- Developed nations fell short of their annual $100 billion climate finance commitment to developing countries in 2022, providing only around $35 billion instead of the reported $116 billion claimed by the OECD.
- Oxfam criticizes the majority of reported funds being loans rather than grants, which burdens heavily indebted nations with additional financial strain.
- The discrepancy underscores ongoing challenges and trust issues in global climate negotiations, as discussions intensify ahead of COP29 in Baku, Azerbaijan, to address equitable climate finance frameworks and support for vulnerable nations.
Oxfam Report Reveals Developed Nations’ $100 Billion Climate Finance Shortfall
A recent report by Oxfam International has uncovered a significant gap in climate finance provided by developed nations to developing countries in 2022.
Contrary to claims by the OECD, which reported that wealthy nations met their annual $100 billion climate finance commitment by mobilizing nearly $116 billion, Oxfam’s analysis suggests that actual support amounted to no more than $35 billion.
Since the 2009 UN climate conference in Copenhagen, developed nations pledged to deliver $100 billion annually from 2020 to assist developing countries in tackling climate change impacts.
However, ongoing delays in meeting this target have sparked contention during annual climate negotiations and eroded trust.
Oxfam’s report highlights a substantial difference between reported figures and actual financial efforts. According to their findings, nearly 70% of the reported $116 billion was provided as loans, often at profitable market rates, thereby increasing the debt burden of heavily indebted nations.
Chiara Liguori, Senior Climate Justice Policy Advisor at Oxfam GB, criticized developed countries for “short-changing” lower-income nations by up to $88 billion in 2022.
“Rich countries have been cutting corners on climate finance for years,” Liguori stated. “Claims that they are now meeting their financial promises are exaggerated, with actual financial commitments much lower than reported.”
Oxfam’s figures are based on research by INKA Consult and Steve Cutts, using the latest OECD climate-related development finance datasets for 2021 and 2022.
The organization calculated climate-related loans at their grant equivalents to accurately reflect the financial efforts of developed countries, considering the differences between market-rate loans and preferential terms.
The need for substantial climate finance is urgent. According to the United Nations Environment Programme (UNEP), developing countries require between $215 billion and $387 billion annually this decade for adaptation efforts alone.
As the UN climate conference approaches in Baku, Azerbaijan, discussions on the New Collective Quantified Goal (NCQG) are poised to address these challenges.
Developed nations argue that countries with significant emissions and economic capacities, including China and certain petro-states, classified as developing under the Paris Agreement, should also contribute to climate finance.
In contrast, developing countries invoke Article 9 of the Paris Agreement, asserting that climate finance should flow from developed to developing nations.
Oxfam emphasizes the prioritization of grants over loans for climate finance and urges genuine support for climate-related initiatives that aid vulnerable nations in adapting to climate change impacts and transitioning away from fossil fuels.
“At present, vulnerable nations face a double penalty—first from climate impacts they had little role in causing, and then from interest on loans to address these impacts,” Liguori emphasized.
The upcoming COP29 conference will play a crucial role in addressing these issues and establishing a new financial framework to support climate action in developing countries.
Negotiations will focus on securing an equitable agreement that honors commitments made over a decade ago, ensuring tangible progress towards global climate goals.
