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ODA Spending

ODA In Context

Norway ranks ninth among DAC donor countries in terms of its spending on projects with some degree of climate focus.

Norway ranks 19th among DAC donors, when considering its spending on climate change-related projects, relative to its total ODA spending.

ODA Trends

Norway’s climate-related ODA increased between 2016 and 2018, rising from US$498 million in 2016 to US$559 million in 2018. After a slight decrease in 2019, climate-related ODA increased close to 2018 levels in 2020, reaching US$554 million.

In November 2021, the government announced it would double its total climate finance to NOK14 billion (US$1.5 billion) by 2026 to support low- and middle-income countries in financing both the reduction of greenhouse gas emissions and strengthening resilience to future climate change. It is the first time Norway established a quantifiable target for its climate financing. The NOK14 billion (US$1.5 billion) will come from Norway’s development budget for climate-related actions and investments, private capital mobilized through Norfund, and a newly established climate investment fund.

Unlike most DAC donors, the majority of Norway’s climate funding is channeled to projects targeting climate change as a ‘principal’ objective; principal climate funding represented 12% of Norway’s bilateral ODA, above the DAC average of 9%.

ODA Breakdown

Bilateral

More than half (53%) of Norway’s climate-related funding went to projects related to environmental protection. It was followed by funding for agriculture (14%) and energy (13%).

In 2020, US$405 million of Norway’s climate-related ODA went to projects supporting climate change mitigation, higher than the US$200 million funding that went to projects supporting climate-change adaptation. US$52 million (or 9% of total climate-related funding) went to projects that contributed both to adaptation and mitigation.

This strong focus on mitigation is largely driven by Norway’s work on renewable energies. In 2021, the government announced that it would allocate NOK10 billion (US$1.1 billion) over a period of five years to a new Climate Investment Fund. The new fund became operational in May 2022 and will be capitalized with NOK2 billion (US$212 million) each year. The fund is intended to support climate actions and increase access to renewable energy sources in low- and middle-income countries. One-half of the annual funding will be provided by Norfund, which will also administer the fund; the other half will come from the national budget.

When it comes to adaptation, Norway’s 2016 ODA policy white paper mentions climate-smart agriculture as an important field, both from business and environmental perspectives. In April 2021, the government launched a new strategy to combat the climate crisis and fight hunger, which focuses Norway’s climate assistance more on climate adaptation than before.

Multilateral Spending and Commitments

In line with its overall ODA policy, Norway works closely with multilateral organizations, to which it contributes significant amounts of funding, though not all these funds are counted as ODA.

Funding & Policy Outlook

Norway integrates climate efforts throughout its development policy: Within Norway’s overall development policy, the fight against climate change is both a cross-cutting issue (along human rights, women’s rights and gender equality, and anti-corruption) and one of five thematic priority areas (‘climate, renewable energy, and the environment’). The government has expressed that they want to unify climate and development policy and prioritize renewable energy, a renewal of the rainforest investment and funds for climate adaptation. According to its 2016 white paper on ‘Common responsibility for a common future – the Sustainable Development Goals and Norwegian Development Policy,’ renewable energies are crucial for Norway’s development cooperation in climate. Norway intends to strengthen low- and middle-income countries' ability to resist and adapt to climate-related dangers and natural disasters. The government is dedicated to designing Norwegian climate financing so that it contributes to transformative measures with verifiable climate effects.

Norway is upping its climate ODA in 2023: In its 2023 ODA budget, the Norwegian government allocates NOK1.9 billion (US$206 million) to its budget line for ‘climate, environment, and oceans’. In addition, NOK5.5 billion (US$581 million) was budgeted for ‘business development, agriculture, and renewable energy.’ Of this, NOK816 million (US$86 million) was earmarked for renewable energy specifically, this number almost doubled between 2021 and 2022 and will remain stable in 2023. In 2020 and 2021, funds were reshuffled because of the COVID-19 pandemic; money was redeployed from initiatives and programs were halted as a result of the crisis. This included the reallocation of some of Norway’s climate-related funding.

In addition to these funds, provided by MFA, Norway’s largest climate-finance initiative is NICFI, funded with NOK3 billion per year (US$319 million) for emissions reduction and climate adaptation in partner countries.

Key Bodies