UNITEDNATIONSCONFERENCEONTRADEANDDEVELOPMENT

ConsiderationsforaNew

Collective

QuantifiedGoal

Bringingaccountability,

trustanddevelopingcountryneedstoclimatefinance

AdvanceCopy

UNITEDNATIONSCONFERENCEONTRADEANDDEVELOPMENT

Considerations

foraNew

Collective

QuantifiedGoal

Bringingaccountability,

trustanddevelopingcountryneedstoclimatefinance

AdvanceCopy

Geneva,2023

UNCTAD/GDS/2023/7(Advancecopy)

Thefindings,interpretationsandconclusionsexpressedhereinarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheUnitedNationsoritsofficialsorMemberStates.

ACKNOWLEDGEMENTS

ThispublicationwaspreparedbyKatieGallogly-Swan,undertheoverallguidanceofRichardKozul-Wright,DirectoroftheUNCTADDivisiononGlobalizationandDevelopmentStrategies.ThepublicationwassignificantlyenhancedasaresultofreviewbyandfeedbackfromthefollowingUNCTADcolleagues:DianaVivienneBarrowclough,DanielaMagalhaesPratesandIlariaCrotti.

UNCTADgratefullyacknowledgesthecontributions,asexternalreviewers,ofMeenakshiRaman,IskanderErziniVernoitandPrernaBomzan.

Thedocumentbenefitedfromaworkshopheldwithdevelopingcountries’climatenegotiatorson29September2023,inpartnershipwiththeGroupof77andChinaChair,CubaandtheThirdWorldNetwork,onthesidelinesofSeventhTechnicalExpertDialogueundertheadhocworkprogrammeontheNewCollectiveQuantifiedGoalinGeneva,Switzerland.Thereportteamaregratefulfortheinvaluableinputandguidancefromdevelopingcountryrepresentatives.

PreparationofthepublicationbenefitedfrombackgroundresearchundertakenthroughtheUNCTADproject,“G77-UNCTADWorkshop:DevelopmentPrioritiesforaClimate-ResilientFinancialSystematCOP28”,whichreceivedsupportfromtheClimateEmergencyCollaborationGroup,asponsoredprojectofRockefellerPhilanthropyAdvisorsandtheRockefellerBrothersFund.

ThepublicationwasdesignedbyJesúsAlésVillota.

iii

CONSIDERATIONSFORANEWCOLLECTIVEQUANTIFIEDGOAL:BRINGINGACCOUNTABILITY,TRUSTANDDEVELOPINGCOUNTRYNEEDSTOCLIMATEFINANCE

TABLEOFCONTENTS

Acknowledgementsiii

ExecutiveSummaryvii

1.Estimatingclimatefinanceneeds1

NeedsforMitigation,AdaptationandLossandDamage3

QualitativeConsiderations4

2.ChallengeswithexistingflowsofClimateFinance5

3.DesigningtheNCQG9

UNCTADConsiderationsfortheNCQG9

DefiningtheQuantum11

4.TheNCQGinthecontextofdebatesontheglobalfinancialsystem13

Conclusion17

2023CLIMATEANDDEVELOPMENTSERIES

iv

LISTOFFIGURES

Figure1:Climatefinanceflows,estimatedneeds,andproposedNCQGtargets(USDbillions).3

Figure2:Financeflows,needsandproposedNCQGsub-goalsfordifferentthematicpillarsofclimate

finance(USDbillions).4

Figure3:Climatefinancebypublicandprivatesourcesin2011-2022(USDbillions).6

Figure4:Climatefinancebyinstrumentbetween2011-2020(USDbillions).6

Figure5:Datagapsingloballandscapeofclimatefinance.7

Figure6:Potentialrevenuegenerationfromalternativesourcescomparedwithproposedtargets

(USDbillions).12

Figure7:SimplifiedstructureofNCQGandsubgoals.12

Figure8:ElementsofamoreenablingglobaleconomicgovernancefortheNCQG.15

v

EXECUTIVESUMMARY

Article9oftheParisAgreement(PA)providesthatdevelopedcountrypartiestaketheleadinmobilizingclimatefinancebasedondevelopingcountryneedsandpriorities.Thereisawiderangeofestimationsontheneedsandprioritiesofdevelopingcountries,buttheflowoffinancehasfallenfarshortofalloftheseassessments.Thisincludesthe2009politicaltargetof$100billionperyearby2020,subsequentlyextendedto2025,whichhasneverbeenreachedandwasnotbasedonarobustanalysisofneededresource.

