Donors must do more to align development finance with climate goals

climate changes

(Credit: Unsplash)

This article is brought to you in association with OECD.


Donor countries must do more to bring development finance in line with climate goals, raising the share used for climate action and reducing to zero the amount that supports new fossil fuel activities, according to a new OECD report.

Aligning Development Co-operation and Climate Action: The Only Way Forward finds that only 20% of development finance provided each year by members of the OECD Development Assistance Committee (DAC) over 2013-17 included a focus on climate change. For multilateral providers such as U.N. agencies and international development banks, 40% of finance included a climate focus. Overall, while development finance used for renewables and energy efficiency is rising, this continues to be undermined by the financing of new fossil fuel-based energy.

“It is encouraging to see donors moving in the right direction to bring development finance in line with climate goals, but we must not rest until we have zero aid going to fossil fuels and more going to tackle climate change,” said OECD Secretary-General Angel Gurría. “Given the climate emergency we are facing, and the fact developing countries will suffer some of the greatest impacts, there is simply no excuse for using foreign aid to subsidise fossil fuels.”

The report looks at both concessional (grants and loans on generous terms) and non-concessional development finance from DAC-members, non-DAC members and multilateral providers.

It finds that globally, countries have roughly doubled flows of development finance going to support renewable energy since the 2015 Paris Agreement, from an average of USD 5.6 billion per year in 2014-15 to USD 12.2 billion per year in 2016-17.

Yet in 2016 and 2017, an annual average of USD 3.9 billion – 1.4% of total development finance of USD 283 billion – was used for fossil fuel activities. Of that amount, 23% was bilateral aid from DAC members. Almost all of the remaining 77% was development finance from multilateral providers.

Momentum is growing as more bilateral and multilateral providers commit to aligning development flows with the Paris Agreement. A number of multilateral providers are reducing financing for coal-fired power generation and making further commitments to steer more finance away from fossil fuels. For example, the European Investment Bank Group (EIB) recently committed to align all financing activities with Paris Agreement goals by 2020 and stop financing fossil fuel energy projects from the end of 2021. A survey of aid providers carried out for the report found that a third of respondents have exclusion lists for fossil fuel intensive activities.

Yet progress is not happening quickly enough, and many donors still lack mandates, resources, incentives and strategies to ensure they are factoring in climate change. In addition to development flows, export credits are a major public instrument for trade promotion that undermine climate goals. According to an analysis of OECD countries that have reported data, 58% of official export credits that support energy production benefit fossil fuel technologies.

Aid activities that are inconsistent with the Paris Agreement, such as financing infrastructure or economic activities that are high-emitting and not climate resilient, risk locking countries into development pathways that will exacerbate and increase vulnerability to climate change. These risks create stranded assets and debt distress, making it harder to achieve the 2030 Sustainable Development Goals. Low-emissions, climate-resilient pathways are the only sound option for achieving sustainable energy access and poverty reduction goals.

The OECD measures climate-related development finance through its Creditor Reporting System.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Four years on and half a billion dollars later – Tax Inspectors Without Borders

5 lessons for the future success of virtual and augmented reality

EU legislation protecting home buyers approved in Parliament

Could a Digital Silk Road solve the Belt and Road’s sustainability problem?

How to stop data leaks

These countries have the most nuclear reactors

Reparations for sexual violence in conflict – ‘what survivors want most, yet receive least’

EU tourism industry expects a new record year in 2014

COP21 Breaking News_05 December: Carbon Price Needed for Climate Change Success

Afghanistan: top UN official denounces ‘extreme’ suffering of civilians in Ghazni

UN highlights importance of skills development on World Youth Skills Day

The status of the Code of Medical Ethics: loading

Brexit Update: EU endorses unprecedented compromise to help Cameron out of the referendum mess he got himself into

On World Bee day, human activity blamed for falling pollinator numbers

EYE to kick off on Friday: 8000+ young people discussing the future of Europe 1 – 2 June

At global health forum, UN officials call for strong, people-focused health systems

With Gaza violence ‘escalating as we speak,’ UN envoy calls for ‘immediate stop’

2014 budget: The EU may prove unable to agree on own resources

Harnessing the power of nature in the fight against climate change

The Philippines is reopening a ‘cesspool’ island after a six month clean up

Parliaments broadly agree on next steps for economic, monetary union

Brain drain 2017: why do medical students need to emigrate to become doctors in 2017?

Larger species are more at risk of extinction than smaller ones – here’s why

The EU Commission predicts a decimated growth in the next years

Postal workers in France are helping elderly people fight loneliness

Commission issues guidance on the participation of third country bidders in the EU procurement market

Backed by UN agency, countries set to take on deadly livestock-killing disease

These are the 3 key skill sets workers will need to learn by 2030

‘Crimes against humanity,’ ‘war crimes’ and risk of new ethnic violence in DR Congo, warn UN experts

EU and China to do more in common if the global scene gets worse

Making the most of the Sustainable Development Goal 3: its overlooked role in medical education

The future of science could be in your gut. Here’s why

Access to health in the developping world

UN chief ‘deeply alarmed’ over military offensive in south-west Syria

Children are so hungry in one British town they are eating from bins

Citing public anger and youth activism, OECD Secretary-General urges governments to heed calls for climate action

Gynecologic care in the 21st century

“The Arctic climate matters: to what degree?”, a Sting Exclusive co-authored by UN Environment’s Jan Dusik and Slava Fetisov

EU Commission – US hasten talks to avoid NGO reactions on free trade agreement

Portugal: €4.66 million in aid for 1,460 dismissed workers and jobless young

This Chinese tech giant’s latest gadget is… a bus

“No labels for entrepreneurs!”, a young business leader from Italy cries out

FROM THE FIELD: Malawi farmers diversify to fight climate change

“The Sea is vast as it admits all rivers”, Ambassador Yang Yanyi of the Chinese Mission to EU gives her farewell address in Brussels

UN chief hopes for new agreement after Israel concludes international observation mission

Preparing Africa for ravages of climate change ‘cannot be an afterthought’ – COP24

Globalization is changing. Here’s how your business can adapt

Cohesion Policy: EU invests €880 million to improve Poland’s railway system

Security Council beats midnight deadline, renews Syria cross-border aid in contentious vote

Greece: Tsipras’ referendum victory does not solve the financial stalemate of the country and its banks

Election-related violence claims 85 lives in Afghanistan: UN report

Why climate change matters for future health professionals

Wind farms now provide 14% of EU power – these countries are leading the way

Bayer-Monsanto merger: the story of the rise of the “endless company”

“As German Chancellor I want to be able to cope with the merger of the real and digital economy”, Angela Merkel from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

2019 EU Budget: Commission proposes a budget focused on continuity and delivery – for growth, solidarity, security

Climate change as determinant of health: the 21st Century challenge

LETTER FROM AFGHANISTAN: Elections serve up food for thought, for Afghan youth

The creative technology and its advancements

European Semester: The Winter Package explained

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s