The OECD has said that, based on preliminary but unverified data, it expects the goal will be met in 2022. Recent reporting by MDBs and the European Union show significant increases in their 2022 climate finance, which adds confidence to this projection. But given past failures, the onus remains on all developed countries to report their climate finance data transparently. This applies particularly for the United States, which is behind other developed countries in meeting its climate finance commitments. A State Department official recently indicated that in 2022 its climate finance “was nearly $6 billion, of which $2.25 billion was grant-based.” But until the U.S. and other developed countries release proper reporting, questions about the $100 billion will linger.
Developed countries committed to mobilize $100 billion a year between 2020 and 2025, so even once they meet the $100 billion, they should aim to exceed this in 2023, 2024 and 2025, to make up for the $27 billion shortfall in 2020 and 2021, and ensure their contributions across the period 2020 to 2025 average at least $100 billion a year.
Despite the emphasis developed countries have placed on the private sector to help meet climate investment needs, mobilized private climate finance has remained stagnant for the last five years, even as the amount of public finance has grown. The majority of the mobilized private finance has been going to middle income countries; the private sector is not delivering for the poorest and most vulnerable countries.
One nascent and potentially positive trend is that in 2021, the share of grant finance provided by developed countries increased, while the share of loans decreased. This may be a sign that developed countries are responding to concerns that providing climate finance as loans may exacerbate the sovereign debt crises many developing countries are struggling with.
Doubling adaptation finance. At COP26, developed countries committed to at least double their adaptation finance from 2019 levels by 2025. This would be an increase from $20 billion to $40 billion, based on OECD data. This commitment recognized that adaptation has comprised only around a quarter of developed countries’ climate finance. In 2020, developed countries’ adaptation finance jumped by $8.3 billion to $28.6 billion, 34% of all climate finance that year, raising hopes that the doubling goal might even be met ahead of time. However, two recent reports have tempered this optimism. Adaptation finance fell by $4 billion in 2021 to $24.6 billion, according to the OECD, with 27% of total climate finance from developed countries. Meanwhile, the UN Environment Program updated its estimates of adaptation finance needs to $215-387 billion per year this decade, more than 50% higher than previous estimates.
One way developed countries can help get adaptation funding back on track is to make new pledges to multilateral adaptation-focused funds such as the Adaptation Fund and Least Developed Countries Fund, as well as the Green Climate Fund, which directs half of its funding to adaptation projects. They have proven track records in rapidly delivering grant-based funding to vulnerable countries. Indeed, multilateral climate funds were the only category of institutions to see growth in their adaptation finance.
Replenishing the Green Climate Fund. The Green Climate Fund (GCF) is the world’s largest multilateral fund dedicated to helping developing countries address the climate crisis. The Fund is undergoing its second replenishment this year. So far, 25 countries have pledged a total of $9.3 billion to it, short of the $10 billion committed to prior fundraising rounds in 2014 and 2019. Previous major contributors, including the United States, Sweden, Italy, Switzerland, and Australia, have yet to make pledges, but have stated they intend to. They are expected to announce contributions at COP.
If every developed country that has yet to pledge was to commit at least the same level as their previous contributions, it would bring the replenishment total to $12.5 billion. That’s not enough. Other rich, high-emitting countries, like COP28 hosts the United Arab Emirates, are under pressure to step up and pledge to the GCF. If they step up, they will be joining ten other emerging economies, including South Korea, Mexico, and Colombia, that have already contributed.
Preparing for the post-2025 climate finance goal. During the 2015 summit that led to the Paris Agreement, governments also agreed on the need to set a new collective quantified goal for the post-2025 period. Countries agreed that the new goal will be “from a floor of $100 billion per year, taking into account the needs and priorities of developing countries.” Everything else was left up to negotiation. While a new goal is to be set at COP29 next year, countries are beginning to debate a number of questions, both technical and political. These include: the overall size of the new goal, the scope – what thematic areas and sectors should be covered, who the contributors are, the types of finance covered, how to track and account for progress, and how to ensure countries and communities can access the finance. Perhaps the thorniest question is which countries should contribute to the goal. With a growing number of other countries now having wealth and greenhouse gas emissions higher than many developed countries, a growing body of analytical work suggests that an equitable approach to climate finance goals would entail these additional countries also taking on responsibility to contribute. With only a year to go, COP28 needs to deliver a much clearer decision than COP27 managed, ideally starting to narrow options for what the final goal should look like.
Reforming the International Financial Institutions. Over the last 18 months, there has been renewed focus on how to reform international financial institutions, including the multilateral development banks, as well as the International Monetary Fund, to ensure they have the outlook and resources necessary to help countries tackle the climate crisis. At COP27, the outcome text includes several calls on multilateral development banks and their shareholders to make reforms. COP28 should build on this by setting out further action needed from MDBs and other international financial institutions. Read more about the key reforms to international financial institutions that NRDC and partners are calling for.
