Australia - Climate

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

In 2020, Australia spent US$613 million of its bilateral allocable official development assistance (ODA) on projects which targeted action against climate change, making it the eighth-largest Organisation for Economic Co-operation and Development (OECD) Development Committee (DAC) donor to the issue, in absolute terms.  

Australia spent 26% of its allocable bilateral ODA on climate finance in 2020 (DAC average: 23%) putting Australia in 11th place among DAC donors, relative to its total ODA spending. ODA to this sector increased by 7% in 2020 compared to 2019. 

As part of the 2015 Paris Agreement, the government had committed to investing A$1.0 billion (US$687 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$963 million) to support emissions reduction and promote climate change resiliency in partner countries. In December 2020, Australia’s former Prime Minister Scott Morrison announced a A$1.5 billion (US$1.0 billion) climate finance pledge for 2020-2025. At COP26 in 2021, Morrison pledged a further A$500 million (US$344 million). This brings the total commitment to A$2 billion (US$1.4 billion), A$1.5 billion (US$1.0 billion) of which is expected to be sourced from Australia’s bilateral ODA. A$700 million (US$486 million) of this funding flow will be dedicated to the Pacific due to its specific and unique climate vulnerabilities.  


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.


Exact allocations for climate in the FY2022/23 budget are unclear, however, the ‘Climate partnerships’ budget line shows an increase in allocations of 13% compared to FY2021/22. Allocations now amount to A$40 million (US$28 million) to support low emission and climate-resilient investment in the Indo-Pacific. The then-prime minister also announced A$80 million (US$56 million) under this initiative, mainly to help establish a regional carbon trading scheme.  

Recent developments indicate that Australia’s attention to the issue is increasing. Australia’s development policy, ‘Partnerships for Recovery: Australia’s COVID-19 Development Response’ (launched May 2020), did not name climate change among the three pillars of Australia’s Department of Foreign Affairs and Trade (DFAT) development strategy, but ‘Climate change adaptation’ is listed as a component of the government’s plan to foster resilience in the Indo-Pacific. In November 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 named 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 March 2021, the Australian government announced the Australian Climate Finance Partnership (ACFP), established in partnership with the Asian Development Bank (ADB), which will provide up to A$140 million (US$97 million) to accelerate private sector investment in low emission, climate-resilient solutions for Pacific island countries and Southeast Asia.  

The new Labor government is likely to give new impetus to climate action and climate finance. For instance, in May 2022 the new Minister of Foreign Affairs Penny Wong announced the Australia-Pacific Climate Infrastructure Partnership, which will assist with energy projects and other climate-related infrastructure in the Pacific and Timor-Leste, a cornerstone project for future climate-focused assistance to the region. 

Australia’s climate-related ODA focuses on adaptation; a mere 1% of Australia's bilateral allocable ODA went to projects that address climate change as a principal goal 

Australia’s climate-related ODA in 2020 was skewed towards climate change adaptation (89%), in line with the government’s policy emphasis on climate resilience in the Indo-Pacific. 53% focus on climate change mitigation, while 41% target both mitigation and adaptation. (Using the Rio Markers, projects can be tagged as targeting climate change adaptation, mitigation, or both. For more information, see box.). This is a marked change from 2019, where–somewhat atypically–almost all of Australia’s climate-related ODA targeted both adaptation and mitigation together.  

Almost all climate-related ODA in 2020 was spent on projects with a significant climate change component (US$597 million, or 26%, of bilateral allocable ODA; above the DAC average of 14%), whereas a mere 1%, or US$15 million, targeted climate change as a principal goal (DAC average: 9%). The other three-quarters (74%) of Australia’s bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2020 (DAC average: 77%).  

Projects aimed at agriculture received the largest share (24%) of Australia’s climate financing in 2020, followed by multi-sectoral projects (11%), infrastructure (11%), and water and sanitation (8%). 

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. Australia put forth an additional A$80 million (US$55 million) to the GEF at its eighth replenishment in June 2022, providing funding through 2026. 
  • Green Climate Fund (GCF): Australia contributed A$200 million (US$139 million) to the GCF between 2015 and 2018. In October 2018, ex-Prime Minister Scott Morrison announced his government’s intention to stop funding the GCF. Australia made its final contribution to the GCF in December 2018. It remains to be seen if the new administration under Prime Minister Anthony Albanese will rejoin the fund. 
  • 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 indicate that only an additional A$15 thousand (US$10 thousand) has been committed to the fund since. 

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

DFAT is responsible for integrating climate change action across Australia’s development assistance program. Following a restructuring, the Ambassador for the Environment, who is also head of the Climate Change, and Sustainability Division, is chiefly responsible for coordinating Australia’s climate-related development policies. In addition, a ‘Climate Change Policy Committee’ was established to lead the implementation of DFAT’s 2020-2025 ‘Climate Change Action Strategy.’ The committee includes 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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