Climate Finance Shadow Report 2016: Lifting the lid on progress towards the $100 billion commitment | Economies | Climate Change

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In the global push to tackle climate change, international climate finance is essential. Climate finance, both public and private, helps developing countries adapt to climate extremes and develop in a low carbon way. This briefing examines reported international public climate finance flows, taking into account the funding commitments of developed countries under the United Nations Framework Convention on Climate Change (UNFCCC). Oxfam’s analysis finds that the most vulnerable people and communities are being neglected by funds that should be helping them. This is unjust, given that these people are both hardest hit by climate change and did the least to cause it. World leaders acted quickly to ratify the 2015 Paris Agreement – an encouraging sign, given the urgent action needed to deal with the climate crisis. We hope they act with similar urgency at COP22 in Marrakech to deliver the support those on the frontlines of climate change need.
  1   CLIMATE FINANCE SHADOW REPORT 2016 LIFTING THE LID ON PROGRESS TOWARDS THE $100 BILLION COMMITMENT  2 SUMMARY  FINANCIAL SUPPORT TO ADAPT TO CLIMATE EXTREMES IN DEVELOPING COUNTRIES IS URGENT AND RISING. The quality and quantity of climate finance to developing countries must increase significantly if the world is to have any chance of keeping temperature increases to within 1.5°C and those vulnerable to climate change are to get the support to which they are entitled. The Paris Agreement laid out a vision for shifting all financial flows – public and private – to be consistent with low emission, climate resilient development. Mainstreaming climate objectives into development strategies and spending is an essential element in meeting this objective.Financial support to adapt to climate extremes in developing countries is urgent and rising. The combined effects of climate change and El Niño this year have devastated harvests and left an additional 40 million people in Southern Africa alone facing hunger. 1  For developing countries, the need for adaptation finance is particularly pronounced in agriculture. 2  This report offers a critical assessment of reported international public climate finance flows in the context of developed country commitments under the United Nations Framework Convention on Climate Change (UNFCCC). 3  It assesses 2020 climate finance commitments, and climate finance contributions for the period 2013–14 (bilateral and multilateral) using three main sources of data: UNFCCC second biennial reports produced by donor countries; 4  the OECD Development Assistance Committee (DAC) database, which captures the climate-relevance of donors’ ODA spending; 5  and the recently published Roadmap to $100 Billion by developed countries, and associated technical report by OECD. 6  These sources provide comprehensive data on climate finance contributions by country, but because of their differing methodologies, the numbers they provide can be inconsistent. Our analysis focuses mainly on public finance, which constitutes the vast majority of reported climate finance and commitments for 2020. In the final section, we also take stock of some of the main issues related to private climate finance. INTERNATIONAL CLIMATE FINANCE IS VITAL IN THE GLOBAL EFFORT TO COMBAT CLIMATE CHANGE.  IT OFFERS A LIFELINE TO THE WORLD’S POOREST COUNTRIES AND COMMUNITIES THAT ARE STRUGGLING TO COPE WITH A CHANGING CLIMATE, AND PROVIDES CRUCIAL SUPPORT TO HELP THEM DEVELOP IN A LOW CARBON WAY.  3 Oxfam’s analysis explores some fundamental questions, including: how is climate finance being counted? What is climate finance being spent on? Where is climate finance being spent? Key takeaways are set out below. Together they highlight a number of critical challenges for climate finance following the 2015 Paris Agreement. Africa’s fourth COP in Marrakech in 2016 must address the unfinished business of climate finance following Paris. Progress on governance of finance flows is essential if the quality and accountability of climate finance is to be improved. The greater the share of the $100bn that is miscounted or over-counted, the less support developing countries receive. Commitments and decisions made at COP22 must also address the stark shortfall in adaptation finance support to the world’s poorest countries. Governments in Paris in 2015 came close, but ultimately failed to agree quantified goals to ensure adaptation finance increases at anywhere close to the scale needed. Countries did however agree the ‘provision of scaled-up financial resources should aim to achieve a balance between adaptation and mitigation’ (Paris Agreement Article 9.4). 