Pastcommitmentshavenotbeenenoughtosignificantlyshiftcontributions,anddifferencesindefinitionsandaccountingofclimatefinancehaveledtocriticismswhichfurtherunderminetrust.Delayedactionhasincreasedthetotalresourceneededacrossmitigation,adaptationandlossanddamage.Furthermore,thecompositionofthefinance–theshareofgrant,concessionalanddebtfinance–isevermoreimportantgivencompoundingmacroeconomicandfinancialpressuresfacingdevelopingcountries.

AsperDecision1/CP21Paragraph53,countriesdecidedtodeliberateonanewcollectivequantifiedgoal(NCQG)toraisetheflooronclimatefinanceabovethecurrent$100billionannualtarget,takingintoaccounttheneedsandprioritiesofdevelopingcountries.ThediscussionsontheNCQGwillconcludeatCOP29attheendof2024withPartiesagreeinganewgoal.Thispresentsanopportunitytolearnfromtheshortcomingsofthe$100billiongoal,includingsettingbothqualifiedandquantifiedtargetsinlinewithneeds;agreeingsuitablemodalitiesforfinancingmitigation,adaptationandlossanddamage;andbuildingdeeperlevelsofaccountabilityandtransparencyintothegoal.Itisalsoanopportunitytoinfluenceongoingreformeffortsoftheglobalfinancialarchitecture,transformationofwhichisessentialfortheachievementofeventhebest-designedandwell-supportedclimatefinancinggoals.

Thisreportexploreslessonsfromtheongoingchallengeswithclimatefinanceandmorespecificallythe$100billiongoal,proposingasetofconsiderationsandstructurefortheNCQGtoensureitisanimprovedtarget.Section1comparesdifferentestimationsofdevelopingcountries’financingneeds.Section2outlinesexistingchallengesinensuringclimatefinanceflowsrespondtotheneedsandprioritiesofdevelopingcountries.Section3considersdesignoftheNCQG,outliningnineconsiderationstoguidethinking,asimplestructuretodeliverontheseconsiderations,andquantifiedtargets.Section4buildslinksbetweentheNCQGandongoingdebatesonglobaleconomicgovernancereform,identifyingseventransformativeelementsdevelopingcountriescanpursuetomaximiseoverallfinanceflows.Section5offersconclusionsinmovingforward.

Thereisstronginternationalagreementontheneedtomassivelyscaleupfinancingfordevelopingcountries’climategoals.Butunderstandingsofpreciselyhowthisisachievedarefarfromachievingconsensus,whetherconsideringaquantum,financingmodalities,targetedactivitiesorsourcesoffinance.Thisreportattemptstoclarifysomeofthekeyissuesaroundanewneeds-basedtarget,supportingPartiestodeliveranNCQGconsistentwithPAcommitments,enablingmoreambitiousclimate-resilientdevelopmentpathwaysindevelopingcountries,andrebuildingtrustforall.

vii

1.ESTIMATINGCLIMATEFINANCENEEDS

AtCOP15in2009,developedcountriescommittedtojointlymobilise$100billionperyeartoaddresstheneedsofdevelopingcountriesby2020.1Thedeadlineformeetingthegoalwasextendedto2025atCOP21in2015.Thiscommitmenthasyettobemet.TheOrganisationforEconomicCo-operationandDevelopment(OECD)estimatesthat$83.3billionwasprovidedbydevelopedcountriesin2020,2however,thesenumbershavebeenchallengedbysomedevelopingcountriesmainlyduetoalackofagreementonthedefinitionofclimatefinance.3Themainformwaspublicfinance(82percent),morethanhalfofwhichcamefrommultilateralsources.Thiscontributionremainsafractionofdiverseestimatesofoverallneed.

JustpriortoCOP26in2021,theUnitedNationsFrameworkConventiononClimateChange(UNFCCC)StandingCommitteeonFinance(SCF)publishedthe‘FirstreportonthedeterminationoftheneedsofdevelopingcountryPartiesrelatedtoimplementingtheConventionandtheParisAgreement.’ThereportfoundthatoftheNationallyDeterminedContributions(NDCs)submittedby153partiestothePAasof31May2021,only78includedcostestimatesofactivities,totalling$5.82-5.89trillionofresourcingneedby2030.AreportfromClimaPartnersinassociationwithAvivaInvestors(2022)usedasimilarmethodologyandupdatedNDCsfrom126developingcountriestoprojectaggregatefinancingneedsof$7.8-$13.6trillionuntil2030.4BothreportsacknowledgethatthesearelikelyavastunderestimationconsideringthatnotallNDCsanalysedwerecosted,thatbroadinconsistenciesinhowNDCsarereportedexist,andthattheseplansdonotnecessarilyrepresentthehighestlevelofambitiontoachievecollectiveclimategoals.

