Australia - Climate

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Though policy attention to climate is increasing, Australia’s climate-related ODA remains low

In 2019, Australia spent US$516 million of its bilateral allocable official development assistance (ODA) on projects which targeted action against climate change, making it the 11th-largest Organisation for Economic Co-operation and Development (OECD) Development Committee (DAC) donor to the issue, in absolute terms.

Australia spent 25% of its allocable bilateral ODA on climate finance in 2019 (DAC average: 22%) putting Australia in 12th place among DAC donors, relative to its total ODA spending.  

 


Climate finance: funding for projects tagged in the OECD’s Creditor Reporting System (CRS) database with the Rio markers for climate change mitigation and/or climate change adaptation. Projects can be tagged with either or both markers.

Each marker has three possible scores:

  1. Principal, for projects in which climate change mitigation or adaptation is a fundamental and explicitly stated goal;
  2. Significant, for projects in which climate change mitigation or adaptation is not a key driver but still an explicitly stated goal; or
  3. Not targeted, meaning the project does not address climate change mitigation or adaptation.

Not all projects are screened against the Rio markers; this funding falls into the ‘not screened’ category.


 

Australia’s ODA to this sector increased by 71% in 2019 compared to 2018. This brought Australia’s ODA to climate above the previous peak of US$403 million in 2016, which followed the government’s December 2015 Paris Agreement commitment to investing A$1.0 billion (US$695 million) over five years to assist poor countries in dealing with the impacts of climate change. According to its 2020 Biennial Communication to the United Nations Framework Convention on Climate Change (UNFCCC), Australia met and exceeded this commitment, providing A$1.4 billion (US$973 million) to support emissions reduction and promote climate change resiliency in partner countries. In December 2020, Australia’s Prime Minister announced a A$1.5 billion (US$1.0 billion) climate finance pledge for 2020-2025.

Exact allocations for climate in the FY2021/22 budget are unclear, however, the ‘Climate partnerships’ budget line (previously included in ‘Other Sectoral Programs’) which falls within ‘Indo-Pacific Sectoral Programs, records a doubling in allocations compared to FY2020/21. Allocations now amount to A$40 million (US$28 million) to support low emission and climate-resilient investment in the Indo-Pacific. The Prime Minister also announced A$80 million (US$56 million) under this initiative, mainly to help establish a regional carbon trading scheme.

While climate change was not mentioned among the six priorities in Australia’s development policy between 2014 and 2020, more recent developments indicate that Australia’s attention to the issue is increasing. Australia’s newly launched development policy, ‘Partnerships for Recovery: Australia’s COVID-19 Development Response’ policy (launched May 2020), does not name climate change among the three pillars of Australia’s Department of Foreign Affairs and Trade (DFAT) development strategy for the next two years, but ‘Climate change adaptation’ is listed as a component of the government’s plan to foster resilience in the Indo-Pacific. , A 2017 Foreign Policy White Paper named climate change alongside “Islamist terrorism” as a significant force shaping the world,  highlighting Australia’s framing of the issue in terms of regional security. In November of 2019, DFAT released the Climate Action Strategy for 2020 to 2025. This document signals the escalating threat that climate change poses to sustainable development, particularly in countries of high priority within Australian foreign policy (namely the Indo-Pacific).

The Strategy names three key objectives: 1) Supporting partner countries to adapt to climate change and climate-related impacts; 2) Promoting lower-emissions development in the Indo-Pacific; and 3) Supporting innovative solutions to climate change, including those that engage private sector investment. In line with these priorities, in August of 2019, announced a A$140 million (US$97 million) Private Sector Mobilisation Climate Fund, which will be used to encourage private sector investments in low emissions, climate-resilient solutions for the Pacific and Southeast Asia.

Almost all of Australia’s climate-related ODA has cross-cutting objectives; none of Australia's bilateral allocable ODA went to projects that address climate change as a principal goal

Australia’s climate-related ODA in 2019 overwhelmingly targeted both adaptation and mitigation together (99%). The remaining 1% focused on climate change adaptation exclusively. (Using the Rio Markers project can be tagged as targeting climate change adaptation, mitigation, or both. For more information, see box.) This is a big change from 2018 when Australia’s investments were much more heavily skewed toward climate change adaptation, in line with the government’s policy emphasis on climate resilience in the Indo-Pacific.

All of the 25% of Australia’s bilateral allocable ODA that targeted climate change in 2019 was spent on projects with a significant climate change component (DAC average 16%), meaning that none of Australia’s funding targeted climate change as a principal goal (DAC average: 7%). The other three-quarters (75%) of Australia’s bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2019 (DAC average: 78%).

Projects aimed at strengthening government and civil society received the largest share (19%) of Australia’s climate financing in 2019. Infrastructure received 13%, followed by education (10%) and agriculture (including forestry, fishing, and rural development; 10%).

Australia’s multilateral climate finance is low; GCF funding was stopped in 2018

Australia also contributes climate financing through multilaterals, though not all these funds are considered ODA. This includes contributions to the following multilaterals:

  • Global Environment Facility (GEF): Between 2014 and 2018, Australia contributed A$93 million (US$65 million) to the GEF, which was used toward grants for addressing global environmental issues in the Indo-Pacific region. At the seventh replenishment of the GEF in June 2018, Australia pledged to continue supporting the GEF with A$77 million (US$53 million) through 2022.
  • Green Climate Fund (GCF): Australia contributed A$200 million (US$139 million) to the GCF between 2015 and 2018. In October of 2018, announced his government’s intention to stop funding the GCF. Australia made its final contribution to the GCF in December 2018.
  • Global Green Growth Institute (GGGI): Australia pledged US$15 million in core contributions to the GGGI – an intergovernmental organization that promotes green growth – between 2017 and 2019. No further funding has been announced.
  • The Multilateral Fund for the Implementation of the Montreal Protocol: Between 2018 and 2020, Australia contributed A$24 million (US$16 million) to this protocol which is committed to reversing the deterioration of the Earth's ozone layer. The latest budget documents do not indicate further commitments.

DFAT leads Australia’s development program, including climate-related assistance.

DFAT is responsible for integrating climate change action across Australia’s development assistance program. A new Climate Change Policy Committee will be established to lead the implementation of DFAT’s 2020-2025 Climate Change Action Strategy. The committee will include Senior Executive Officers from the sectoral and development assistance management divisions. The Strategy highlights the necessity of a whole-of-government approach, as well as the importance of working with external experts (including non-governmental organizations) and the private sector. DFAT also engages with the Australian Government’s National Disaster and Climate Resilience Reference Group, made up of Senior Executives within the Australian government, which facilitates cross-government climate policy.

 

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