Protecting Forests
Two years ago, at COP26, more than 140 countries signed the Glasgow Leaders’ Declaration on Forests and Land Use, committing to halting and reversing worldwide deforestation and forest degradation by 2030. Unfortunately, in the nearly two years since, there have been significant warning signs that the Glasgow Declaration is not positioned to deliver on its promise, either in the tropics or in northern forests. In 2022, the loss of tropical primary forests increased, while degradation in northern forests continued essentially unabated, with devastating consequences for the climate and biodiversity. Longstanding policy inequities have allowed the Global North to call for action from tropical countries while sidestepping accountability for the significant impact of industrial logging in their own forests, which constitutes the single largest driver of tree cover loss in the world. Through carving out protections for their own industries, northern countries have hampered forest protection efforts everywhere. In August, the African Ministerial Conference on the Environment called on world leaders to adopt a Glasgow Declaration Accountability Framework (GDAF) “as a means of driving global progress and promoting greater equity between forest protection standards.” Since then, a growing contingent of policymakers, civil society organizations, and private sector leaders have supported the GDAF, which would drive transparency, facilitate policy and finance commitments, and foster alignment, positioning the international community to deliver transformative change.
Mobilizing action in northern forests. As part of the need to close accountability gaps on forest governance, developed countries need to show leadership on addressing the emissions associated with deforestation and forest degradation on their land, addressing loopholes that obfuscate the climate impact of industrial logging. A recent study estimates that logging, much of which occurs in northern forests, will contribute 3.5 to 4.2 billion metric tons of greenhouse gases to the atmosphere annually over the coming decades, an amount equivalent to approximately 10 percent of recent annual global emissions. In Canada, according to a report from NRDC and Nature Canada, the Government of Canada’s own data shows the country’s logging industry is responsible for more than 10% of Canada’s total annual greenhouse gas emissions. Each year, the logging industry clearcuts more than 550,000 hectares of forests in Canada, equivalent to six NHL hockey rink-sized areas every minute. The pace of these industrial logging operations has led Canada to lose its carbon-rich and biodiverse intact forests at a rate just behind that of Brazil. The integrity of Canada’s climate plan, as well as its commitment under the Glasgow Leaders’ Declaration on Forests and Land Use, depends on a full, accurate, and transparent accounting of all major sectors, including logging, and a strategy to reduce the logging industry’s emissions in alignment with its broader 2030 climate commitments.
Cleaning-up the commodity supply-chain. In addition to addressing their own domestic forest impacts, Global North countries need to develop standards curbing the impacts of their purchasing behavior on driving deforestation and degradation abroad. Countries should commit to eliminate their ‘imported deforestation and degradation’ by securing action from corporate leaders, using trade measures and procurement rules, and using other tools to halt global commodity-driven deforestation, degradation, and conversion while ensuring social and environmental safeguards.
Delivering transformations in cement, steel, and aluminum. To be on a 1.5°C consistent pathway, by 2030 we need to halve the CO2 intensity of steel making and decrease the CO2 intensity of cement making by a third by 2030. The US and EU continue to negotiate on a “Global Arrangement on Sustainable Steel and Aluminum (GASSA)”. At COP28, key companies, investors, and countries should commit to new steps to decarbonize cement, steel, and aluminum.
More Emissions Cutting Action
To deliver on the promise of the Paris Agreement – to pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels” – countries, companies, investors, and decision-makers will need to deliver greater action across all key sectors of the economy.
Delivering on the Promise of Paris by 2030. At COP28, we will need to see a series of new commitments and actions to close the emissions gap by 2030. These commitments will be reflected in the negotiated Global Stocktake response, enhanced political commitments, and new coalitions. The results of various studies are clear: delivering a set of concrete actions right now can put the global of 1.5°C goal within reach.
Setting the Conditions for the 2035 NDCs. The G20 countries signaled their intent to have their 2035 climate targets – their next NDCs – be economy-wide, with all emissions. This commitment was further solidified when the US and China agreed that “both countries’ 2035 NDCs will be economy-wide, include all greenhouse gases, and reflect the reductions aligned with the Paris temperature goal…” and signaled intent to ensure that the COP28 outcome includes this economy-wide target framework for all countries. At COP28, countries should commit to have economy-wide 2035 targets by solidifying that in the Global Stocktake decision.
Climate Ambition and Action: the Clock is Ticking
Everyone meeting at COP28 in Dubai has a responsibility to deliver more ambition, accountability, and equity in the global response to climate change. Leaders can do this by:
- decisively responding to the fact that we are off track
- mobilizing additional actions that they will deliver this decade
- committing to phase-out fossil fuels in a rapid and equitable manner, enabled by a tripling of renewable energy capacity by 2030, a doubling of energy efficiency by 2030, a decline in coal, and a more rapid transition in oil and gas
- delivering stepped up finance for climate mitigation, adaptation, and loss and damage to accelerate the transition and help the poorest cope with the impacts of a crisis which they have contributed little to
- ensuring countries deliver action across the entirety of their economy and all greenhouse gases.
All of us must commit to do big things—right now—while we still can.
