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Financing for the future: Climate finance and the role of ODA Overview & Trends
Donor Tracker Webinar, August 6, 2020 Sinéad Dwyer, Raimund Zühr, Zoe Johnson
What is the Donor Tracker?
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Financing for the future: Climate finance and the role of ODA - - PowerPoint PPT Presentation
Financing for the future: Climate finance and the role of ODA - - PowerPoint PPT Presentation
Financing for the future: Climate finance and the role of ODA Overview & Trends Donor Tracker Webinar, August 6, 2020 Sinad Dwyer, Raimund Zhr, Zoe Johnson What is the Donor Tracker? 2 The supports
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The supports evidence-based advocacy for global development
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Free, independent website with Donor Profiles featuring analyses of 14 major OECD donors and their ODA flows Data-driven insights on strategic priorities, funding trends, decision making structures, budget process, and key opportunities to engage Partner Perspectives offering viewpoints from others in the global development space Regular cross-donor ‘Insights’ on latest trends Weekly policy updates on policy and financing trends provided by our network of consultants based in donor capitals
www.donortracker.org
Covers seven sectors: global health, global health R&D, agriculture, nutrition, education, climate finance, and gender equality
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Financing for the future: Climate finance and the role of ODA Overview & Trends
Donor Tracker Webinar, August 6, 2020 Sinéad Dwyer, Raimund Zühr, Zoe Johnson
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Setting the scene - or - how do we get to Paris?
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The world is off track to meet Paris goals, negatively impacting SDG progress
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How much climate finance is needed in LMICs and how are we doing?
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LMICs need financing to be able to achieve the goals set out in the Paris Agreement
This is a major concern as climate change compounds existing development challenges Meeting ambitions of Paris requires substantial investment globally in climate mitigation and climate adaptation
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Paris Agreement is the first universal climate change treaty aiming to limit global temperatures and support climate change adaptation Of the limited climate finance mobilized, most is domestically focused meaning more vulnerable countries struggle to access financing required
3,980 546 Global financing required to meet Paris Agreement Mobilized climate finance in 2018 +629% Annual global financing required versus annual financing mobilized in 2018, US$ billions
Source: Climate Policy Initiatives, Global Landscape of Climate Finance 2019
Global climate finance is far below levels needed to meet Paris goals
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Donor countries have a responsibility to support climate action in LMICs
Not necessarily all ODA but ODA has an important role to play
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Donor countries committed to mobilizing US$100 billion a year in new and additional climate finance by 2020 Funds to be mobilized from “wide variety of sources: public and private, bilateral and multilateral, including alternative sources of finance” Beyond the US$100 billion target, financial flows to LMICs, particularly ODA, should be aligned with climate objectives
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It is not clear if the US$100 billion target by 2020 has been achieved
OECD estimates show encouraging progress towards US$100 billion target According to the latest OECD estimates, US$71 billion was mobilized in 2017
10 23 23 26 28 27 16 20 16 19 28 13 17 14 10 15 2015 2 62 2013 2014 2 3 2 2016 2 2017 52 58 59 71 +8% Mobilized private Bilateral public Export credits Multilateral public
Source: 2013 to 2017, OECD (2019). 2013 and 2014 mobilized private finance numbers are not directly comparable to 2016 and 2017 due to change in methodology, 2015 number private finance number has been estimated by Donor Tracker based on average of other 4 years. 2020 projections are based on OECD (2016) projections from 2013/14 data and are therefore conservative. They are consistent with a continuation of an 8% growth rate.
However, the OECD’s methodology has not been universally accepted
OECD estimates of international climate finance provided and mobilized towards the US$100 billion goal, US$ billions
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Tracking donors’ support for climate action through bilateral ODA
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OECD Rio markers for climate allow us to track donors' activities in support of climate action
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Markers have three possible scores:
- Principal: Activities that would not have been undertaken or designed in that way except for the explicit objective of
climate mitigation or adaptation
- Significant: Activities not principally undertaken in pursuit of climate objectives, but which have been explicitly
'formulated or adjusted' in support of climate objectives
- Not targeted: Activities that do not include climate action objectives
Not all activities are screened against the markers Two climate change markers:
- Climate change mitigation: activities that reduce or remove greenhouse gases
- Climate change adaptation: activities that respond to and anticipate the impacts of climate change
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How are donors using bilateral ODA to support climate action?
