Billions of dollars of foreign aid have been reclassified as “climate finance”, thereby helping rich countries to meet a long-overdue target, according to new analysis.
Newly released figures suggest that developed nations achieved their goal of raising $100bn in climate aid for developing countries in 2022 – two years after the deadline.
The Organisation for Economic Co-operation and Development (OECD) says these countries raised $115.9bn for climate-related projects, following a record surge in spending.
However, analysis conducted by the Center for Global Development (CGD) and shared with Carbon Brief suggests that around $27bn of the $94.2bn increase in public climate funds over the past two decades came from existing development aid.
Specifically, the CGD identified at least $6.5bn of climate aid within the record 2022 increase that was diverted from other aid programmes. This is despite pledges by wealthy countries to provide climate finance that is “new and additional”.
Such accounting changes could allow some developed countries to reach their climate targets, even while slashing their wider aid budgets.
Meanwhile, wealthy nations are under pressure to rapidly increase climate spending in the global south. At COP29 this year, all parties must agree on a new climate target that will help raise the trillions of dollars these nations say they need to address climate change.
‘Largest increase’
The $100bn target was set in 2009 at COP15 in Copenhagen to help developing countries cut their emissions and protect themselves from climate change.
A group of “developed” countries, including many European nations, the US, Canada, Japan, Australia and New Zealand, agreed to “mobilise” this amount by 2020 and then each year through to 2025.
This money largely comes from countries’ foreign-aid budgets, which finance climate-related development projects. A smaller proportion is also raised from the private sector.
Crucially, countries have determined during UN climate negotiations that climate finance should be “new and additional”. This is generally interpreted as meaning it should be supplied on top of existing aid.
Developed countries failed to hit the $100bn goal by 2020, raising just $83.3bn that year. This was poorly received by developing country governments, who view this money as essential to meet their climate targets under the Paris Agreement.
Last year, the OECD, which tracks international climate finance, announced that developed countries had “likely” met the target in 2022 – two years late. It did not release the data underpinning this estimate at the time.
The OECD has now published a report confirming that the $100bn goal was met. In fact, the organisation says climate finance underwent its “largest year-on-year increase observed to date” in 2022 – reaching $115.9bn. This $26.3bn increase can be seen in the chart below.
This uptick in climate finance was driven by record increases in spending both bilaterally – directly from country-to-country – and via multilateral development banks and funds.
There was also an unprecedented $7.5bn increase in private finance, which was mobilised by developed country investment. This comes after years of private investment remaining essentially unchanged each year.
The OECD notes that the “lion’s share” of public climate finance was provided as loans – around 69% of the total. This has raised concerns, given the number of global south countries that are already struggling with debt.
‘New and additional’
Countries are set to decide on a new climate-finance goal – known as the “new collective quantified goal” – at COP29 in Baku, Azerbaijan, later this year. This target is expected to go beyond the $100bn goal and be based on an assessment of countries’ real-world needs.
Meanwhile, some wealthy countries have announced major cuts to their foreign-aid budgets. Many nations have also decided to channel large amounts of aid to Ukraine, following Russia’s invasion in 2022, while also diverting funds to accommodate refugees on their own soil.
All of this could squeeze the wider development-aid budget and, in theory, make achieving climate finance goals more challenging.
Some countries, including the UK, have opted to meet their climate finance targets by “redirecting” or “relabelling” existing funds as “climate finance”, while failing to commit new money in sufficient volumes.
According to analysis by the CGD – released one week ahead of the OECD’s assessment – this is largely what enabled developed countries to meet the $100bn target in 2022.
It concluded that, when considering public climate finance, the goal was “partly achieved by adding climate objectives to existing development finance flows”. (The CGD analysis did not attempt to estimate the increase in private finance, assuming it would remain stable as it had in previous years.)
Applying the CGD analysis to the public portion of the OECD’s $115.9bn climate finance figure – which amounted to $94.2bn – shows that around $27bn comes from existing development aid.
