Netherlands - Climate
At a glance
The Netherlands uses the Paris Agreement as a basis for climate policy and continues to increase ODA spending
In 2018, the Netherlands spent US$884 million of its bilateral allocable ODA on projects which targeted action against climate change as a principal or significant objective, making it the 8th-largest Organisation for Economic Cooperation and Development (OECD) Development Assistane Committee (DAC) donor to the issue, in absolute terms.
The Netherlands spent 32% of its bilateral allocable ODA on climate finance in 2018. This is well above the DAC average of 22% and places the Netherlands 8th again out of 29 DAC members.
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.
The Netherlands’ ODA in this sector saw a dramatic increase in 2015 from US$401 million (15% of bilateral allocable ODA) to US$1.1 billion in 2015 (30%), following the government’s commitment to the Paris Agreement. Since that time, ODA for climate spending has fluctuated but hovered in the 30% range. A dip in 2016 to 23% was offset in 2017 by an increase to 34%. Spending evened out in 2018 to 32%. In the 2020 budget, the Dutch government allocated €219 million (US$258 million) to finance climate initiatives. (It is possible that these numbers will be significantly shifted due to major unexpected spending on COVID-19, both to address the crisis domestically and to support response mechanisms in low-income countries.)
Climate protection is a high priority issue for the Netherlands; ‘Promote sustainable growth and climate action worldwide’ is given as one of three overarching goals of Dutch development policy. Starting in 2018, the government committed to spending up to €80 million (US$94 million) in additional funding annually for efforts to fight climate change in low-income countries. Of the €80 million, €40 million (US$47 million) is allocated to the Dutch Fund for Climate and Development (DFCD), a new national fund for development and climate. DFCD will provide €160 million (US$189 million) for climate-related projects in low-income nations between 2019 and 2022.
This reflects the Dutch government’s view that the fight against climate change and sustainable economic development are “two sides of the same coin”; they seek to dovetail climate sustainability measures with all their preexisting and future development initiatives. The initial public contribution of €160 million (US$189 million) is projected to help mobilize between €500 million (US$590 million) and €1.0 billion (US$1.2 billion) in private finance to support the work of the DCFC. The DCFC is managed by a consortium of organizations with expertise in the areas of climate and development, including the Dutch development bank FMO, the Dutch branch of World Wide Fund for Nature, Climate Fund Managers, and SNV Netherlands Development Organisation. In addition to spending on the DFCD, another €40 million (US$47 million) will be spent annually on fighting climate change in low-income countries.
A 2019 document with the utilitarian title of ‘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. The policy advocates for a 55% reduction at the European level; if this target is unreachable in the EU at large, the document says, the Netherlands will “strive to achieve more ambitious agreements with like-minded North-Western European countries”.
According to the Ministry of Foreign Affairs, the Dutch government tackles climate change in low-income countries with a three-pronged approach by: 1) investing in knowledge and expertise, 2) funding sustainable clean energy sources, and 3) fighting deforestation.
The Dutch government maintains ‘climate change profiles’ on each of their partner countries, which describe the effects on the country of climate change, the key priorities, policies and commitments of the country, and key activities financed with government assistance help. The Netherlands was slated to host the 2020 Climate Adaptation Summit, a global conference to discuss international action for climate change, but due to public health restrictions related to COVID-19, the Summit has been postponed until January of 2021 and will be an online meeting instead.
Policy focus is on climate adaptation and agricultural sector; only 7% of bilateral allocable ODA goes to projects that address climate change as a principal goal
The Netherlands’ climate-related ODA overwhelmingly focuses on adaptation (87%) to climate change. Interventions aimed at climate change mitigation account for 58% of the Netherland’s funding in this sector. As is apparent from the relative size of these percentages, there is also significant overlap between the two markers. This is because a project can target both adaptation and mitigation. In 2018, 45% 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 2018, 25% of the Netherlands’ bilateral allocable ODA was spent on projects with a significant climate change component, well above the DAC average of 15%. Only 7% of funding targeted climate change as a principal goal, however, in line with the 7% DAC average. A large proportion (68%) of Dutch bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2018 (DAC average: 78%).
Projects aimed at making agriculture (including forestry and fishing) more sustainable received the largest share (38%) of Dutch climate financing in 2018. Water and sanitation took with 16%, followed by financial services and business support (13%).
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 2019, the Netherlands contributed €100 million (US$118 million) to the GEF. At the seventh replenishment of the GEF in June of 2018, the Netherlands pledged to continue supporting the GEF with €8 million (US$9 million).
- Green Climate Fund (GCF): The Netherlands pledged €100 million (US$118 million, according to GCF website) in initial resource mobilization in May of 2020 for the GCF’s first replenishment.
- Global Alliance for Clean cookstoves: Since 2005, the Netherlands has invested over €150 million (US$177 million) in support of projects which support the transition towards clean cookstoves in low income countries. For the period of 2014-2018, the Netherlands budgeted an additional US$60 million.
- 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 total sum of €353,000 (US$390,200) in the 2016 budget under the category ‘Biodiversity and forests’. However, in the National budget for Foreign Trade and Development Cooperation 2020, as well as in the budgets from 2017-2019, the Tropical Forest Alliance is not mentioned at all.
- Sustainable Trade Initiative (IDH): The government of The Netherlands supports IDH to accelerate market transformation towards sustainable supply chains. The Ministry of Foreign Affairs granted IDH €100 million (US$118 million) for the period 2015-2020 to co-fund private sector investments in sustainable market transformation in 11 commodity sectors.
Additionally, the Dutch government allocated €20 million (US$24 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. The Dutch government views the fight against climate change and sustainable economic development as “two sides of the same coin”; the fund focuses on improving the wellbeing, economic prospects, and livelihoods of vulnerable groups – especially women and youth – while simultaneously enhancing the health of crucial ecosystems, like river basins, tropical rainforests, marshland, or mangroves. The consortium’s activities will also help protect communities and cities from the increasing frequency of extreme weather events and benefit weakening biodiversity in areas that provide people with water, food, medicine, and economic opportunity.