100 Billion Paris Agreement

The value of grants remained stable from 2016 to 2018 (about $12 billion to $13 billion per year), reaching $16.7 billion in 2019. This represented about 27% of public finances. The solution, proposed more than a decade ago at a United Nations meeting in Copenhagen and reaffirmed in the 2016 Paris Agreement, has been dubbed the „big market”: all countries – from the largest economic giant to the smallest island nation – would strive to reduce their greenhouse gas emissions. But rich countries would also channel hundreds of billions of dollars a year in grants, loans and other forms of climate finance to poorer countries to help them switch to clean energy and adapt to the worst monsoons, heat waves and droughts caused by climate change. Most of the climate finance has been spent on projects to reduce greenhouse gas emissions. The Paris Agreement aimed to strike a balance between these „mitigation projects” and those that help people adapt to the effects of climate change. But only $20 billion was spent on adaptation projects in 2019, less than half of the financing for mitigation projects, the OECD2 noted (see „Adjustment backlog”). The United Nations 6 estimates that developing countries already need $70 billion a year to cover adaptation costs and that they will need $140 to $300 billion in 2030. The OECD`s latest assessment of progress, published in September, showed that climate finance provided and mobilised by developed countries amounted to $79.6 billion in 2019, up just 2% from 2018. It is unlikely that the $100 billion mark will have been reached in 2020, although the verified data needed for the official conclusion of this provision will not be available until 2022.

However, the Climate Policy Initiative (CPI), a nonprofit research group based in San Francisco, California7, estimates that climate-related financial flows within and between countries amounted to $632 billion annually, or about 0.7% of global GDP, in 2019-2020. About half of this amount was private financing, much of it for renewable energy production (see „The Climate Finance Universe”). Accounting for the $100 billion depends on multiple reporting systems. In addition, countries and institutions have different views in their reports on what constitutes climate finance. For example, Japan counts the financing of „more efficient” coal-fired power plants, unlike other countries. New WRI research shows that most developed countries are not contributing equitably to the $100 billion target. Three major economies – the United States, Australia and Canada – provided less than half of their share of the financial effort in 2018, based on objective indicators such as the size of their economies and their greenhouse gas emissions. The other countries that provided less than half of their fair share were Greece, Iceland, New Zealand and Portugal. In total, more than a dozen industrialized countries have failed to live up to their responsibilities. And there are other problems with the money that has already been promised. The $100 billion target was deliberately vague: it includes both public spending and private funds „mobilized” through public spending. If, for example, a public loan for a solar farm motivates private investors to get involved, then that private money can be counted towards the overall goal.

But experts disagree on how to count private funds, and some private investments may have taken place anyway, even without the injection of public funds. This has led some organisations – such as the British non-profit group Oxfam – to question whether countries are even close to the $100 billion mark. „It is crucial that we reach the goal of $100 billion in climate finance provided and mobilized by developed countries for developed countries as soon as possible. Based on the information we have received, our analysis shows that developed countries intend to significantly increase the climate finance provided and mobilized in the coming years, which is of course to be welcomed. Our OECD analysis of donor information shows that 2023 is the year in which the target is likely to be achieved. This level of funding must then be maintained throughout 2024 and 2025. OECD Secretary-General Mathias Cormann said. He added: „While a number of factors, such as the ability to launch relevant projects on time, will influence exactly when the $100 billion target is reached, it is crucial that developing countries have a good understanding of developed countries` intentions in the run-up to COP26 in Glasgow, which starts next week. The $100 billion commitment has long been considered a minimum to increase over time.

But some recipient countries have said they are willing to accept a static target for the time being if rich countries clearly indicate how it is to be achieved. Today, a week before the start of international climate talks in Glasgow, diplomats from Canada and Germany said in a joint statement on Monday that they expected „significant progress towards the US$100 billion target in 2022 and were confident it would be achieved in 2023.” The annual target for developed countries to provide and mobilize $100 billion in climate finance per year for climate action in developing countries is expected to be met in 2020 and maintained until 2025. In the run-up to COP26, developed countries have prepared an implementation plan to reach the $100 billion target. In this context, they asked the OECD to help them analyse the future level of climate finance by different countries and MDBs. For example, according to an official report by the Organisation for Economic Co-operation and Development, countries and private companies mobilized only about $80 billion in 2018, which is still far from the 2020 target. And while it takes several years to count the numbers, early estimates suggest that, unsurprisingly, 2020 hasn`t been a record year. The OECD recently estimated that developed countries mobilized $79.6 billion in climate finance in 2019. It is likely that these countries have not collectively reached the $100 billion target in 2020 (although actual coverage for this year is not yet available). The $100 billion is a collective commitment. Just as the Paris Agreement`s collective mitigation goal – keeping global temperature rise to 1.5°C (2.7°F) – depends on individual countries` actions that add up, the goal of crowdfunding requires individual countries to make a sufficient contribution to offset the total. Now, however, this adhesive could come off.

In 2009, negotiators at that UN meeting in Copenhagen promised to raise $100 billion a year for developing countries by the end of 2020 – later agreeing to raise $100 billion each year thereafter. But after major countries and economies have been plunged into turmoil by COVID-19, even the most fundamental first goal of climate finance seems out of reach. .