A key pledge to prevent a full-scale climate catastrophe was for developed nations to commit $100 billion per year to address the current climate crisis.
It isn't happening.
The true value of climate finance is a third of what developed countries report says Oxfam. It reports international climate finance remains flawed and profoundly unfair.
Rich countries are using dishonest and misleading accounting to inflate their climate finance contributions to developing countries – in 2020 by as much as 225%, according to Oxfam.
Oxfam estimates between just $21-24.5 billion as the “true value” of climate finance provided in 2020, against a reported figure of $68.3 billion in public finance that rich countries said was provided (alongside mobilized private finance bringing the total to $83.3 billion).
“Rich country contributions not only continue to fall miserably below their promised goal but are also very misleading in often counting the wrong things in the wrong way. They’re overstating their own generosity by painting a rosy picture that obscures how much is really going to poor countries,” said Nafkote Dabi, Oxfam International Climate Policy Lead. “Our global climate finance is a broken train: drastically flawed and putting us at risk of reaching a catastrophic destination. There are too many loans indebting poor countries that are already struggling to cope with climatic shocks. There is too much dishonest and shady reporting. The result is the most vulnerable countries remaining ill-prepared to face the wrath of the climate crisis.”
Oxfam found that instruments such as loans are being reported at face value, ignoring repayments and other factors. Too often funded projects have less climate-focus than reported, making the net value of support specifically aiming at climate action significantly lower than actual reported climate finance figures.
Currently, loans are dominating over 70% provision ($48.6 billion) of public climate finance, adding to the debt crisis across developing countries.
“To force poor countries to repay a loan to cope with a climate crisis they hardly caused is profoundly unfair. Instead of supporting countries that are facing worsening droughts, cyclones and flooding, rich countries are crippling their ability to cope with the next shock and deepening their poverty,” said Dabi.
Least Developed Countries’ external debt repayments reached $31bn in 2020.
For example, Senegal, which sits in the bottom third of the world’s most vulnerable countries to climate change, received 85% of its climate finance in form of debt (29% being non-concessional loans), despite being at moderate risk of falling into debt distress and with its debt amounting to 62.4% of its Gross National Income.
"Manipulating the system will only mean poor nations, least responsible for the climate crisis, footing the climate bill,” explained Dabi. “A climate finance system that is primarily based on loans is only worsening the problem. Rich nations, especially the heaviest-polluting ones, have a moral responsibility to provide alternative forms of climate financing, above all grants, to help impacted countries cope and develop in a low-carbon way,” said Dabi.
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