Netherlands - Climate
At a glance
The Netherlands uses the Paris Agreement as a basis for climate policy and continues to increase ODA spending
In 2019, the Netherlands committed US$1.3 billion of its bilateral allocable official development assistance (ODA) to projects which targeted action against climate change as a principal or significant objective, making it the sixth-largest Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) donor to the issue in absolute terms
Between 2015 and 2016, the Netherlands’ ODA targeting climate dropped dramatically from US$1.1 billion US$645 million. Since that time, however, climate commitments have steadily increased, reaching an all-time high of US$1.3 billion in 2019, when 35% of bilateral allocable ODA was tagged with the Rio Markers (DAC average: 23%) earning the Netherlands the fifth rank out of 29 OECD DAC members in relative terms.
Climate protection is a priority for the Netherlands; ‘Promote sustainable growth and climate action worldwide’ is given as one of the three overarching goals of Dutch development policy. Starting in 2018, the government committed to spending up to €80 million (US$90 million) in additional funding annually for efforts to fight climate change in low-income countries. Of the €80 million, €40 million (US$45 million) is allocated to the Dutch Fund for Climate and Development (DFCD), a national fund for development and climate. DFCD provides €160 million (US$179 million) for climate-related projects in low-income nations between 2019 and 2022. In the lead-up to COP26 in November of 2021, the Dutch Secretary of State for Economic Affairs and Climate said the government is expecting to contribute €1.3 billion (US$1.5 billion) to climate financing in 2022 in both public and private funds.
The 2019 ‘National Climate Agreement’ gives a detailed domestic policy framework for the Dutch government’s plans to meet the 2030 goals of the Paris Agreement, namely to reduce greenhouse gas emissions by the Netherlands by 49% compared to 1990 levels. In the 2021 budget, the Dutch government allocated €219 million (US$245 million) to finance climate initiatives, but this number is subject to change due to spending on the COVID-19 response.
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:
- Principal, for projects in which climate change mitigation or adaptation is a fundamental and explicitly stated goal;
- Significant, for projects in which climate change mitigation or adaptation is not a key driver but still an explicitly stated goal; or
- 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.
Policy focus is on climate adaptation and the agricultural sector; only 7% of bilateral allocable ODA goes to projects addressing climate change as a principal goal
The Netherlands’ climate-related ODA overwhelmingly focuses on adaptation (97%) to climate change. Interventions aimed at climate change mitigation account for 37% of the Netherlands’ commitments to climate. As is apparent from the relative size of these percentages, some projects target both adaptation and mitigation. In 2019, 34% of Dutch funding for actions against climate change was channeled toward projects tagged with both markers. (For more information on the markers, see box.)
In 2019, 26% or US$994 million of the Netherlands’ bilateral allocable ODA was committed to projects with a significant climate change component, well above the DAC average of 16%. 9% or US$332 million of funding targeted climate change as a principal goal, just above the 7% DAC average. A large proportion (65%) of Dutch bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2018 (DAC average: 77%).
Multisector projects received the largest share (17%) of Dutch climate financing in 2019. Environmental protection and water and sanitation took the second- and third-largest shares with 16% each, followed by agriculture including forestry, fishing, and rural development (15%).
Dutch climate finance supports multilaterals working to transition to clean energy and protect biodiversity
The Netherlands also contributes climate financing through multilaterals, though not all these funds are counted as ODA. This includes contributions to the following multilaterals:
- Global Environment Facility (GEF): Between 2015 and 2018 the Netherlands contributed €100 million (US$111 million) to the GEF. At the seventh replenishment of the GEF in June of 2018, the Netherlands pledged to continue supporting the GEF with US$94 million for the 2018-2022 period.
- Green Climate Fund (GCF): The Netherlands pledged €120 million (US$134 million), for the period of 2020-2023.
- Tropical Rainforest Alliance 2020: The Dutch government aims to combat deforestation through a five-pronged approach, including supporting multi-stakeholder initiatives, such as the Tropical Forest Alliance 2020. The Tropical Forest Alliance was allocated a total sum of €353,000 (US$395,000) in the 2016 budget.
- Sustainable Trade Initiative (IDH): The Netherlands supports IDH to accelerate market transformation towards sustainable supply chains. The Ministry of Foreign Affairs granted IDH €100 million (US$112 million) for the period 2015-2020 to co-fund private sector investments in sustainable market transformation in 11 commodity sectors.
At the 2021 COP26 conference, the Netherlands also committed to discontinue financing fossil fuel projects abroad.
Additionally, the Dutch government allocated €20 million (US$22 million) for the period 2015-2020 to pilot a landscape approach in six resource vulnerable landscapes.
Ministry of Economic Affairs and Climate Policy leads on national policy; Ministry of Foreign Affairs is responsible for climate-related development cooperation
The Dutch Fund for Climate and Development (DCFC), managed by a consortium of climate and development expert organizations, is a key instrument in realizing the Netherlands’ commitment to funding projects combatting climate change in low-income nations. In particular, the DCFC is managed by the Dutch development bank FMO, SNV Netherland, and Climate Fund Managers on behalf of the Dutch Ministry of Foreign Affairs.