Climate mitigation and adaptation: How do bilateral donors fare?

Last week, world leaders, development officials, and civil society and private sector representatives gathered in New York for the U.N. Climate Summit. The meeting lies outside U.N. Framework Convention on Climate Change negotiations, and its goal was to spur support for a global climate agreement in Paris next year. Climate finance nonetheless made its way into the agenda, as France and a number of donors pledged $1.3 billion to the Green Climate Fund. How would GCF spend this money? A multilateral mechanism that has yet to gain momentum, GCF only recently decided its disbursement priorities. At its board meeting in Bali, Indonesia, earlier this year, GCF agreed to split its allocation: spend equally between mitigation and adaptation activities. Two years ago, the end of the fast-start finance period — a collective $30 billion commitment that developed countries, according to their own reporting, exceeded by at least $3 billion — sparked some interest in striking a balance between these two activities. Meant to provide a balanced allocation between mitigation and adaptation, FSF galvanized significant support for the latter, which some say is a neglected component of the climate change discussion. But despite the funding increase for adaptation during the FSF period, much of the contributions were still earmarked for mitigation activities: adaptation finance accounted for just 12 percent of top contributors’ FSF, according to the World Resources Institute. Mitigation involves cutting greenhouse gas emissions, while adaptation entails reducing vulnerabilities to the risks and effects of climate change. Because the goals are very similar, some critics argue distinguishing between the two creates a false choice for climate change supporters. Indeed, Devex analysis shows these two objectives can overlap. Using mitigation and adaptation markers from Organization for Economic Cooperation and Development data on external development finance targeting environmental objectives, we analyzed bilateral donor spending on climate activities. We dug deeper into the activity-level data to determine how these donors distributed their aid for mitigation and adaptation activities — and found that in 2012, the latest year for which climate aid figures are available, activities often addressed both mitigation and adaptation objectives. By excluding activities that have other primary objectives, our analysis also revealed that climate spending of major bilateral donors still leans toward mitigation. In 2012, Japan, France, Germany, Norway and the United Kingdom devoted the bulk of their bilateral climate-related aid to mitigation efforts. Australia, Sweden, Canada and the Netherlands gave a larger proportion of their climate assistance to adaptation activities. Among donors that spent more on adaptation, however, at least two — Australia and Canada — are expected to be more lukewarm about their support for climate change efforts. EU funding for mitigation and adaptation activities, meanwhile, is more evenly distributed. Japan Consistently the largest bilateral donor to climate aid, Japan is a crucial contributor to the fight against climate change. Japan International Cooperation Agency’s climate mitigation efforts have focused on developing low-carbon technologies and promoting the efficient use of resources, while its climate adaptation initiatives have been targeted toward assessing vulnerability, bolstering adaptive capacity and building resilient infrastructure. JICA is currently accepting bids for an earthquake and tsunami observation capability survey in the Americas. Last year, Japan pledged $16 billion from both its public and private sectors to help developing countries become less vulnerable to climate change. More recently, at the U.N. Climate Summit, Prime Minister Shinzo Abe signaled more climate aid would come from the country, although he was mum about the exact amount of this assistance. France In 2012, energy financing was the primary focus of the French Development Agency’s mitigation efforts, while sanitation and preservation of water resources were the key areas for its adaptation projects. The Mediterranean was the center of AFD’s mitigation activities, while sub-Saharan Africa, which has limited institutional and financial capacity to handle future climate shocks, had the largest share of AFD adaptation projects. There was also a shift toward more rural development projects and natural resource protection activities in 2012, but energy remains a major part of AFD’s climate-related activities. Last month, AFD launched a call for renewable energy and energy efficiency projects. Selected projects will be granted seed capital through a partnership agreement with the agency. Germany As much as 85 percent of Germany’s climate finance has been channeled bilaterally and has been delivered through funding, expertise and assistance. To help developing countries increase their capacity for climate mitigation, Germany gives preferential loans, advice on creating national climate strategies, assistance with incentive schemes and training for local experts. Its adaptation efforts, meanwhile, focus on increasing food security and improving these countries’ negotiating competencies in climate talks. KfW Entwicklungsbank, Germany’s leading development bank, recently issued a tender for an environmental improvement project in Pu’er, a city in China’s southern Yunnan province. European Union By providing 7.34 billion euros ($9.3 billion) for FSF, the EU exceeded the 7.2 billion euros it committed from 2010 to 2012. EU climate finance is largely channeled through bilateral programs with partner countries and regional organizations. Last year, the European Commission adopted an adaptation strategy that will, among other goals, increase insurance against natural and man-made disasters. Recently, EuropeAid, the EU body in charge of crafting development policies and delivering aid, issued a tender for technical assistance for an REDD capacity-building project in Sierra Leone. Norway Climate change and the environment are key priorities of Norway’s development policy. In 2012, aid for environment and energy made up 17 percent of its total assistance. Norway’s mitigation efforts have been focused on REDD and promoting renewable energy, while its adaptation activities have mostly been about reducing disaster risk and promoting food security. Earlier