AtCOP27,theIndependentHigh-levelExpertGrouponClimateFinance(IHLEG)releasedareportthatestimatedclimate-relatedinvestmentneedsfordevelopingcountries.5Thereportaggregatesestimatesfromdifferentstudiesandcountrylevelassessmentstoarriveatanumberfortotalneeds,buildingontheapproachusedbyBhattacharya(2022).67Needsareconsideredinthreepriorityareas:energytransition;adaptationandresilienceincludinglossanddamage;andtherestorationofnaturalcapitalthroughsustainableagriculture,foodandlandusepractices,andbiodiversity.ThereportestimatesthattheseprioritieswillrequiredevelopingcountriesexcludingChinatocollectivelyspend$1trillionperyearby2025and$2.4trillionby2030.Thereportthuscallsforanincreaseof$1trillioninexternalfinancingby2030.

1.UNFCCC.BackgroundnoteontheUSD100billiongoalinthecontextofUNFCCCprocess,inrelationtoadvancingonSDGindicator13.a.1.Availableat

/sdgs/tierIII-indicators/files/13.a.1

_Background.pdf

2.OECD(2022).ClimateFinanceProvidedandMobilisedbyDevelopedCountriesin2016-2020:InsightsfromDisaggregatedAnalysis,ClimateFinanceandtheUSD100BillionGoal.OECDPublishing,Paris.Availableat

/10.1787/286dae5d-en

.

3.TWN(2021).DevelopedcountriesreportprovisionofUS$45-52billioninclimatefinancein2017-2018.TWNInfoServiceonClimateChange.21October2021.Availableat:

https://www.twn.my/title2/climate/info.service/2021/cc211007.htm

4.ClimaCapitalPartnersLLC(2022).Mindthegap:AnestimateofclimatefinanceneedsbydevelopingcountriestofundtheirNDCcommitments.WashingtonDC.Availableat:

https://static.aviva.io/content/dam/aviva-investors/main/assets/views/aiq-investment

-thinking/2022/08/mind-the-gap-an-estimate-of-climate-finance-needs-by-developing-countries-to-fund-their-ndc-commitments/mind-the-gap-en.pdf

5.SongweVetal.(2022).Financeforclimateaction:Scalingupinvestmentforclimateanddevelopment.London:GranthamResearchInstituteonClimateChangeandtheEnvironment,LondonSchoolofEconomicsandPoliticalScience.London.

6.BhattacharyaAetal.(2022).Financingabiginvestmentpushinemergingmarketsanddevelopingeconomiesforsustainable,resilientandinclusiverecoveryandgrowth.GranthamResearchInstituteonClimateChangeandtheEnvironment,LondonSchoolofEconomicsandPoliticalScience,andWashington,DC:BrookingsInstitution.Availableat

https://www.lse.ac.uk/granthaminstitute/

publication/financing-a-big-investment-push-in-emerging-markets-and-developing-economies/

7.BasedonaggregatesprovidedbydifferentanalysisbyStern(2021)andtheIEAalongwithdisaggregatedcountryanalysistobuildcountrybycountrynumbersfrom2025to2030using2019asthebase.

1

1.ESTiMATiNGCLiMATEfiNANCENEEDS

Figure1:Climatefinanceflows,estimatedneeds,andpotentialNCQGtargets(USDbillions).

2500

2000

1500

1000

500

0

Estimationsofaggregateannualneed

UNCTADproposalsforNCQG

2020annualclimatefinance

flows

OECD

Oxfam

UNFCCCNDRClimaPartners

IHLEG2025

IHLEG2030

WBCCDRs

2025

2030

Source:UNCTADcomparisonbasedonvarioussources.14

NeedsforMitigation,AdaptationandLossandDamage

Aswellastheseaggregateestimatesoffinancingneeds,it’sworthconsideringthedistinctneedsofthethreepillarsofclimatefinance–mitigation,adaptationandlossanddamage–todevelopastructuredneeds-basedanalysis.Unsurprisingly,trackedfinancialflowsfallshortofthelevelsneededforadaptation,lossanddamageandtoachievemitigationgoalsacrossallsectorsandregions.15

