Wealthy nations are expected to fall up to US$75 billion ($106.6 billion) short of fulfilling their long-standing pledge to mobilise just over US$100 billion each year from 2020 to 2025 to help the most vulnerable countries adapt to the dangerous effects of climate change and reduce their emissions, according to estimates by Oxfam today.
This analysis comes ahead of informal climate talks between world leaders at the UN General Assembly later today – a key moment to get the target back on track ahead of the COP26 UN Climate Summit in Glasgow in November. The Organisation for Economic Co-operation and Development (OECD) released new data on Friday showing that developed countries provided only around US$80 billion in climate finance in 2019.
Based on current pledges and plans, Oxfam estimates that wealthy governments will continue to miss the $100 billion goal and reach only US$93 billion to US$95 billion per year by 2025, five years after the goal should have been met. This means that climate-vulnerable countries could miss out on between US$68 billion and US$75 billion in total over the six-year target period.
Hot and cold temperatures are estimated to kill five million people every year, accounting for more than nine percent of human deaths globally, and this is expected to increase as heat-related deaths rise due to climate change. Climate change could trigger economic losses double that of the pandemic, but it is not being treated with the same urgency. In 2020, the EU, UK, US, Canada, Japan, Australia and New Zealand spent more than $21 trillion on COVID-19 fiscal recovery packages ―equivalent to meeting the climate finance goal 151 times over. At the same time, total global military spending rose by 2.6 percent since 2019 to just under US$2 trillion ―nearly 20 times more than the climate finance goal. So far, New Zealand has spent $48.4 billion on the Covid-19 pandemic, which is more than 160 times its fair share of the US$100 billion goal according to an Oxfam report.
Several countries, including Aotearoa New Zealand, Italy, Spain and the Netherlands have made no new climate finance pledges. While some countries, including the US, Canada and Germany, have increased their pledges in recent months their efforts have not been enough. At the G7 Summit in June, leaders repeated their commitment to narrow the gap, but those of France, Australia and Japan failed to increase their contributions above current levels.
Climate finance is one of the three key pillars of the Paris Agreement and vital to global efforts to tackle the climate crisis and its impacts. Globally, 2020 tied for the hottest year on record, with 98.4 million people affected by floods, storms and other climate-related disasters and caused economic losses of at least $242.8 billion.
At a virtual talanoa of the Pacific Island Forum last week, Tuvalu’s Finance Minister Seve Paeniu said that Tuvalu needs more than $425 million for coastal protection alone. For countries like Tuvalu, transitioning to clean energy and adapting to climate change impacts —some of which are already irreversible— cannot happen without this support. Many developing countries are already being forced to spend large amounts of their public finances on combating climate change. For example:
- Fiji has an average asset loss of more than FJ$500 million ($340 million) per year due to tropical cyclones and floods. The World Bank estimates that almost FJ$9.3 billion ($13.6 billion), almost 100 percent of GDP, in investment is required over the next 10 years to strengthen Fiji’s resilience to climate change and natural hazards for decades to come.
- Over the next 50 years Solomon Islands is likely to incur annual average direct losses equivalent to 3 percent of GDP, has a 50 percent chance of experiencing an event causing a loss exceeding 35 percent of GDP.
- Poor families in rural Bangladesh spend nearly $2 billion a year on preventing climate-related disasters or repairing the damage caused by them —twice as much as the government and over 12 times more than Bangladesh receives in multilateral international climate financing. The average person in Bangladesh produces 24 times less CO2 than the average person in the US.
Oxfam Aotearoa Campaign Lead Alex Johnston said:
“The pandemic has shown that our government can swiftly mobilise billions of dollars to respond to a crisis — it is clearly a question of political will. Let’s be clear, we are in a climate crisis. It is wreaking havoc across the globe and requires the same decisiveness and urgency. Millions of people from Guatemala to Fiji have already lost their homes, livelihoods and loved ones because of turbo-charged storms and chronic droughts, caused by a climate crisis they did little to cause.
“Wealthy nations, including New Zealand, must live up to their promise made twelve years ago and put their money where their mouths are. We need to see real funding increases now, within a rising overseas aid budget. It’s particularly critical that New Zealand steps up in this area ahead of COP26 to show a commitment to increased action given that our Emissions Reduction Plan won’t be ready in time. Developing countries need to see that we have skin in the game, and climate finance, alongside a greatly increased 2030 climate target, is one of the ways we can show that.”