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One quarter of donors’ bilateral ODA in 2018 supported climate action
Climate change mitigation receives more funding than climate change adaptation Some growth over last decade but far from mainstreaming climate into ODA portfolios
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ODA principally targeting climate action fell between 2014 and 2018
Source: OECD aid activities targeting Global Environment Objectives, commitments, 2018 constant prices
However, policy commitments take time to translate into reported ODA data
DAC donors’ bilateral ODA with a principal and significant focus on climate change or adaptation 2009-2018
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Donors vary in their principal and significant support for climate action
Share of bilateral ODA targeting climate action, 2018 Total funding for climate action, US$ millions, 2018
8,029 United States France Japan 5 631 Germany EU Institutions Sweden 9 United Kingdom 299 Netherlands Norway 182 Denmark Canada 884 Switzerland Australia Belgium 9,577 Spain 187 Slovak Republic Italy Finland Korea New Zealand Iceland Ireland Austria Poland Luxembourg Slovenia Czech Republic Portugal 670 Greece 281 Hungary 5,577 8 63 1,987 69 1,197 952 364 313 199 111 1,374 73 26 8 76 18% 2% 7% 18% 17% 1% Czech Republic 50% 2% 2% 36% Japan Netherlands Germany 32% 3% 10% 22% Belgium Slovenia 21% 7% 25% 21% 30% 10% Sweden 35% Poland 9% 2% Iceland 19% 5% United Kingdom 12% 1% Spain EU Institutions 14% Austria Canada New Zealand Ireland 18% 1% Finland Denmark Luxembourg 4% 14% Norway 13% Switzerland 18% France 12% Korea Italy Australia 5% 7% 5% 100% Portugal
2%
United States Slovak Republic Greece Hungary 12% 31% 7% 7% 6% 6% 13% 5% 5% 11% 6% 2% 1% 1% Principal Significant Not targeted Average not screened
Source: OECD aid activities targeting Global Environment Objectives, commitments
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There are unexplored opportunities for mainstreaming climate into development portfolios
16 DAC donors’ share of climate related ODA by sector, 2018
Environmental protection Tourism Energy Agriculture Water and sanitation Humanitarian aid Infrastructure Other multisector Government & civil society Food aid and commodity assistance Industry, construction & mining Education Financial services and business support Other social services Trade policy Health Conflict, peace and security Unspecified Bilateral ODA not screened
- r targeted for
climate markers Climate-related ODA
Source: OECD aid activities targeting Global Environment Objectives, commitments
24% 18% 16% 10% 10% 21% Infrastructure Energy Agriculture Water and sanitation Environmental protection Other DAC donors’ climate related ODA by sector, 2018
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Reflections and recommendations
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The world spends more on fossil fuel subsidies than on climate and ODA combined
Sources: International response: European Commission, pledges made between 4 May-27 June. Fiscal measures: IMF, World Economic Outlook; June 2020 update. SDG funding gap: UNCTAD World Investment Report, 2014.
Annual funding for various purposes, in US$ billions 71 153 478 Global GDP Covid-19 - Int. Response Mobilized international climate finance SDG funding gap (LMICs) ODA Fossil fuel subsidies Covid-19 - Domestic response
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The issue is not lack of funds; the issue is the way we prioritize spending
Annual funding for various purposes, in US$ billions 71 150 478 17 10,800 2,500 Fossil fuel subsidies Covid-19 - Domestic response ODA Mobilized international climate finance Covid-19 - Int. Response 88,000 Global GDP SDG funding gap (LMIC)
Sources: International response: European Commission, pledges made between 4 May-27 June. Fiscal measures: IMF, World Economic Outlook; June 2020 update. SDG funding gap: UNCTAD World Investment Report, 2014.
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Recommendations
Donors need to urgently scale up ODA funding for activities that principally target climate action. ODA funding flowing to activities directly opposed to the Paris goals should be phased out as soon as possible Meaningful mainstreaming of climate action into donors’ entire global development project portfolios is essential.
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To improve accountability, more donors should set concrete and ambitious ODA-related funding targets for climate finance, that can be tracked. The COVID-19 crisis must not be allowed to serve as a distraction from the need for more and better climate action
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