OECD says $115.9 billion in climate finance to be mobilised in 2022, experts disagree | Latest News India

NEW DELHI: The Organisation for Economic Cooperation and Development (OECD) said on Wednesday that developed countries will provide and mobilise $115.9 billion in climate finance for developing countries in 2022, exceeding the annual target of $100 billion for the first time and reaching levels not expected before 2025. Experts were quick to dispute the claim, saying the figure is an overestimate.

They also expressed concern that loans make up a large proportion of this funding, which dilutes the very concept of climate finance.

“Achieving an unambitious target with inordinate delays is nothing to be happy about. The newly released OECD figures may show some progress in terms of expanding the role of public climate finance and increasing funding for adaptation. But lending once again dominates climate finance, which runs counter to notions of climate justice,” Rebecca Thissen, global lead for multilateral processes at Climate Action Network, said in a statement.

The OECD report acknowledged this.

According to the report, “Climate finance provided and mobilized by developed countries, 2013-2022,” in 2022, as in the previous year, official climate finance from developed countries provided through bilateral and multilateral channels will mainly take the form of loans (69% or $63.6 billion) and, to a lesser extent, grants (28% or $25.6 billion).

Between 2016 and 2022, around 90% of the funding provided by multilateral development banks was in the form of loans. In contrast, the shares of multilateral climate funds (39% loans, 54% grants) and bilateral providers (57% loans, 39% grants) were relatively balanced, the report added.

The OECD is an intergovernmental organization of 38 member countries, most of which are high-income nations, that was founded in 1961 to promote economic development. Developing countries have repeatedly questioned developed countries' commitment to financing climate change efforts.

“While it is very disappointing that the target of developed countries collectively mobilizing $100 billion per year by 2020 was not met as planned, the COP29 Presidency welcomes today's announcement of joint mobilization of $116 billion through 2022. Fulfilling past commitments is always important, but even more so this year as the Presidency brings together stakeholders to agree on a fair and ambitious new climate finance target. We call on developed countries to continue collectively mobilizing the previous target until 2025, to build unity, enable action and send a strong signal to all of our will to raise ambition,” Mukhtar Babayev, the next COP29 President, said in a statement.

And it's important to know how much money is needed, Thyssen added: “Before we congratulate ourselves, we must remember that the $100 billion pledge was not based on real needs for climate adaptation or emissions reduction in the Global South, but completely ignored loss and damage from climate impacts. Looking forward, we must ensure that future climate finance targets reflect these real needs, and are primarily funded by public grant-based funding.”

Sheel Raheja of the Centre for Science and Environment said it was also important to look closely at lending.

“Even between 2016 and 2022, the majority of total lending by multilateral climate funds and MDBs has been of a non-concessional nature (with more or less market interest rates and significantly weaker terms than concessional lending). It is instructive to consider the extent to which this form of climate financing helps or harms developing countries. In climate change negotiations, developing country groups have consistently called for an expansion of grant-based and concessional lending, but this does not yet seem to be reflected in real-world implementation.”

Raheja added that “the process of arriving at the new $115 billion figure” needed to be transparent, noting that “a widely agreed-upon definition of what constitutes climate finance has yet to emerge”.

In fact, the process is rife with “ambiguity and inadequacy,” says Harjeet Singh, a climate activist and loss and damage expert. “Much of the funding has been repackaged as loans rather than grants and is often intertwined with existing aid, blurring the lines of true financial support. This is not about numbers, it's about sincerity and real support. The funding needed by developing countries to transition away from fossil fuels and address climate impacts has now ballooned to trillions of dollars.”

“Now is not the time to look for creative accounting or fiscal loopholes. Rich countries need to act quickly to remove these smokescreens and provide real financial support,” he added.

At COP15 in Copenhagen in 2009, developed countries set a goal of raising $100 billion per year by 2020 to address the needs of developing countries. Developed countries committed that funds would come from a variety of sources, including alternative finance, public, private, bilateral and multilateral. The climate finance target was formally decided at COP16 in Cancun but was not realized until last year.

“The lack of a definition of climate finance leads to a lack of trust and transparency on an issue that should be clear. According to the OECD, the estimated climate finance provided and mobilised by developed countries in 2020 is around $83 billion, but if we adopt the estimates in Oxfam's Climate Finance Shadow Report, it comes to $21 billion to $24.5 billion,” Federal Environment Minister Bhupender Yadav said at a ministerial meeting on climate finance held in Dubai during COP28 last year.

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