CLIMATE CRISIS

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Oxfam Intermón points to "serious doubts" about climate finance

🖊 OXFAM INTERMÓN 📸 JUAN COLE


Climate finance averaged $59.5 billion per year (50,266 million euros) between 2017-2018, however, the true value of climate action support was between $19 billion and $22.5 billion per year (around 16,050 to 19 billion euros), according to a report released on Tuesday by the international organization Oxfam Intermón.

OI's analysis raises serious questions about how developed countries are allocating climate finance, noting that this reveals that the real value of funding for rich countries to help developing nations respond to the climate crisis "could be only a third of the amount they declare."

Reorientation of fossil fuel subsidies

It also ensures that climate finance could be mobilized through a variety of sources, including "the reorientation of some fossil fuel subsidies that, in 2019 alone, cost governments more than $320 billion (EUR 270.27 billion)".

The document was presented days before a report by the Organization for Economic Cooperation and Development (OECD) on the progress of developed countries in achieving the 100 billion dollars per year (EUR 84.460 million) climate finance target by 2020 was released.

Oxfam Intermón's expert climate change policy adviser, Tracy Carty, and one of the report's authors, says that "the world's poorest countries, many of which are already dealing with unsustainable debts, should not be forced to borrow to respond to a climate crisis they have not contributed to."

Climate finance

Carty adds that "climate finance is a lifeline for many communities," and governments in the midst of the fight against the COVID-19 pandemic ," "should not lose sight of the growing threat of the climate crisis."

Therefore, the excessive use of loans and the provision of non-concessional financing as climate assistance "is a scandal overlooked".

The report's data are from 2017-2018, "the last known," and according to them, "the true value of climate action support can be only $19,000 to $22.5 billion per year, once loan repayments, interest and other overestimations are discouraged."

Moreover, of the total declared public climate funding, "a surprising" 80% ($47 billion/39.7 billion euros) did not materialize in the form of subsidies, but mainly as loans.

Of this amount, about half - $24 billion/20.275 million - was in the form of non-concessional loans, offered "on un generous terms requiring further repayment by poor countries."

The organization estimated that the "subsidy equivalent" (i.e., the true value of loans once repayments and interest are neglected) was less than half of the declared amount.

OI's estimate of $19 billion to $22.5 billion also takes into account "overestimation of climate funding in projects where climate action is only part of a broader development project."

Of the total public climate funding declared in 2017-2018, according to Oxfam, about one-fifth (20.5%) it went to the least developed countries and only 3% to small island developing states, which are most threatened by the climate emergency and those with the least resources to deal with it.

Grants and loans

The analysis also shows that some countries rely more on subsidies than loans compared to others.

France, for example, provided almost 97% ($4.6 billion/3.886 million) of its bilateral climate financing in the form of loans and other non-subsidy instruments, with an equivalent subsidy value of only $1.3 billion - EUR 1.1 billion - (27%).

By comparison, Sweden, Denmark and the United Kingdom provided the vast majority of their climate funding as in the form of subsidies.

According to the organization, between 2013 and 2018, Spain contributed to climate financing $1,217 million (1,028 million euros) a "nothing negligible" figure but that could be higher than maintaining a growing trend in these years.

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