This is based on overall aid only increasing $67.2bn between 2009 and 2022, meaning the remaining increase in climate aid must have come from existing sources.
Ian Mitchell, the CGD senior policy fellow who led the analysis, tells Carbon Brief:
“The intention was to provide ‘new and additional’ finance and I think the very lowest bar for that is that the face value of [total] finance would have gone up $100bn.”
As the chart below shows, while the overall aid budget grew in 2022, due partly to new aid for Ukraine and more spending on housing refugees, existing bilateral development aid fell in 2022.
Given this, the CGD says the $6.5bn increase in climate finance that year can definitively be attributed to countries’ existing foreign-aid budgets, rather than an increase in spending.
Diverting funds
Mitchell highlights the key issue with hitting climate finance targets without committing enough new resources:
“The problem with meeting that $100bn from existing resources is that it’s either rebadging it, which is not providing climate finance, or it’s diverting it from other development objectives…reducing spend on health or education.”
However, Joe Thwaites, senior international climate finance advocate at the Natural Resources Defense Council (NRDC), tells Carbon Brief that not all diversions are “bad diversions”.
A report by the thinktank ODI last year found that much of the funding being reclassified came from sectors such as energy and transport. Thwaites points out that this could mean cutting back on support for fossil fuels and targeting clean energy instead:
“Given the massive development and climate needs, we need to be growing the overall international public-finance pie. But shifting finance from one area to another isn’t necessarily a bad thing, it all depends what it’s being taken from and going to.”
More broadly, Harjeet Singh, global climate lead at Climate Action Network (CAN) International, tells Carbon Brief that developed countries are taking advantage of “creative accounting” and “fiscal loopholes” to meet their targets.
He warns that, as nations prepare to negotiate a new climate finance target at COP29, there is a need for a clear definition of what counts as “climate finance” to avoid such behaviour:
“The absence of a unified definition of climate finance is not a mere oversight; it mirrors historical patterns of power…Developed countries have aimed to keep their financial responsibilities ambiguous.”
The post Rich countries met $100bn climate-finance goal by ‘relabelling existing aid’ appeared first on Carbon Brief.
Rich countries met $100bn climate-finance goal by ‘relabelling existing aid’
Delegates will soon gather in the Turkish resort city of Antalya for UN climate negotiations, against a backdrop of war, energy crisis and climate extremes.
At COP31, nations will try to find agreement on various issues, including climate finance for developing countries and a global “just transition” towards a cleaner economy.
This summit is unusual due to its joint presidency, which means that Australia is leading the negotiations while Turkey hosts the conference.
Outside the formal negotiations, Turkey is also pushing its own priorities as part of a wider “action agenda”, including electrification, oceans and “green industrialisation”.
In order to track parties’ positions on key negotiating points and wider issues at COP31, Carbon Brief has analysed around 100 documents and captured them in the interactive table below.
The first column shows the countries and UN negotiating blocs, the second shows the topics up for debate and the third indicates specific issues within those topics.
The final column indicates the positions that the parties have expressed on each topic. These range from “priority” – meaning the party is likely to be pushing the issue – to “oppose”, meaning it is likely to push against it.
This is a “living document” that will be updated over the course of COP31.
Please get in touch if you would like to offer additions by emailing policy@carbonbrief.org.
Brief explanations of the key issues and jargon-filled language that permeate the talks can be found below the interactive table.
Just transition
At COP30 in Brazil in 2025, nations agreed to establish a practical mechanism to help drive a “just transition” to a low-carbon economy.
Key aspects of this “Belém-Antalya mechanism” (BAM) – often referred to as the “just transition mechanism” (JTM) – were agreed during the June climate negotiations this year, but many details are missing and dividing lines remain between parties.
Parties have disagreed about the scope of the mechanism and whether it should be tied to the provision of finance.
Nevertheless, following progress in June within the “just transition work programme” (JTWP), civil society groups highlighted that getting the mechanism up and running is a “key expected outcome” from COP31.
