Rich nations failed to meet USD 100 bn climate finance promise in 2022: Oxfam

Rich countries falsely claimed that they provided nearly USD 116 billion in climate finance to developing countries in 2022, while the actual financial support given was not more than USD 35 billion, according to global non-profit organization Oxfam International. At the 2009 UN climate conference in Copenhagen, rich nations pledged to provide USD 100 billion annually from 2020 to help developing countries mitigate and adapt to climate change. However, delays in achieving this goal have eroded trust between developed and developing nations and have been a continual source of contention during annual climate negotiations.

In May, the Organization for Economic Co-operation and Development (OECD) said that developed countries had met the long-standing USD 100-billion-a-year promise by providing nearly USD 116 billion in climate finance to developing countries in 2022.

However, nearly 70 per cent of this money was in the form of loans, many of which were provided at profitable market rates, adding to the debt burden of already heavily indebted countries.

“Rich countries have again effectively short-changed low- and middle-income countries by as much as USD 88 billion in 2022,” Oxfam said.

Oxfam estimated that the “true value” of climate finance provided by rich countries in 2022 is as little as USD 28 billion and no more than USD 35 billion, with at most only USD 15 billion earmarked for adaptation, which is crucial for helping climate-vulnerable countries address the worsening impacts of the climate crisis.

This discrepancy between financial promises and reality continues to undermine the trust needed between countries and is materially vital, as climate action in many countries depends on this climate finance, it said. Chiara Liguori, Oxfam GB’s Senior Climate Justice Policy Advisor, said: “Rich countries have been short-changing lower income countries for years by doing climate finance on the cheap. Claims that they are now on track with their financial promises are overstated, with the real financial effort much lower than the reported figure seems to suggest.” Oxfam’s figures reflected climate-related loans as their grant equivalents, rather than at their face value, in order to gauge rich countries’ real financial effort.

The organisation also accounted for the difference between loans at market rate and those at preferential terms, while also considering the overly generous claims about the climate-related significance of these funds.

“Low- and middle-income countries should instead get most of the money in grants, which also need to be better targeted toward authentic climate-related initiatives that will help them adapt to the impacts of the climate crisis and move away from polluting fossil fuels,” Liguori said.

“At the moment they’re being penalized twice. First, by the climate harm they did little to cause, and then by paying interest on the loans they’re having to take to deal with it.”

Oxfam said its estimates are based on original research by INKA Consult and Steve Cutts using the latest OECD climate-related development finance datasets for 2021 and 2022. Figures are rounded to the nearest 0.5 billion.

According to new data from the OECD, rich countries claimed they mobilized USD 115.9 billion in climate finance for Global South countries in 2022. Nearly USD 92 billion of the reported amount was provided as public finance, with 69.4 per cent of public finance provided as loans in 2022, up from 67.7 per cent in 2021.

According to the United Nations Environment Programme (UNEP), the funds required for adaptation in developing countries are estimated to be between USD 215 billion and USD 387 billion per year this decade.

Climate finance will be at the centre of the UN climate conference in Baku, Azerbaijan, where the world will reach the deadline to agree on the New Collective Quantified Goal (NCQG) – the new amount developed nations must mobilize every year starting 2025 to support climate action in developing countries.

However, a consensus on NCQG will not be easy.

Some rich nations argue that countries with high emissions and higher economic capacities, such as China and petro-states that classify themselves as developing countries under the Paris Agreement, should also contribute to climate finance.

Developing countries, however, cite Article 9 of the Paris Agreement, which states that climate finance should flow from developed to developing nations.

Developed countries want the funds to prioritize nations most vulnerable to climate impacts, such as the least developed countries and small island developing states. Developing countries assert that they all deserve support.

Developing nations also demand clarity on what constitutes climate finance, insisting that development finance should not be counted as climate finance and that funds should not be provided as loans, as has happened in the past.

Leave a Reply

Your email address will not be published. Required fields are marked *