” he added. “As we stand today, the financial needs of developing countries to transition away from fossil fuels and to address climate impacts have skyrocketed into the trillions.”
(Reporting by Megan Rowling and Matteo Civillini; Editing by Joe Lo)