According to the OECD’s latest assessment, climate finance provided and mobilized by developed countries for climate action in developing countries reached USD 89.6 billion in 2021. While this reflects a positive trend with an 8% increase over 2020, it falls just over USD 10 billion short of the annual goal of USD 100 billion set under the UN Framework Convention on Climate Change.
The report indicates a promising trajectory, surpassing the average annual growth observed from 2018 to 2020. The preliminary data suggests that the goal may have already been met as of 2022, aligning with forward-looking scenarios released two years ago.
OECD Secretary-General Mathias Cormann emphasizes the positive trend but highlights the urgency for significant investments. He notes that while the target for 2020 has not been fully achieved, preliminary data indicates it may be met ahead of 2023, urging continued efforts from climate finance providers.
LOWER AND UPPER MIDDLE-INCOME COUNTRIES
Key findings reveal stability in the share of financing targeting lower and upper middle-income countries, while the share directed at low-income countries increased from 4% in 2016 to 10% in 2021. Additionally, there’s a progressive increase for small island developing countries (SIDS) and least developed countries (LDCs), suggesting growing recognition of the need for action in vulnerable regions.
Public climate finance, both bilateral and multilateral, nearly doubled from USD 38 billion in 2013 to USD 73.1 billion in 2021, forming the majority of the total climate finance. Notably, multilateral public climate finance surpassed bilateral from 2019. Mobilized private climate finance reached USD 14.4 billion in 2021, returning to 2019 levels after a dip in 2020. However, this component displays an overall stagnating trend since 2017.
Despite progress, two components remain low: mobilized private climate finance (16% of the total) and adaptation finance, which dropped by USD 4 billion (-14%) in 2021. The report emphasizes the urgent need to scale up efforts in these areas and provides recommendations for international providers to enhance the effectiveness of public climate finance and increase finance for adaptation.
As the world grapples with climate challenges, this report sheds light on the strides made and the areas that require intensified focus to bridge financing gaps and accelerate climate action.