Rich countries on track to give little more than half of climate adaptation finance promised at COP26
Rich countries and multilateral organisations are on track to provide little more than half of the promised US$40bn per year of finance to help the most vulnerable adapt to climate change by 2025 according to new analysis from IIED.
IIED’s analysis of countries’ own reporting of the climate finance they have provided and the pledges they made at COP26, to enable comparability among donors, suggests rich countries will provide $10.8bn in climate finance for adaptation bilaterally by 2025, with multilateral organisations providing a further $11bn. That’s a total of $21.8bn when the promised target is $40bn per year.
Negotiators are meeting currently in Bonn, Germany to examine the progress made since the COP26 climate talks in Glasgow. Fulfilling the climate adaptation finance promise would help to build trust between those countries providing climate finance and those countries receiving it, ahead of the next Conference of Parties (COP27) in Egypt later this year.
While bilateral finance providers have made pledges that would double their contribution in line with their Glasgow commitment, multilaterals have not. The resulting shortfall of $18.2bn needs to come from bilateral donors who can provide the finance in the form of grants, not loans.
Commitments from different countries vary wildly with only five anywhere close to their fair share of climate adaptation finance based on their Gross National Income (GNI), population size and cumulative greenhouse gas emissions.
The USA tripled their support for adaptation with their $3bn pledge for the years between 2021 and 2025. But even assuming this increases steadily and accounting for the adjustments researchers made, they would likely spend $1.4bn in 2025 at best, compared to their fair share of $11.6bn.
Other countries whose pledges fail to reflect a fair share are Australia, Austria, Canada, Italy, Japan, Spain, Luxembourg, Ireland, Switzerland, Norway, Finland, Iceland, Belgium and Portugal.
Clare Shakya, director of Climate Change research at IIED, said: “You only need to look at heatwaves in India and Pakistan, flooding in South Africa and Bangladesh threatening the lives of millions to see that providing the means for developing countries to adapt to the now inevitable changes in climate is absolutely vital.
“Pledges made so far show rich countries are falling short. Our analysis demonstrates what it would take to show greater ambition and achieve a doubling of finance for adaptation by 2025. Every cent, shilling and rupee invested as adaptation finance should have as its primary objective, adaptation to the impacts of climate change.”
IIED’s analysis suggests of 22 bilateral providers, two – France and Sweden – have pledged over their fair share. Five more – the Netherlands, New Zealand, the UK, Denmark and Germany – are at least halfway towards providing their fair share of finance for adaptation.
However, there remain serious issues over consistency and transparency of reporting and it is impossible to discern how much money is really spent on adaptation.
Finance providers could very easily increase the total amount of adaptation finance without needing any extra budget simply by ensuring that the finance they provide is spent purely on measures to help people to adapt to the impacts of climate change. Currently, only a portion of providers’ pledges are spent in this way.
Shakya added: “This analysis also shows how challenging it is to understand how much finance is being spent on adaptation and who the money is going to. Work needs to be done to improve transparency and consistency of the reporting of climate finance to build trust between countries and to achieve greater accountability.”
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Notes to editors
IIED’s analysis is set out in 'Fair share of adaptation finance in 2025'.
Providers committed to double adaptation finance by 2025 to $40 billion per year at COP26. The $100bn finance target committed at COP16 in Cancun in 2010 applied only to the developed country parties to the UNFCCC. As such, our analysis explores the fair shares of these providers. These countries are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the UK and the US. We omitted Greece from this analysis due to a lack of data. Other providers such as the EU institutions and the multilateral finance providers will supply a large amount of the finance goal, but these are capitalised from national budgets so are not responsible for the finance targets. Each of the rich countries report how much climate finance they provide with a different accounting system. Our analysis applies a single accounting method to all donors, so they are truly comparable. This means the numbers will differ from the donors own.
Our fair share analysis used finance providers’ own reporting to the OECD DAC CRS database. We developed a consistent method to enable finance recipients to compare providers. This method counts 100% of climate finance tagged as having a ‘principal’ adaptation objective and 40% tagged as ‘significant’. We excluded ‘cross cutting’ climate finance due to the lack of transparency over the percentage attributable to adaptation. We modelled the adaptation finance pledges made at COP26 to increase incrementally across 2021–2025 to project a 2025 total.
We adjusted these pledges to reflect each providers’ historical proportions of finance reported as having principal or significant objectives to arrive at a realistic estimate for adaptation finance in 2025. Where providers’ pledges also included private finance, we also made an adjustment to assume how much of their pledge came from public finance. This means that many provider pledges are lower than what has been officially communicated which reflects that some providers have historically counted a larger share of investment where climate action was a significant but not principal objective.