In a newly released report on climate finance, Oxfam evaluated progress towards a 2009 commitment by high-income countries to jointly provide US$100.0 billion per year by 2020 to help low-income countries reduce emissions and adapt to the impacts of the climate crisis. The report found that of the US$59.5 billion in annual public climate finance reported in 2017-2018, only US$12.5 billion was provided as grants, while an "astonishing" 80%, US$47.0 billion, was given in loans.
About half of the loans (US$24.0 billion) were non-concessional, meaning they were "offered on ungenerous terms requiring higher repayments from poor countries". Oxfam calculated that the true value of the loans after deducting interest and repayments (known as the 'grant equivalent') was less than half the reported amount.
Calculating climate finance can be an imprecise science. According to The Guardian, there is no agreed-upon definition of climate finance, thus, the US$100.0 billion commitment could include private-sector flows. Furthermore, total spending on climate finance is still likely outweighed by ongoing investments in fossil fuels; the world's largest investment banks have financed fossil fuels with more than £2.20 trillion (US$2.66 trillion) since the 2015 international climate Paris Agreement.
To improve assistance standards, Oxfam recommended that the definition of climate finance should include funds that help build smallholder farmers' resilience and that support feminist solutions. Financing "efficient" coal power and providing non-concessional loans to countries "grappling with unsustainable debt" should not be counted as climate finance, they argue.
2021's COP26, annual climate talks under the United Nations Framework Convention on Climate Change (UNFCCC), will be an important venue for nations negotiating new collective goals to succeed the US$100.0 billion commitment in 2025. No follow-up commitment currently exists. Low-income countries are expected to submit emissions-reduction plans before COP26; they are still waiting to learn what financial assistance will be available from high-income countries, a major challenge in their policy planning. High-income countries, which primarily shape the climate finance landscape, are also in most cases the biggest contributors to climate degradation. There is, for the most part, consensus internationally that these nations bear the responsibility for providing the lion's share of the finance needed to resolve the impending climate crisis, which includes addressing the levels of increased inequality which it has already exacerbated.
Discussions at COP26 in Glasgow should lead to a major shift in the breakdown of climate finance by funding type, said Oxfam; grant-based climate finance should significantly outweigh loans-based finance in the future, especially non-concessional loans which Oxfam says should not be counted towards UNFCCC climate finance obligations. The improvement of global accounting standards for all donors is also a top priority.
Report - Oxfam
Press release - Oxfam
News article - The Guardian