Woman with money in her hands

World’s richest countries top-up climate finance with funds diverted from world’s poorest

G7 countries are consistently breaking promises for “new and additional” climate finance

● The G7 and other rich countries are diverting money intended for development aid to climate finance, instead of committing new money as promised.
● $103 billion of climate finance reported by G7 nations taken directly from aid budgets.
● Diverted funds include those intended for health, education, gender equality, and poverty alleviation.

Most of the public climate finance reported by rich countries is taken directly from development aid budgets, despite long-standing commitments to provide new money, finds a new report from CARE.

At COP15 in 2009, the G7 and other rich countries promised to provide “scaled-up, new and additional finance” to the value of $100BN USD a year by 2020 to support the global South with their climate change adaptation and mitigation efforts.

The reported sum of public climate finance provided by these rich countries totals $220BN USD over the years 2011-18. Of this, only $99BN USD can be considered as “weakly” additional to support for development. Using a stronger definition of additionality, CARE calculates that the figure is alarmingly lower at just $14BN USD. Moreover, while it appears that climate finance has increased over time, the proportion seen to be “‘new and additional” has in fact decreased over eight years.

CARE’s analysis uses data reported to the United Nations Framework Convention on Climate Change (UNFCCC) to assess whether this reported climate finance is in fact “new and additional”, as promised in 2009 by the 23 Annex II Parties of the UNFCCC. Because there is no formalized definition of “new and additional”, the analysis utilizes two definitions:

1. Strong additionality: The amount of climate finance that has been provided on top of the long-standing international commitment made by rich countries to provide 0.7% of their Gross National Income (GNI) as official development assistance (ODA).
2. Weak additionality: The amount of climate finance which has been provided by a rich country on top of the level of development finance they contributed in 2009, the year of the COP15 climate finance commitment.

The report finds that the G7 and other rich countries have made use of hollow definitions of “new and additional” to overreport their climate finance. Of the total $220BN USD reported climate finance, G7 members collectively account for 85% of this figure. Yet, despite reporting such large quantities of finance, just 0.1% of the climate finance reported by G7 countries was found to be “strongly additional”. G7 countries have therefore failed to provide climate finance on top of their existing development aid obligations and have largely failed to provide 0.7% of their GNI as ODA – a long-standing pledge made by rich countries, which has been repeatedly endorsed at an international level. This overreporting means that the G7 have overwhelmingly diverted funds intended for health, education, gender equality and poverty alleviation to climate finance.

“It is quite shocking to see that the world’s leading nations do not care about their international commitments to support climate and development in poor countries. Instead of being the backbone of global governance, these countries, in reality, undermine international cooperation and create mistrust in the rest of the world.”
John Nordbo, report author and Senior Advocacy Adviser (Climate) at CARE International

In contrast, just three of the world's richest countries, Luxembourg, Norway, and Sweden consistently provided “new and additional” climate finance on top of their existing development aid budgets. These three countries accounted for 2% of the rich countries’ collective GNI and provided 81% of the $14BN USD total. CARE calls upon the G7 and other developed countries to follow the example of Sweden, Norway, and Luxembourg and honor their commitment to provide $100BN USD of “new and additional” climate finance.

“As the drought situation worsens in Kenya and across East and Horn of Africa, causing malnutrition and threatening the lives and livelihoods of about 20 million people, it is disappointing to see that developed countries still do not honour their climate finance commitments under the Convention and Paris Agreement."
Dr. Pacifica Achieng Ogola, Director, Climate Change Directorate, Ministry of Environment and Forestry, Kenya

In 2009, rich countries made a commitment to scaled up, new and additional finance to the value of USD 100 billion a year by 2020, unfortunately only USD 80 billion had been mobilized by COP26. Ahead of COP27, rich country parties must demonstrate that they are serious on delivering on their climate finance commitments, including doubling up finance for adaptation. It is also essential that the Glasgow dialogue on New Collective Quantified Goal on Climate Finance (post 2025) leads to enhanced international support for adaptation and loss and damage with new and additional grant-based finance which is non-ODA.

Over the past month, G7 Ministers have reiterated their existing commitment to support adaptation and mitigation efforts in the global South and to meet the $100BN USD goal, which is now expected to be met in 2023. Yet, the report reveals these endorsements are yet to be backed by adequate funds.

The United States, for example, is responsible for just 8% of the total $220BN USD of reported climate finance - a mere 0.01% of its GNI. As the world’s largest economy, accounting for 24% of global GNI in 2018, and as champion of the 2009 Copenhagen Accord, the US falls well short of shouldering its responsibility to provide its fair share of international climate finance.

“In March, The United States Congress approved $1BN USD for international climate finance for 2022, falling far short of the Biden Administration’s pledge to provide $11.4BN USD annually. This lack of action from the US Congress has serious repercussions for those nations at the frontline of the climate crisis who need immediate finance for adaptation and mitigation.”
Karl Deering, Senior Director of Climate Justice, CARE US

CARE’s revelation that rich countries are diverting money intended for development aid to climate finance, instead of committing new money as promised, is particularly damning in the face of current global challenges – including Russia’s invasion of Ukraine, global energy and food security, and the ongoing effects of the pandemic. Recent OECD statistics show that development aid is already spread thin among the Sustainable Development Goals, humanitarian response and relief, COVID and refugee costs.

Despite this, the G7 and other rich countries consistently fail to realize their promise of reaching the 0.7% target. The UK is even actively decreasing its development aid budget from 0.7% of GNI to 0.5%. For these reasons, the latest IPCC report also emphasized that climate finance should be “new and additional” and not at the cost of non-climate development finance because the movement of resources from development aid to climate would increase the vulnerability of a population to climate shocks. Additionality is therefore essential.

CARE calls on the G7 and other Annex II Parties to the UNFCCC to begin to honor their obligations and commitments to provide $100BN of new and additional climate finance. Countries not yet meeting the 0.7% target should also redouble their efforts to do so within the next few years, and make sure that their climate finance is contributed on top of a growing aid budget.

In many contexts, the physical realities of climate change will add substantial costs to the development agendas in global South countries. Diverting funds from tackling poverty to support the response to climate change is unjust and attributes the responsibility for action to the world’s poorest, who have contributed least to the crisis.

Read the full report
 

For more information, including interviews and comment, contact:

Madeleine Lynch madeleine.lynch@greenhouse.agency +44 (0) 7446 054146
Sunita Ramani sunita.ramani@greenhouse.agency +44 (0) 7563 519 415
Gabriella Smith gabriella.smith@greenhouse.agency +44 (0) 7754 054906