According to the UN Environment Program, annual adaptation costs in developing countries are expected to reach US$140 billion to 300 billion ($199 billion to $211 billion) per year by 2030, and US$280 billion to 500 billion ($398 billion to $710.8 billion) by 2050.
With the COP26 UN climate talks in Glasgow just over a month away, Oxfam is calling on New Zealand and other wealthy countries to urgently increase their pledges of climate finance to deliver on their target. At least 50 percent of climate finance should be spent on adaptation.
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Notes
Oxfam’s methodology and datasheet on the shortfall in climate finance are available on request.
In 2009, developed countries agreed to contribute US$100 billion a year in climate finance to poorer countries by 2020. At the Paris climate summit in 2015 (COP21), this goal was extended to last through to 2025. Under the 2015 Paris Agreement, they agreed to negotiate a yet-higher amount that would kick in from 2025.
Climate Week NYC is taking place 20-26 September. UN Secretary-General António Guterres and UK Prime Minister Boris Johnson will convene a closed-door meeting of world leaders at the UN General Assembly later today (Monday).
A study led by Monash University and published in The Lancet Planetary Health estimates that more than five million extra deaths a year can be attributed to abnormal hot and cold temperatures. The study found deaths related to hot temperatures increased in all regions from 2000 to 2019, indicating that global warming due to climate change will make this mortality figure worse in the future.
The economies of the G7 nations could see an average loss of 8.5 percent annually by 2050 ―equivalent to $4.8 trillion― if leaders do not take more ambitious action to tackle climate change, according to Oxfam’s analysis of research by the Swiss Re Institute.
The IMF’s Fiscal Monitor Database summarizes the key fiscal measures governments have announced or taken in selected economies in response to COVID-19.
Country | Total spending on COVID-19 fiscal measures (US$ billion) | Equivalent to meeting the $100 billion climate finance goal X times |
EU (total) | 5,527.40 | 55 |
EU (national spending) | 4,166.02 | 42 |
EU (central funds) | 1,361.38 | 14 |
Australia | 273.89 | 3 |
Canada | 326.06 | 3 |
Japan | 2,259.90 | 23 |
United Kingdom | 892.95 | 9 |
United States | 5,838.30 | 58 |
EU, UK, US, Canada, Australia & Japan | 15,118.50 | 151 |
The Stockholm International Peace Research Institute (SIPRI) reported that total military expenditure rose to $1,981 billion in 2020 (nearly $2 trillion or $2,000 billion), an increase of 2.6 percent from 2019.
Oxfam’s Climate Finance Shadow Report 2020 estimates that 80 percent ($47 billion) of all reported public climate finance (2017-18) was not provided in the form of grants, but mostly as loans and other non-grant instruments. Around half of this ($24 billion) was non-concessional, offered on ungenerous terms requiring higher repayments from poor countries. Oxfam calculated that the ‘grant equivalent’ ―the true value of the loans once repayments and interest are deducted― was less than half of the amount reported.
According to NASA, 2020 was the hottest year on record, effectively tying 2016, the previous record.
Apart from the COVID-19 pandemic, 2020 was dominated by climate-related disasters. These were largely responsible for the 389 recorded events, which resulted in 15,080 deaths, 98.4 million people affected, and economic losses of at least US$171.3 billion.
A recent report from the Internal Displacement Monitoring Centre highlighted that from 2008 to 2019, Fiji has been devastated with 30 climate induced disaster events that have displaced 153,000 people. Average annual asset loses due to tropical cyclones and floods are estimated at more than FJ$500 million per year which is about five per cent of Fiji GDP. The World Bank has estimated that almost FJ$9.3 billion (almost 100 percent of GDP) in investment is required over the next 10 years to strengthen Fiji’s resilience to climate change and natural hazards for decades to come.
Oxfam estimates New Zealand’s fair share of the collective goal would range between NZ$301.5m and $540m per year. In 2018, New Zealand committed to providing $300 million in climate finance over four years. It has likely exceeded this target, but have not committed to any increase beyond 2022.
The UN Environment Program (UNEP) estimates that annual adaptation costs in developing countries are expected to reach $140-300 billion in 2030 and $280-500 billion in 2050.