Climate finance
Climate finance is always a highly contested issue at UN climate negotiations.
Developing countries have successfully pushed for a “work programme” on climate finance to feature on the conference agenda.
These parties see this programme as a way to pressure developed countries into providing more funding from their public coffers, specifically under Article 9.1 of the Paris Agreement. Some are even proposing a “burden sharing” arrangement for climate-finance provision.
This comes against a backdrop of major donors cutting their aid budgets and the Trump administration in the US pressuring multilateral development banks (MDBs) to drop their climate objectives.
Developed countries, which have traditionally been responsible for providing finance, would prefer to keep a broader focus on issues such as improving access to existing finance and broadening the range of donors. Some developing countries, such as small-island states, also support these goals.
Nations have also been discussing Article 2.1c of the Paris Agreement under the “Veredas dialogue”. This focuses on making all global “financial flows” consistent with climate action.
Countries have different views about what this involves, with developing countries again hoping to keep the focus on developed countries’ responsibilities to financially support them.
Adaptation and mitigation
At negotiations in June, parties were unable to agree on the details of a “global goal on adaptation” (GGA), which is intended to drive climate adaptation worldwide.
Having agreed at COP30 on a list of 59 “indicators” – ways to assess progress towards the GGA – nations now need to refine these before COP32 in Addis Ababa, Ethiopia. This is a highly technical process that involves a taskforce working out how to use and track these indicators.
Broadly, developing countries stress the importance of finance to fund adaptation efforts, rather than simply to track progress. They also want reassurances about a pledge made last year to “triple adaptation finance”.
At the June climate negotiations, negotiators also failed to make any progress when discussing the mitigation work programme (MWP) – the only formal agenda item that concerns cutting greenhouse gas emissions.
Among other things, parties disagreed on whether the MWP should continue running over the next few years, or simply be brought to a close.
Global stocktake and NDCs
Back in 2023, the first “global stocktake” (GST) of the Paris Agreement set out the state of climate action and what needed to be done to set the world on course.
On mitigation, nations agreed to a package of measures, including “transitioning away from fossil fuels”, tripling renewable energy and “halting and reversing deforestation” by 2030.
Some of these outcomes remain contentious among certain parties, particularly large, developing countries and those with economies that rely on fossil-fuel exports.
Developing countries have persistently argued that they need more climate finance to implement the global stocktake outcomes.
Parties were meant to update their climate plans under the Paris Agreement, informed by the first global stocktake, by 2025. These plans, known as nationally determined contributions (NDCs), cover the period out to 2035.
So far, only 150 parties – responsible for three-quarters of global emissions – have submitted new NDCs.
Iran, Vietnam, Egypt and Argentina are among those without new NDCs – and the US has withdrawn its climate plan under the Trump administration.
Some parties, such as the EU, have stressed the need for countries to submit their new NDCs ahead of COP31 – and to ensure they are aligned with the 1.5C temperature limit.
COP31 will also see the launch of the second global stocktake, which will conclude in 2028.
Action agenda and other issues
Turkey will be pushing its “action agenda” priorities at COP31, including global targets for electrification, reducing waste and reducing building-sector emissions.
(The Australian “presidency of negotiations” is intending to pursue a “cover text” decision at COP31 that may capture some of these wider targets, such as the electrification goal.)
The action agenda is meant to provide a complementary track to the formal negotiations, where governments and non-state actors can advance specific, real-world solutions.
A new COP31 presidency effort dubbed the “climate implementation bridge” is also meant to complement these ambitions by turning NDC goals into an “investable project portfolio”
Some parties have explicitly signalled their support for various elements beyond the formal negotiations, in the run-up to COP31.
For example, a joint letter signed by 105 parties called for COP31 to “put the ocean at the heart of climate action” by embedding ocean-based climate action in the UNFCCC architecture.
The post Interactive: Who wants what at the COP31 climate change summit appeared first on Carbon Brief.
Interactive: Who wants what at the COP31 climate change summit
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