Issue Deep Dive
Last updated: December 20, 2022
ODA In Context
Though policy attention to climate is increasing, Australia’s climate-related ODA remains low. It ranks eighth among DAC donor countries in terms of its spending on projects with some degree of climate focus. This will increase under the new Labor government.
Australia ranks eleventh among DAC donors when considering its spending on climate change-related projects, relative to its total ODA spending.
Almost all of Australia’s climate change-related ODA in 2020 was spent on projects with a significant climate change component, putting Australia far above the DAC average of 14%. This means very little of Australia’s funding went toward projects which named climate change as a principal goal.
Between 2015 and 2020, Australia met its commitment to investing A$1.0 billion (US$687 million) to assist poor countries in dealing with the impacts of climate change. This pledge was made as part of the 2015 Paris Agreement and was disbursed over the five subsequent years. According to its ‘2020 Biennial Communication’ to the 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.
The Australian government sees climate change as a threat to the livelihoods, security and well-being of the peoples of the Pacific, the region that receives the largest share of Australia’s ODA.
Agriculture (including forestry and fishing), while the sector to receive the largest share of climate change-related ODA from Australia in 2020, is not specifically mentioned in the country’s development policy. However, agricultural projects could still align with Australia’s stated climate change-related goals, which include:
- Promoting the shift to lower emissions development in the Indo-Pacific region
- Supporting partner countries to adapt to climate change, and to plan, prepare for, and respond to climate-related impacts; and
- Driving innovative solutions to climate change, including those that encourage private sector investment, drawing on Indigenous traditional knowledge, such as cultural burning and supporting nature-based solutions.
Australia’s climate change-related ODA in 2020 was skewed towards climate change adaptation, in line with the government’s policy emphasis on climate resilience in the Indo-Pacific. 53% went to projects related to climate change mitigation, while 41% targeted both mitigation and adaptation. This is a marked change from 2019, where, somewhat atypically, almost all of Australia’s climate-related ODA targeted both adaptation and mitigation together.
Multilateral Spending and Commitments
Australia’s multilateral climate finance is low, however, it does contribute some of its climate financing through multilaterals. Not all these funds are considered ODA. This includes contributions to the following multilaterals:
Funding & Policy Outlook
Australia’s development policy lists ‘Climate change adaptation’ as a component of the government’s plan to foster resilience in the Indo-Pacific: Although climate change is not considered its own pillar of the policy, this indicates the government’s recognition that it remains an important component of its plans for the development of its region.
DFAT’s Climate Action Strategy for 2020 to 2025 signals the escalating threat that climate change poses to sustainable development: This is particularly true for countries of high priority within Australian foreign policy (namely the Indo-Pacific).
In 2020 and 2021, former Prime Minister Scott Morrison announced A$2 billion (US$1.4 billion) in climate change-related pledges: In December 2020, he announced a plan to spend A$1.5 billion (US$1.0 billion) on climate finance between 2020-2025. He then pledged an additional A$500 million (US$344 million) at COP26 in 2021. This brought Australia’s 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.
March 2021, the Australian government announced the Australian Climate Finance Partnership ( ACFP): This partnership was established together with the 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.
Exact allocations for climate change in the FY2022/23 budget are unclear: Although it does not provide exact figures, 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 former Prime Minister Morrison also announced A$80 million (US$56 million) under this initiative, mainly to help establish a regional carbon trading scheme.
The 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 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 ceased its membership in the GCF in 2019 and redistributed that funding to bilateral commitments. Rejoining the GCF is currently under consideration by the Labor government. Australia is bidding to co-host COP31 in 2026 with Pacific Island countries.
Unless otherwise indicated, all data in this section is based on commitment. For more information, see our Donor Tracker Codebook.
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