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OECD Report: Developed Countries Provided USD 115.9 Bn Climate Finance for Developing Countries in 2022

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Rich nations finally delivered on $100 billion climate finance pledge in 2022According to the Organization for Economic Cooperation and Development’s (OECD) report, Climate Finance Provided and Mobilised by Developed Countries in 2013-2022, developed countries provided and mobilised USD 115.9 billion as climate finance for developing countries in 2022.

  • This exceeds the annual USD 100 billion goals for the 1st time, surpassing the target by over 15%.
  • This report is the OECD’s 7th assessment of progress towards the United Nations Framework Convention on Climate Change (UNFCCC) goal, agreed in 2009.

Note: This achievement occurred 2 years later than the original 2020 target year, but a year earlier than the OECD projections.

About the Report:

i.The report features the trends in annual climate finance provided and mobilised by developed countries for climate action in developing countries between 2013-2022.

ii.It presents these trends by the source of finance, climate theme, sector, income group, type of financial instrument, and geographical distribution of climate finance.

Analysis and Insights:

i.Public climate finance, which includes finance drawn from bilateral (countries) and multilateral sources (like World Bank) contributed to 80% of the total in 2022. This marks an increase from USD 38 billion in 2013 to USD 91.6 billion in 2022.

ii.Bilateral sources contributed USD 41 billion and multilateral sources provided USD 50.6 billion in 2022.

iii.Private finance mobilised by public climate finance, reached USD 21.9 billion in 2022, showing a USD 7.5 billion (52%) increase.

Adaptation Finance:

i.Adaptation finance reached USD 32.4 billion in 2022. Of this, USD 28.9 billion was from bilateral and multilateral public sources, and private sector amounted to USD 3.5 billion in 2022.

ii.Developed countries are on track to meet the 2019 COP26 Glasgow Climate Pact’s call to double adaptation finance by 2025.

Financial Instruments and Distribution:

i.Loans are the primary instrument for public climate finance, especially from the Multilateral Development Banks (MDBs).

ii.Grants are prioritised in lower-income countries, with a balanced mix seen in multilateral climate funds and bilateral providers.

  • Between 2016-2022, close to 90% of financing provided by MDBs took the form of loans.
  • The same applies to bilateral providers, with 57% as loans and 39% as grants.

iii.Between 2016 and 2022, grants increased by USD 13.4 billion (more than doubling with an increase of 109%) and public loans by USD 30.3 billion (up 91%).

Support for Vulnerable Countries:

In 2022, climate finance to low-income countries was low at 10%, with 50% of adaptation finance going to Least Developed Countries (LDCs) and Small Island Developing States (SIDS) than the average for all developing countries (25%).

Context and Progress:

i.The OECD’s 7th assessment highlights progress toward the UNFCCC goal of mobilising USD 100 billion annually by 2020, extended to 2025, to help developing countries mitigate and adapt to climate change.

ii.Discussions for a New Collective Quantified Goal (NCQG) post-2025 are underway, aiming to address evolving global needs.

Note: The NCQG needs to optimise the roles of various actors and finance sources to address diverse climate-related needs.

Recent related News:

According to the OECD Economic Outlook, Volume 2024 Issue 1, OECD has raised India’s Gross Domestic Product (GDP) growth forecast for FY25 (2024-25) by 40 basis points (bps) to 6.6% from 6.2% projected earlier.

About Organization for Economic Cooperation and Development (OECD):
The forerunner of the OECD was the Organisation for European Economic Co-operation (OEEC).
The Convention transforming the OEEC into the OECD was signed on 14 December 1960 and entered into force on 30 September 1961.
Secretary-General– Mathias Cormann
Headquarters– Paris, France