Developed countries fail to meet climate finance targets for 11th year in a row

Wealthier nations, who are historically more responsible for climate change, are failing to meet the international climate funding obligations they agreed in Copenhagen in 2009, stated the recently published new report on “Fair Share” by ODI and Zurich Flood Resilience Alliance. A target of providing $100 billion a year in climate finance – agreed by developed nations– has now been missed for the 11th year in a row.

The report is being released following the G20 leaders’ summit in Delhi, held over the weekend, where the G20 countries once again said that they will meet the $100bn goal in 2023. However, only eight developed countries out of 23 currently pay their fair share of climate finance, with the USA, Spain, and Australia continuing to fall hugely short. The shortfall in climate finance exposes vulnerable countries like Bangladesh and communities to escalating climate impacts and is a total failure of responsibility.

ODI report shows, despite needs amounting to an estimated $4 trillion by 2030 to keep to a 1.5 degree C trajectory, the $100 billion target has been missed every year to date. In 2020, the target should have been reached, provision and mobilization amounted to $ 83.3 billion. Cumulatively over 2011–2020, the climate finance gap totals $409.8 billion.

Dr, Saleemul Huq, Director, International Centre for Climate Change and Development mentioned "Despite impassioned pleas from developing nations, including Bangladesh, and the resounding call for developed countries to honour the $100 billion financing target, these pleas have fallen on deaf ears. It is disheartening that, even 11 years down the line, countries such as the US, among others, have yet to fulfil their responsibility. Bangladesh, a steadfast advocate for climate finance, demands not just words, but the concrete and immediate fulfilment of commitments."

The report finds that, for climate finance in 2021 ($100bn annual target), USA provided $9 billion in 2021; just 21% of its fair share. If the USA were to meet its shortfall it would need to provide an additional $34 billion per year. Eight developed countries - Norway, France, Sweden, Denmark, Germany, Switzerland, Luxembourg, and the Netherlands – met their fair share towards the annual $100 billion target. The UK – who came under fire earlier this year for attempting to walk back on its climate finance commitments - provided only two-thirds of their fair share.

For adaptation finance (to meet the aim of at least doubling this, from $20bn to $40bn), USA has the largest shortfall, missing their fair share goal by $14 billion. None of Australia, Spain, Canada, and the UK met their fair share either; they should be providing an additional $500 million to $1 billion each.

Dr Laetitia Pettinotti, ODI Research Fellow and the Fair Share report’s lead author said: “It’s a total failure of responsibility by developed countries who bear historical responsibility for climate change. Many of the world’s self-professed climate-leading countries - the UK, Canada and Australia, all members of the global Champions Group on Adaptation Finance – are just not providing their fair share of contributions.

“Understanding individual countries’ progress towards providing their fair share is critical if we are to create the kind of accountability and ambition needed to accelerate climate action.”

The report mentioned that the failure to meet the climate finance goal can be attributed to developed countries collectively, and this failure has far-reaching consequences. Instead of catalysing climate ambition as originally intended, the shared nature of developed nations‍‍` climate finance commitments has, in practice, allowed some countries to evade their responsibilities. This breakdown occurs within an already complex landscape, where differing interpretations of climate finance give rise to data transparency issues, double counting, and crucial questions concerning the ‍‍`new and additional‍‍` aspect of climate finance – ensuring it remains distinct from reallocated development assistance and stands as a supplementary commitment to providing 0.7% of GNI as official development assistance.

M Zakir Hossain Khan, Climate Finance Analyst and Chief Executive of Change Initiative stated “Not to provide the fair share of climate finance as promised by major embitters is not because of their inadequate ability to finance, rather they don‍‍`t prioritize to address the risks and vulnerabilities of the lives and nature of the LDCs. This is a sheer example of climate injustice. If G20 countries just cut down 20% of their annual public subsidy to fossil fuels around $200 billion could be mobilized to the vulnerable nations. In this context, from 2025 the LDCs should jointly impose the carbon tax on the fossil fuel-based aviation, shipping, cars industries".

Beyond merely achieving their ‍‍`fair share‍‍` of the $100 billion target, developing countries must contend with the fact that historically, adaptation funding has been vastly overshadowed by mitigation support. In fact, the underfunding of adaptation is so pronounced that provider countries were implored to double their flows of adaptation finance during the 2021 Glasgow COP. This underscores the pressing need for a more equitable and comprehensive approach to climate finance, one that aligns with the actual needs and priorities of those most vulnerable to the impacts of climate change.

Mercy Corps Chief Climate Officer David Nicholson said “It is crucial for climate and adaptation funding to be more transparent, new, and additional, provided in the form of grants or other concessional instruments, with robust accountability mechanisms for contributors, and for it to enable more local ownership as well as be responsive to communities’ needs. Meeting these financial commitments is not just an ethical imperative toward those bearing the brunt of the climate crisis; it is an essential step in the fight against climate change."

Press release