Norway - Climate

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Climate change is a cross-cutting issue in Norway’s development policy

In 2019, Norway spent US$488 million of its bilateral allocable official development assistance (ODA) on projects which targeted action against climate change as a principal or significant objective, making it the 13th-largest Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) donor to the issue, in absolute terms.


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:

1) principal, for projects in which climate change mitigation or adaptation is a fundamental and explicitly stated goal,

2) significant, for projects in which climate change mitigation or adaptation is not a key driver but still an explicitly stated goal, or

3) 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.


Funding marked with the Rio markers represented 16% of Norway’s bilateral allocable ODA, below the DAC average of 23%. This puts Norway in 21st-place among DAC donors. Unlike most DAC donors, however, the majority of Norway’s climate funding is channeled to projects marked as targeting climate change as ‘principal’ objective: Principal climate funding represented 10% of Norway’s bilateral ODA, above the DAC average of 7% (though down from 14% in 2018).

Norway’s climate-related ODA increased between 2016 and 2018, rising from US$547 million in 2016 to US$620 million in 2018. In 2019, funding decreased to US$488 million. This decrease might be due to lower funding level under the Norway International Climate and Forest Initiative (NICFI, see below), as countries that have not met their pledges no longer receive funding.

In its 2022 ODA budget, the Norwegian government allocated NOK1.8 billion (US$193 million) to its budget line for ‘climate, environment and oceans’. In addition, NOK5.3 billion (US$569 million) was budgeted for ‘business development, agriculture, and renewable energy’. Of this, NOK816 million (US$87 million) was earmarked for renewable energy specifically. Funding for these areas increased compared to the 2021 ODA budget but are broadly on par with the pre-COVID 2020 budget levels. In 2020 and 2021 funds were reshuffled as a result of the COVID-19 pandemic, money was redeployed from initiatives and programs halted as a result of the crisis. This has included the reallocation of some of Norway’s climate-related funding.

In addition to these funds, provided by the Ministry of Foreign Affairs (MFA), Norway’s largest climate-finance initiative is the Norwegian International Climate and Forest Initiative (NICFI), funded with NOK2.9 billion per year (US$330 million) for emissions reduction and climate adaptation in partner countries.

In November of 2021, the government announced it would double its total climate finance to NOK14.0 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 NOK14.0 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 (see below).

In December of 2021, the Norwegian government joined the NDC Partnership program to support low- and middle-income countries in achieving their national climate commitments and ensure financial and technical assistance is delivered as efficiently as possible. The agreement between Norway and the NDC Partnership is operated through the Norwegian Agency for Development Cooperation (Norad) and UNOPS. The agreement will be effective from 2021 to 2025 with a total contribution of NOK70 million (US$8 million) from Norway.

High share of funding went to projects with action against climate change as their principal goal; focus shifts from mitigation to adaptation

Of the US$488 million spent on climate-related activities in 2019, US$295 million was spent on projects that targeted action against climate change as a ‘principal’ goal, down from US$473 million in 2018 (see box for more information). This represented 10% of Norway’s bilateral allocable ODA, above the DAC average of 7%. The remaining US$193 million (4% of bilateral allocable ODA) went to projects targeting climate as a ‘significant’ objective (DAC average: 16%). This is in stark contrast to other donors, who tend to invest larger amounts in programs targeting climate as a significant goal. 77% of Norway’s bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2019 (DAC average: 77%).

In 2019, US$430 million of Norway’s climate-related ODA went to projects supporting climate change mitigation, higher than the US$123 million funding that went to projects supporting climate-change adaptation. This included US$65 million (or 13% of total climate-related funding) which 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 to allocate NOK10 billion (US$1.1 billion) over a period of five years to a new climate investment fund, starting in 2022. The fund is ought 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 of 2021, the government launched a new strategy on combating the climate crisis and fighting hunger, which focuses Norway’s climate assistance more on climate adaptation than before.

Almost half (49%) of Norway’s climate-related funding went to projects related to environmental protection. This is consistent with the large share of Norway’s ODA that was spent on projects with climate as a principal objective. It was followed by funding for energy (35%) and agriculture (7%).

Norway significantly increased contributions to GCF and GEF over the past two years

Norway is a strong contributor to multilateral organizations, including for climate funds (though not all these funds are counted as ODA). It includes contributions to the following multilaterals:

  • Green Climate Fund (GCF): Norway is a strong supporter of the GCF, and hosted its last replenishment meeting in April of 2020. At this event, it pledged a doubling of its yearly contributions to the fund, from NOK400 million (US$45 million in 2019 prices) a year to NOK800 million (US$91 million) a year for 2020 to 2023 (totaling NOK3.2 billion, or US$364 million). Norway is the sixth-largest donor to the fund, and the third largest donor per capita.
  • Global Environment Facility (GEF): In April of 2018, the Norwegian government increased its pledge to the GEF by 20%, pledging to contribute NOK520 million (U$59 million in 2019 prices) over four years.
  • Climate investments Funds (CIF): Norway is one of 14 donors to the World Bank’s Climate Investments Funds (CIF), and has contributed US$282 million to it since its inception in 2008.

MFA guides climate-related cooperation, Ministry of environment funds major climate initiatives

Under the Ministry of Foreign Affairs’ (MFA) leadership, the Minister for international development is in charge of development cooperation, including for climate-related issues. Within the MFA, the Department for Sustainable Development is responsible for Norway’s work relating to climate change and the environment, as well as for promoting Norway’s energy interests. Within Norway’s development agency, Norad, the Department for Climate, Energy and Environment is the most relevant to these issues. In addition, the Ministry of Climate and Environment funds NICFI, Norway’s major climate-finance initiative.

 

Unless otherwise indicated, all data in this section is based on commitment. For more information, see our Donor Tracker Codebook.