Rich countries have finally delivered on a longstanding commitment to provide developing countries with US$100 billion to grapple with the climate emergency, according to new figures, but still much more will be required to meet their needs.

On Wednesday, the Organization for Economic Co-operation and Development (OECD) said developed countries delivered US$115.9 billion in 2022, the most recent figures available. That represents nearly a 30 per cent increase from the previous year and marks the first time rich countries have met the target.

For three years now, Canada has been central to this effort after being tapped alongside Germany to develop a plan to deliver on the $100 billion promise ahead of COP26 in Glasgow in 2021. In an interview with Canada’s National Observer, Environment and Climate Change Minister Steven Guilbeault said the work has paid off.

“Now obviously $100 billion is good, it's not nothing. But we know we have to, this year, find ways to move from billions to trillions,” Guilbeault said.

The $100 billion promise, made in Copenhagen in 2009, is widely seen as a linchpin for the Paris Agreement. In order to convince countries to sign on to the global pact to slash planet-warming greenhouse gas emissions, rich countries ponying up cash to help poorer countries pay for the energy transition — and adapt to warming already locked-in — was an essential promise.

But the commitment was to provide $100 billion by 2020. In recent years, with that commitment lagging billions behind schedule, international climate negotiations have increasingly focused on closing the gap, recognizing ambitious international agreements to tackle climate change will grow further out of reach if trust is strained between countries in the Global North and South.

Guilbeault, who was working in civil society when the $100 billion promise was made, said the overall feeling was that it was an empty promise destined to die on the vine. In 2009, climate finance was averaging around $10 billion per year and a commitment to increase it ten-fold was daunting, he said.

“Now we need to increase it ten-fold again –– roughly –– I don't want to prejudge the outcome of what the conversation will be this year, but it's likely going to be in the hundreds of billions, probably trillion,” he said. “So we've shown we can do this, and we have to do it again on a larger scale bringing in more donors to make it happen.

Screenshot from OECD report showing breakdown of climate finance mobilized from 2013-2022.

In a joint statement from Guilbeault and German State Secretary and Special Envoy for International Climate Action Jennifer Morgan, the two officials called delivering on the commitment “a key step” to help build momentum as countries negotiate new climate finance targets ahead of the annual United Nations climate conference set to be held in Azerbaijan later this year.

“Rich countries cannot simply absolve themselves of responsibility by now claiming to have met their climate finance commitments of US$100 billion in 2022," says @Harjeet11. #ClimateAction #canpoli

“As we continue to scale up climate finance, we recognize the particular importance of reflecting on lessons learned across 15 years of the USD$100 billion goal,” the joint statement reads.
“Now more than ever, in light of overlapping crises and evolving needs, the effectiveness of climate finance needs to be maximized, together with the impact of each dollar delivered.”

Guilbeault said climate finance will be “an extremely important aspect” of this year's negotiations. But he says it will be a heavy lift for the COP29 presidency to deliver and important diplomatic work has to happen between now and November when the negotiations are officially scheduled to start.

Practically, that will involve building negotiating blocs using meetings such as the G7, held in Italy next month, as well as the G20 summit in Brazil in November.

“We need to use all of these meetings… to mobilize toward achieving the goals we've set for ourselves,” Guilbeault said.

Specifically, the OECD found financing from governments and the private sector are increasing, with public finance accounting for nearly 80 per cent of the $115.9 billion recorded in 2022.

In international climate finance there are three main buckets: mitigation (reducing greenhouse gas emissions), adaptation (preparing for warming already locked-in), and loss and damage (compensation for harm caused by climate change). The $100 billion commitment only refers to mitigation and adaptation, with a separate loss and damage fund being actively negotiated.

Mitigation financing has long made up the lion’s share of international climate finance, leading to calls for rich countries to scale up the money available to invest in adaptive measures such as building sea walls to deal with rising sea levels. The OECD found that in 2022, adaptation finance reached US$32.4 billion, representing 28 per cent of finance recorded that year.

However, the overall amount of climate finance being made available comes with a catch. As in previous years, money made available is overwhelmingly in the form of loans, not grants. In 2022, 69 per cent of financing (US$63.6 billion) took the form of loans that developing countries are obligated to pay back. This can perpetuate debt traps that slow development, experts say.

For the lowest income countries in the study, grants represented 64 per cent of public financing, owing to specific needs such as building capacity and projects where the ability to pay back debt is riskier, the OECD said.

Harjeet Singh speaks to reporters at COP27 in Egypt on Nov. 19, 2022. Photo by John Woodside/Canada's National Observer

Fossil Fuel Non-Proliferation Treaty Initiative strategic advisor Harjeet Singh told Canada’s National Observer that with the financial needs of developing countries transitioning off fossil fuels and dealing with skyrocketing climate impacts, they need genuine support.

“Rich countries cannot simply absolve themselves of responsibility by now claiming to have met their climate finance commitments of US$100 billion in 2022, which should be seen as only beginning to honor their longstanding unfulfilled commitment,” he said. “The target has been artificially achieved by adding loans and even counting private sector finance and equity investments.”

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