PARIS - This report provides disaggregated data analysis of climate finance provided and mobilised in 2016-2020 across climate finance components, themes, sectors, and financial instruments.

It also explores key trends and provides insight relating to the distribution and concentration of climate finance provided and mobilised across different developing country characteristics and groupings.

The concluding chapter of the report provides further insights on the impacts and effectiveness of climate finance, as well as meaningful mitigation action and transparency on implementation. The findings complement the OECD Report on Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020.

Context

At the 15th Conference of Parties (COP15) of the UNFCCC in Copenhagen in 2009, developed countries committed to a collective goal of mobilising USD 100 billion per year by 2020 for climate action in developing countries, in the context of meaningful mitigation actions and transparency on implementation (UNFCCC, 2009[1]). The goal was formalised in the Cancun Agreements adopted at COP16 (UNFCCC, 2010[2]). At COP21 in Paris, the annual USD 100 billion goal was extended to 2025 (UNFCCC, 2015[3]).

Since 2015, at the request of donor countries, the OECD has produced analyses of progress towards this goal1. These analyses are based on best-available data and a robust accounting framework, consistent with the outcome of COP24 agreed to by all Parties to the Paris Agreement as regards the funding sources and financial instruments related to reporting of information on financial resources provided and mobilised through public interventions (UNFCCC, 2019[4]).

OECD figures capture four distinct components of climate finance provided and mobilised by developed countries: (i) Bilateral public climate finance provided by developed countries’ bilateral agencies and development banks; (ii) Multilateral public climate finance provided by multilateral development banks and multilateral climate funds, attributed to developed countries; (iii) Climate-related officially supported export credits, provided by developed countries' official export credit agencies, and (iv) Private finance mobilised by bilateral and multilateral public climate finance, attributed to developed countries.

As such, the climate finance figures presented in this report do not capture all finance for climate action in developing countries. Due to the geographical scope of the USD 100 billion goal, the figures include neither developing countries' domestic public climate finance, nor bilateral public climate finance between developing countries (so-called South-South cooperation), or multilateral and mobilised private climate finance attributable to developing countries. Further, the figures do not include either private finance catalysed by public policy interventions, for which there is no measurement methodology, or private finance invested in the absence of public interventions.

In 2022, the OECD published a first report “Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020”, which adds figures for 2020 to the previously published 2013-2019 time series, thereby providing an aggregate-level assessment against the initial target year of the goal (OECD, 2022[5]). The present report provides complementary analysis and insights by further exploring key trends within individual climate finance components as well as the distribution and concentration of climate finance provided and mobilised across different developing country characteristics and groupings. This report also considers questions relating to enabling environments, impacts and effectiveness of climate finance, as well as to meaningful mitigation action and transparency on implementation.

The report was jointly prepared by the OECD’s Environment and Development Co-operation Directorates. It also benefited from dedicated 2020 data inputs by the OECD Trade and Agriculture Directorate (for the majority of export credits) as well as donor countries (provision of 2019-2020 bilateral public climate finance in advance of UNFCCC reporting, delayed to later in 2022).

Key messages

The OECD report “Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020” (OECD, 2022[5]), released in July 2022, presented aggregate figures and trends to 2020, the initial target year of the USD 100 billion goal. The first section of the Key Messages recaps these.

The present complementary report, focused on the period 2016-2020, provides disaggregated analysis and insights relating to the distribution and concentration of climate finance provided and mobilised across climate themes, sectors, financial instruments, as well as based on different developing country characteristics and groupings (see “Insights from observed trends”, below). These insights may, however, not be representative of the wide range of individual characteristics of climate finance providers’ portfolios or of developing country circumstances.

The report also considers questions relating to the impacts and effectiveness of climate finance, as well as to meaningful mitigation action and transparency on implementation…

Recap of 2020 figures and aggregate trends

- USD 83.3 billion was provided and mobilised by developed countries for climate action in developing countries in 2020. While increasing by 4% from 2019, this was USD 16.7 billion short of the USD 100 billion per year by 2020 goal.

- In 2020, public climate finance (both bilateral as well as multilateral attributable to developed countries) grew and continued to account for the lion’s share of the total (USD 68.3 billion or 82%). Private finance mobilised by public climate finance (USD 13.1 billion) decreased slightly compared to earlier years, while climate-related export credits remained small (USD 1.9 billion).

- Mitigation finance still represented the majority (58%) in 2020, despite a USD 2.8 billion drop compared to 2019. Adaptation finance grew, in both absolute (USD 8.3 billion increase compared to 2019) and relative terms (34% in 2020 compared to 25% in 2019). Such an increase is, to a great extent, the result of a few large infrastructure projects. Cross-cutting activities remained a minority category (7%) almost exclusively used by bilateral public providers.

- Mitigation finance focused mainly (46%) on activities in the energy and transport sectors. In contrast, adaptation finance was spread more evenly across a larger number of sectors and focused on activities in the water supply and sanitation sector, and agriculture, forestry and fishing.

- As in all previous years, loans accounted for over 70% of public climate finance provided (71% or USD 48.6 billion in 2020, including both concessional and non-concessional loans). The share of grants was stable compared to 2019 (26% or USD 17.9 billion). Public equity investments continued to be very limited.

- Over 2016-2020, climate finance provided and mobilised mainly targeted Asia (42%) and middle-income countries (43% and 27% for lower- and upper-middle-income countries respectively). Further, 50% of the total was concentrated in 20 countries in Asia, Africa and the Americas that represented 74% of all developing countries’ population.

For the full report, visit: https://www.oecd-ilibrary.org/sites/286dae5d-en/1/2/2/index.html?itemId=/content/publication/286dae5d-en&_csp_=46b868d4f630525e4ccc5f67e501847f&itemIGO=oecd&itemContentType=book