Policy Context

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 and one of five thematic priority areas. The government has expressed its intention to unify climate and development policy and prioritize renewable energy, renewed 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 the ability of LICs and MICs to withstand and adapt to climate-related dangers and natural disasters. The government is dedicated to designing Norwegian climate financing to support transformative measures with verifiable climate effects.

In February 2023, the Norwegian government launched Climate change, hunger, and vulnerability – A strategy for climate change adaptation, disaster risk reduction and the fight against hunger. The strategy laid the foundation for intensified efforts to assist vulnerable societies in adapting to climate change. It identified priority areas and tools for enhancing climate change adaptation, including disaster risk reduction and the fight against hunger.

ODA Spending

How much ODA does Norway allocate to climate projects?

Unlike most DAC donors, most of Norway’s climate funding in 2022 was channeled to projects targeting climate change as a ‘principal’ objective. Principal climate funding represented 32% of Norway’s bilateral ODA, above the DAC average of 13%.

How is Norway's climate ODA changing?

Bilateral spending

In 2022, US$1.3 billion of Norway’s climate-related ODA went to projects supporting climate change mitigation. This is significantly higher than the funding that went to projects supporting climate change adaptation at US$396 million. US$205 million went to projects that contributed to both adaptation and mitigation.

Norway’s strong focus on mitigation has largely driven its work on renewable energies. In 2021, the government announced that it would allocate US$1.2 billion, over a period of five years, to a new Climate Investment Fund. The new fund became operational in May 2022 and will receive government funding of US$212 million, annually. The fund is intended to support climate actions and increase access to renewable energy sources in LICs and MICs. Half of the annual funding is provided by Norfund, which will also administer the fund. The other half comes from the national budget. So far, Norfund has provided climate finance in South Africa and India.

Between 2017-2021, Norway's bilateral ODA to climate adaptation increased 84%, and the allocation of bilateral ODA to climate adaptation increased from 5% in 2017 to 7% in 2021. The drop in funding in 2019 was driven more significantly by a reduction of principal funding, especially to SSA and the agriculture sector. The increase in significant funding in 2020 and 2021 largely benefitted the agriculture sector and environment protection.

Norway’s adaptation-related ODA in 2021 to agriculture focused largely on agricultural development as well as fishing policy and administrative management, especially in partner countries based in SSA. Agriculture not only emerged as the leading sector but also received the largest share of principal funding, amounting to US$56 million. Except for 2019, agriculture has been the sector receiving the most adaptation-related ODA over the past five years. Under environmental protection, the funding mainly focused on environmental policy and administrative management and biodiversity. Disaster risk reduction was prioritized within multi-sector funding.

Multilateral Spending and Commitments

In line with its overall ODA policy, Norway contributes significant climate finance to multilateral organizations, though not all these funds are counted as ODA.

Funding Outlook

What is the current government's outlook on climate ODA?

At COP26, the government announced it would double its total climate finance from 2020 levels to US$1.5 billion by 2026 to support LICs and LMICs in financing both the reduction of greenhouse gas emissions and strengthening resilience to future climate change. This was the first time Norway established a quantifiable target for its climate financing. On September 5, 2023, the Norwegian Ministry of International Development announced that Norway's climate finance stood at NOK15.5 billion, or US$1.6 billion, in 2022, largely driven by the mobilization of private capital, meeting the goal four years ahead of schedule. A large portion of the funding comes through Norfund's mobilization of private capital and the Climate Investment Fund. Norfund mobilized more than NOK5.6 billion, or US$582 million in private capital in 2022. In 2023, Norfund invested just over NOK6.5 billion, or US$676 million in LICs.

In its 2024 ODA budget, the Norwegian government has allocated NOK2 billion, or US$208 million, to the budget line for ‘climate, environment, and oceans.’ In addition, NOK5.8 billion, or US$603 million is budgeted for ‘business development, agriculture, and renewable energy.’ Of this, NOK1 billion, or US$104 million, is earmarked for renewable energy. Funding for renewable energy has nearly doubled from 2021-2023 and continues to increase in 2024.

In addition to these funds provided by the MFA, Norway’s largest climate-finance initiative is NICFI, which received US$312 million, for emissions reduction and climate adaptation in partner countries.

Key Bodies

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