International climate finance / 100 billion / Adaptation

Hollow Commitments 2023: Wealthy countries are not on track to live up to their climate finance obligations

With a lack of a clear pathway to fulfilling their climate finance obligations, vulnerable countries will not get enough support in dealing with climate change induced impacts. Credits: Michele Bornstein, CARE.

In the run-up to COP26 and COP27 Germany and Canada have produced updates on how wealthy countries delivered on their climate finance commitments. The reports have so far not contributed to a lot of clarity on which counties are expected to provide how much climate finance. Now, we are waiting for Germany and Canada to take stock of climate finance delivery ahead of COP28, and we can hope that the initiative will provide more transparency this time – but our guess is that we will not get it.

Fortunately, there are other sources of information. Developed nations are obligated to submit biennial communications to the UNFCCC, detailing their future plan for providing climate finance to developing countries. In a recent report titled ‘Hollow Commitments 2023’, CARE has analysed these finance plans. We find that though certain progress is evident in the reporting of future climate finance, critical gaps persist. Some key points are presented here:

1. No assurance that USD 100 billion goal will be met

When combined, wealthy countries’ pledges add up to approximately USD 57 billion a year – a little more than half of their collective commitment. This implies that these countries are expecting other contributors, such as multilateral development banks and the private sector, to deliver the remainder of the agreed USD 100 billion.

Furthermore, almost all the financial pledges included in the plans were announced in 2021, but not all countries are on track to deliver their promised support. For example, the United States has pledged to deliver USD 11.4 billion of climate finance annually by 2024, yet has so far only approved a few billions in 2023.

2. Doubling of adaptation finance not on track

Despite the commitment to balance support between adaptation and mitigation, most wealthy countries, including the four biggest contributors (Japan, France, Germany and the United States), provide information in their climate finance plans suggesting that less than half of their total climate finance will target adaptation. This means that there is essentially still no chance of achieving balanced, international support for mitigation and adaptation objectives.

Only 10 developed country parties have quantitative targets for future adaptation finance. In total their pledges amount to USD 14.3 billion annually. This is far from the agreed goal of doubling adaptation finance by 2025, compared to the 2019 level (around USD 20.3 billion, according to the OECD).

This means that a doubling of adaptation finance can only occur if multilateral development banks increase their adaptation finance dramatically, and as the MDBs offer most of their ‘support’ in loans this would add to the already unbearable debt burden that many developing countries carry.

3. Lack of new money for climate

At COP15 in 2009 it was agreed that climate finance should be ‘new and additional’. This is crucial. Diverting funds for tackling poverty towards support for climate activities would be unjust, attributing the responsibility for action to the poorest people in the world who have played no role in creating the climate emergency.

To protect against this, developed countries should meet their UN commitment to provide 0.7% of gross national income (GNI) as ODA, while providing their climate finance on top of this support. Nevertheless, only three countries – Sweden, Norway and Luxembourg – verify in their climate finance plans that they will make their climate finance contributions in addition to the 0.7% UN target.

The report also contains assessments of each of the countries’ climate finance plans and an overall scoring. The German plan received 7 out of 20 possible points. This places Germany in the middle of the countries assessed. Overall, the results clearly show that Germany and the other countries need to step up to deliver on their promises on climate finance. Otherwise, developing countries and those that are particularly vulnerable to adverse impacts of climate change will not obtain the support to which they are entitled.

Guest article by John Nordbo, CARE Denmark