$100 billion climate finance achieved

Context: According to an Organisation for Economic Cooperation and Development (OECD) report, $115.9 billion was allocated to developing countries in 2022 to support climate action.

• It occurred two years later than the original 2020 target year, though earlier than expected in 2025.
• In 2009, at COP15 in Copenhagen, developed countries committed to a goal of raising $100 billion a year by 2020 to address the needs of developing countries
• The same was reiterated by Article 9 of the Paris Agreement adopted in 2015.

Observations of report

• The OECD report noted that public climate finance, drawn from bilateral (country) and multilateral sources (like the World Bank), accounted for close to 80 per cent of the total financial flow in 2022.
• This figure increased from $38 billion in 2013 to $91.6 billion in 2022.
• Private finance grew from $14.4 billion in 2021 to $21.9 billion in 2022, a 52 per cent jump.
• The energy sector benefited the most from private mobilisation in 2022, and middle-income countries received the most investments.
• However, lower-income countries received 64 per cent of total public climate finance as grants, while lowermiddle-income countries received only 13 per cent as grants.

Concerns underlined in the report

• Loans make up 70 per cent of the financial flow, which may push developing countries into a debt trap.
• Much of the funding is repackaged as loans rather than grants and is often intertwined with existing aid.
• Most climate finance went to mitigation. Adaptation activities received $32.4 billion in 2022.
• The $100 billion goal is not based on the needs of developing nations; more needs to be done.

Way forward

Nations are negotiating a New Collective Quantified Goal on Climate Finance, with a floor of $100 billion, to replace
the earlier climate pledge by 2025.

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