8  The projected doubling of adaptation finance in the Roadmap to $100 Billion by donor countries is welcome, but not enough to ensure ‘balance’: Oxfam estimates it would only result in adaptation receiving around 20 percent of the $100bn per year by 2020. 9  We urge donor countries to step up their efforts to significantly increase adaptation finance, and work with developing countries to quickly make those funds accessible to those that need them the most. The most vulnerable people and communities are losing out twice: they are hardest hit by climate change that they did least to cause, and they are being neglected by funds that should be helping them. The fast ratification of the Paris Agreement shows world leaders understand the need for urgency. 10  We hope they act with similar urgency at COP22 in Marrakech to ensure women and men on the frontlines of the climate crisis get the support they need and to which they are entitled. THE GREATER THE SHARE OF THE $100BN THAT IS MISCOUNTED OR OVER-COUNTED, THE LESS SUPPORT DEVELOPING COUNTRIES RECEIVE. ã Levels of climate finance to adaptation and to Least Developed Countries (LDCs) are seriously low – new commitments to increase both are urgently needed.   LDCs are being left with far too little support and adaptation continues to be seriously neglected, when in reality both should be first-order priorities for allocation of the $100bn. 7 ã Agreement on common accounting standards is long overdue and vital to ensure that climate finance is spent effectively and efficiently to help deliver low carbon and climate resilient development.  Climate finance reporting systems lack transparency, consistency and detail, resulting in wide differences and ‘fuzzy maths‘ in the way developed countries report. ã Reported levels of global climate finance overstate the actual support (climate-specific support, net assistance) provided to developing countries by a large margin. This is due to, for example, many countries counting loans at face value rather than at their grant equivalent.  CLIMATE FINANCE TOWARDS THE $100BN COMMITMENT: KEY TAKEAWAYS 1. THE PICTURE IN 2013–14:  Reported figures suggest around $41bn of public finance per year has been provided by developed countries. Of this, the net assistance to developing countries specifically targeting climate change may have been just $11–21bn.  2. THE PICTURE IN 2020: Projected figures in the recent $100bn Roadmap suggest $67bn of public finance per year may be provided by developed countries by 2020. Of this, the net assistance to developing countries specifically targeting climate change may be just $18–34bn. 3. GENEROUS LOAN ACCOUNTING: In 2013–14, loans were reported at up to three times their net value to developing countries. 4. COUNTING FUNDS THAT ARE NOT FOCUSED ON CLIMATE CHANGE: A significant proportion of reported climate finance may not be focused on climate change. If the significance of addressing climate change as a funding objective was taken into account, bilateral flows of climate finance in 2013–14 could be $6–10bn per year lower than reported. 5. GRANT-BASED ASSISTANCE REMAINS TOO LOW: Less than 25 percent of reported climate finance in 2013–14 was in the form of grants. 6. ASSISTANCE FOR ADAPTATION REMAINS TOO LOW: Only 16 percent of climate finance was dedicated to adaptation in 2013–14, and even with the projected doubling of funds for adaptation outlined in the recent $100bn Roadmap, this is set to reach only 20 percent by 2020. 7. ASSISTANCE FOR LEAST DEVELOPED COUNTRIES (LDCS) REMAINS TOO LOW: Only an estimated 18 percent of climate finance went to LDCs in 2013–14. 8. CLIMATE FINANCE IS TAKING A GROWING SHARE OF ODA BUDGETS: In 2013–14 the vast majority of climate finance was counted against donor commitments to increase ODA to 0.7 percent of GNI: climate finance amounted to 18 percent of the total global ODA budget in 2013, and 20 percent in 2014. 9. ACCOUNTING FOR PRIVATE FINANCE REMAINS A BLIND SPOT: While contributing countries are putting increasing emphasis on the importance of mobilizing private finance as part of their climate finance contributions, there remains little consensus about what should be counted or how. 4
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