this year, the Norwegian Agency for Development Cooperation posted a tender for a baseline study of Norwegian development cooperation within natural resource management in Myanmar. At the U.N. Climate Summit, Norway announced an additional bilateral commitment to Peru with $300 million worth of assistance for REDD. Australia Even before it officially set the Asia-Pacific as the geographical focus of its aid, Australia has been providing substantial funding for mitigation and adaptation activities in the disaster-prone region. Through the International Forest Carbon Initiative, for instance, it helped Indonesia set up a forest fire monitoring system. Meanwhile, under the International Climate Change Adaptation Initiative, it established a science program that educated those from Pacific island countries on how climate change would affect them. But some members of the development community are worried that aid cuts to the Australian foreign aid budget — a move that Tanya Plibersek, shadow minister for foreign affairs and international development, decried as “shameful” — will reverse the progress Australia has made in moderating the effects of climate change in the region. The biggest cuts, after all, are to cross-regional climate change and environment programs: From 17 million Australian dollars ($14.9 million) in 2012-2013, funding for these activities was reduced to a mere AU$500,000 in 2013-2014. Australia’s contribution to global environment programs — AU$74 million in 2012-13 — has also been completely slashed for 2013-14. United Kingdom Through the International Climate Fund, which the U.K. set up to assist developing countries pursue low-carbon growth and adapt to climate change, the country achieved its FSF commitment by 2012. The quality of its climate-related aid has also been a source of good news: Its climate change program in Bangladesh, for instance, garnered a favorable review from the Independent Commission for Aid Impact in 2011. The U.K. will likely continue to be a strong supporter of climate finance. In a speech made at the U.N. General Assembly last week, Justine Greening, U.K. secretary of state for international development, reaffirmed U.K.’s commitment to lower carbon emissions, reduce the impact of climate change and deal with deforestation. Last month, the Department for International Development also announced a tender for an evaluation of African Risk Capacity, the African Union’s climate risk insurance pool that will enable African governments to better respond to extreme weather events. Sweden With climate and environment among its priorities, Swedish development policy is founded on the principle that developing countries can work toward economic development that reduces both poverty and their carbon footprint. Through the Swedish International Development Agency, Sweden strengthens developing countries’ capacity to deal with environmental and climate issues and supports institutions in these countries to foster ownership at local and national levels. Its adaptation efforts are focused on agriculture, energy, fishery, forestry, infrastructure and water supply. In August, the European Bank for Reconstruction and Development announced a tender for a market assessment of the waste minimization potential in Moldova, a project that will be jointly financed by the bank and Sida’s energy efficiency technical cooperation funds. Canada Canada’s FSF contribution of 1.2 billion Canadian dollars ($899.9 million) was spent in Africa, Asia, and Latin America and the Caribbean. The Canadian Coalition for Climate Change and Development’s assessment of Canada’s FSF shows that while virtually all of these funds were new resources, it is likely that Canada will not build on this initial FSF experience and that there will be “no long-term financing commitments from Canada in the near future.” The amalgamation of the Canadian International Development Agency and Canada’s Department of Foreign Affairs and International Trade into the Department of Foreign Affairs, Trade and Development has also stirred anxieties about the future of Canadian aid — including climate assistance. Netherlands In its development cooperation policy, the Netherlands considers climate an international public good. According to its own estimates, Dutch contribution to climate finance could increase to as much as 1.2 billion euros in 2020. The Netherlands’ climate policy leans toward adaptation, but also supports mitigation by helping developing countries access sustainable energy and prevent deforestation. Recognizing that several natural disasters are linked to climate change, the Netherlands plans to include disaster risk reduction in this policy. United States The United States’ 2012 climate mitigation and adaptation activities are not screened on the OECD database because, according to the Overseas Development Institute’s review of the U.S. FSF contribution, U.S. climate activities typically do not provide enough detail to allow the OECD to mark them as adaptation or mitigation. ODI’s review attempted to classify approximately 80 percent of the U.S. FSF portfolio. About 34 percent of activities that could be classified as adaptation projects were marked as “ambiguous,” or found to mention no link to vulnerability or climate concerns. Meanwhile, renewable energy projects by the Export-Import Bank and the Overseas Private Investment Corp. — or 52 percent of projects that could be considered mitigation efforts by ODI — were labeled “at least significant” because “it was clear that they contributed to greenhouse gas mitigation but unclear whether they would have gone forward absent that consideration.” The United States’ past climate aid spending under its Global Climate Change Initiative and President Barack Obama’s 2014 budget request for GCCI show a tilt toward mitigation. For instance, in 2012, adaptation efforts made up just 24 percent, or $203.2 million, of the $858 million spent on climate-related projects. For this year, adaptation activities received a $220 million request, while clean energy and sustainable landscapes programs — two programs that reduce greenhouse gas emissions from energy emission and deforestation, respectively, and could thus be considered mitigation efforts — have a combined request of $616.7 million. Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to Money Matters to receive the latest contract award and shortlist announcements, and procurement and fundraising news.