Norway - Climate
At a glance
Climate change is a cross-cutting issue in Norway’s development policy
In 2020, Norway spent US$554 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 ninth-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 17% of Norway’s bilateral allocable ODA, below the DAC average of 23%. This puts Norway in 19th place among DAC donors. Unlike most DAC donors, however, 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%.
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 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, NOK5.4 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, this number almost doubled compared to 2021. In 2020 and 2021, funds were reshuffled because of the COVID-19 pandemic, money was redeployed from initiatives and programs halted as a result of the crisis. This has included 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 NOK3.0 billion per year (US$319 million) for emissions reduction and climate adaptation in partner countries.
In November 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).
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 occupy a crucial place in Norway’s development cooperation for climate. The overall goal of Norway’s work is to strengthen developing 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 effect.
High share of funding went to projects with action against climate change as their principal goal
Of the US$554 million spent on climate-related activities in 2020, US$415 million was spent on projects that targeted action against climate change as a ‘principal’ goal. This represented 12% of Norway’s bilateral allocable ODA, above the DAC average of 9%. The remaining US$138 million (4% of bilateral allocable ODA) went to projects targeting climate as a ‘significant’ objective (DAC average: 14%). This is in stark contrast to other donors, who tend to invest larger amounts in programs targeting climate as a significant goal. 83% of Norway’s bilateral allocable ODA did not target climate change or was not screened against the Rio markers in 2020 (DAC average: 77%).
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 to 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 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. Minister of International Development, Anne Beate Tvinnereim, has said that the new climate investment fund will be Norway`s most important tool in accelerating the global energy transition by investing in renewable energy in developing countries with large emissions from coal and other fossil power production.
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.
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%).
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 2020. At this event, it pledged a doubling of its yearly contributions to the fund, from NOK400 million (US$42 million, in 2020 prices) a year to NOK800 million (US$85 million) a year from 2020 to 2023 (totaling NOK3.2 billion, or US$340 million). Norway is the sixth-largest donor to the fund, and the third-largest donor per capita.
Global Environment Facility (GEF): In April 2018, the Norwegian government increased its pledge to the GEF by 20%, pledging to contribute NOK520 million (U$55 million in 2020 prices) through 2022.
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 oversees 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.
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