To understand climate financing, look at climate politics

CANBERRA — The latest climate finance data from the Organisation for Economic Co-operation and Development — supporting insights on climate financing from bilateral donors using official development assistance, or ODA — ends with the 2018 calendar year. Collating, cleaning, and confirming the data creates a lag in the results and a challenge in understanding whether donors are doing their part in responding to climate change. Financially, Japan leads the way in climate funding, contributing $9.6 billion — and 53% of its bilateral development assistance — to programs targeting climate adaptation and mitigation in 2018. However, 94% of this funding was directed at programs where climate was a significant goal of the program and not a “principal” goal. This means the programs could have gone ahead even without a climate objective. But the OECD data is just part of the story. While developing country profiles on climate funding for the Donor Tracker website, Raimund Zühr from SEEK Development told Devex that politics plays an important role. “To understand climate financing, we need to understand the climate politics,” he said. “OECD data is slow to be updated. But by combining the policies being introduced, we can better predict the directions donors are moving with their funding.” Japan may be the headline country based on the value of its contribution, but the Donor Tracker profile for Japan shows that there may be other political motives behind its spending. The country’s investment in climate programming is predominantly targeting large infrastructure programs, funded using debt instruments. This focus is due to a policy of better utilizing Japan’s technological capacity in foreign aid programs. Donor Tracker focused on twelve leading donors for its climate profiles: Australia, Canada, the European Union, France, Germany, Italy, the Netherlands, Spain, Sweden, the U.K., and the U.S., along with Japan. While the values of climate contributions from European countries differ, the priorities are similar, with agriculture a leading sector in climate programming. For countries that have seen major shifts in aid programming or national leadership, the profiles paint a picture of development assistance heading down widely differing paths. Profiling political shifts: Canada, France, and the US Changing national leadership and political objectives have led to new approaches to aid programs and the targeting of climate within them. The announcement of a feminist focus for Canada’s international assistance program in 2017 has led the country on an upward trajectory in bilateral climate focus. This new policy included environment and climate as key areas of action due to their perceived impact on women and girls. “Women and girls are often the primary producers of food and providers of water, heating and cooking fuel for their households,” the policy reads. “When these resources become more unpredictable and scarce due to, for example, extreme weather, women and girls have to spend more time and effort attending to basic needs, such as growing food and collecting water and fuel.” After the 2017 OECD data showed Canada’s contribution to climate adaptation and mitigation programs dropped 42% from the $670 million contribution in 2016, 2018 has seen the numbers increase again to $631 million — still below the 2016 level. What have changed substantially are the climate goals of programs. Of the programs supporting climate adaptation and mitigation in 2018, 73% had these as their principal goal, compared with just 29% in 2016. And almost a quarter of bilateral aid spending targeted climate in 2018, compared with 19% in 2016. With Canada’s feminist aid approach, the 2018 OECD data shows that direct targeting of climate change has become a greater focus, and this is further reflected in energy and agriculture being the leading sectoral focus of the country’s climate programming. In France, the leadership of President Emmanuel Macron has resulted in a declining contribution from its bilateral aid spending to support climate programs, according to the OECD data listed in its Donor Tracker profile — despite policies supporting increased climate action. “French President Emmanuel Macron has bolstered the country’s commitment to tackling climate change by making it a flagship issue of his presidency,” the Donor Tracker report for France reads. The Agence Française de Développement has committed to disburse 50% of its financing to climate-related programming. Nationally, climate-friendly policies include a commitment announced in June for a €15 billion ($17.6 billion) investment in a range of measures to combat the climate crisis, such as for transport, housing, work and production, food, and consumption of natural resources. The 2018 OECD data shows disappointing results in the bilateral contribution of France to climate action. While 2018 saw $1.2 billion directed at climate mitigation and adaptation activities, this was 18% of its bilateral aid spending, down from 52% in 2017. Programs with climate as a significant goal in their objective made up 98% of this $1.2 billion — an inverted figure from the previous year, when 98% of programs had climate as a principal goal. National policies on climate change may not be responsible for this shift, but looking elsewhere at changes under Macron can reveal the reasons behind it. The 2018-2022 strategic plan for AFD, introduced under Macron, included a quadrupling of grant assistance to support priority countries in Africa. This meant that large-scale infrastructure using debt instruments, which contributed to the bulk of climate-related programs in 2016 and 2017, dropped substantially in 2018 as the French aid programs transitioned to this new approach. How this changes in 2019 will show whether the climate targets are a priority within bilateral aid spending. Since the beginning of the President Donald Trump administration in the U.S., there has been a downward trend in bilateral aid supporting this space, according to Donor Tracker. In June 2017, Trump announced a withdrawal of the U.S. from the Paris Agreement, which led to a further decline in climate-related action at the federal level. Within the OECD data, these changing politics have resulted in an aid program with a progressively smaller climate focus; in 2018, just 3.5% of the U.S. ODA was directed at climate programming, down from 5.1% in 2016. Climate as a significant goal now accounts for almost one-third of climate spending, compared with 6.5% in 2016, and principal climate programming has decreased. The challenges of delayed data While the combination of national policies and OECD data provides a more insightful profile of how donors are targeting climate, the delay in the publication of data still creates a challenge. The United Kingdom’s Donor Tracker profile shows bilateral assistance for climate change on the rise. In 2018, the U.K. directed $2 billion to climate programming. This was 29% of ODA, with 77% targeting climate adaptation and mitigation as a principal goal of programs. In June 2019, the U.K. government pledged to align all of its ODA spending with the Paris Agreement. But since then, leadership has changed — and the aid program along with it. Prime Minister Boris Johnson’s approach to climate change is seen as confused by many observers, creating questions around what direction his leadership will take. But regardless of Johnson’s personal views, the merger of the Department for International Development with the Foreign & Commonwealth Office, announced in June, and aid budget cuts will create a big shift in U.K. development finance — and in climate financing along with it. These changes will take years to be reflected in the data.