TheInternationalEnergyAgency(IEA)estimatesthatbytheendofthe2020s,annualcapitalspendingoncleanenergyindevelopingeconomiesneedstoexpandmorethanseventimes,toabove$1trillion,inordertoexpandenergyaccesswhileputtingtheworldontracktoreachnet-zeroemissionsby2050.16TheUnitedNationsEnvironmentProgramme(UNEP)estimateannualadaptationneedstobe$160-340billionby2030and$315-565billionby2050.17AccordingtoUNEP,thisrequiresa5-10timesincreasefromcurrentadaptationfinanceflows,18howeverOxfamsuggeststhatthegapisfarwiderwhencorrectingforreportingapproachesthatoverstatetheadaptationelementoffinanceflows.19Thisanalysisisinlinewiththefactthatwhileidentifiedmitigationscostswereestimatedtobehigher,developingcountryPartieshavepushedforatleastadoublingoffinanceforadaptationby2025,20indicatingthattheNCQGmayhaveabiggerroleinsupportingthetotalneedsofadaptationcomparedtothetotalneedsofmitigation.

14.SinceboththeUNFCCCNDRandtheClimaPartnersstudyuseaggregatesuntil2030ratherthanannualfinancingtargets,acrudeestimationofannualflowswasassumedtobethetotaldividedbythenumberofyearsuntil2030sincepublication.

15.IPCC(2023).ClimateChange2023:SynthesisReport.Availableathttps://www.ipcc.ch/assessment-report/ar6/

16.IEA(2021).Financingcleanenergytransitionsinemerginganddevelopingeconomies.WorldEnergyInvestment2021SpecialReport.Availableat

/reports/financing-clean-energy-transitions-in-emerging-and-developing-economies/executive-

summary

17.UNEP(2022).AdaptationGapReport2022.Availableat/resources/adaptation-gap-report-2022

18.NaranBetal.(2022).GlobalLandscapeofClimateFinance:ADecadeofData.ClimatePolicy.Availableathttps://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-a-decade-of-data/

19.CartyTandKowalzigJ(2022).ClimateFinanceShort-changed:Therealvalueofthe$100billioncommitmentin2019–2020.BriefingNote.Oxford:Oxfam.Availableat

/resources/climate-finance-short-changed-the-real-value-of-the

-100-billion-commitment-in-2-621426/

20.UNFCCC(2020).FirstreportonthedeterminationoftheneedsofdevelopingcountryPartiesrelatedtoimplementingtheConventionandtheParisAgreement.UNFCCCStandingCommitteeonFinanceTechnicalReport:8(18)

3

CONSIDERATIONSFORANEWCOLLECTIVEQUANTIFIEDGOAL:BRINGINGACCOUNTABILITY,TRUSTANDDEVELOPINGCOUNTRYNEEDSTOCLIMATEFINANCE

Forlossanddamage,thefinalpillarofclimatefinance,theadoptionofoptimalmitigationandadaptationstrategiesinlinewiththelatestIntergovernmentalPanelonClimateChange(IPCC)assessmentsimpliesthatsomelossanddamageisstillavoidable.21Yet,evenifthesestrategiesmaterialize,existingprojectionsanticipatesignificantunavoidablelossanddamagefromthelockedinimpactsfromglobalwarming.Dependingonsuccesswithmitigationandadaptation,lossanddamagecostsareprojectedtobeasmuchas$580billionperyearby2030–afigurethatislikelyanunderestimationconsideringitwascalculatedpre-pandemic.22

Figure2:financeflows,needsandpotentialNCQGsub-goalsfordifferentthematicpillarsofclimatefinance(USDbillions).

1200

1000

500

0

Adaptation

Mitigation

LossandDamage

Currentannualflows(2020)Estimatedannualneedsby2030UNCTADproposedannualthematicsub-goalby2030

Source:UNCTADcomparisonbasedonvarioussources.23,24,25,26

QualitativeConsiderations

AswellasconsideringquantitativeneedsindeterminingtheNCQG,developingcountriesalsohavequalitativeneedsthatshouldbeconsidered.27Therealityisthatdevelopingcountry’sneedsarehighlydynamic:needsandprioritieswillchangedependingonglobalsupportformitigation,adaptationandlossanddamage,andtheadverseeffectsofexogenousshocks.Moreover,domesticpoliticalandeconomicconditionscanshift,rapidlyrenderingneedsassessmentsoutofdate.Anotherchallengeisthatnotallneedsarenecessarilyeasilyquantified,forexampleneedsrelatingtocapacitybuildingandtechnologydevelopmentandtransfer.Finally,asdemonstratedbyneedsassessmentsforexampletheUNFCCC’sNeedsDeterminationReport,self-reported,‘bottom-up’methodsarechallengingtocompareoraggregate,posingmethodologicalandaccountabilityissueswhenafinancialquantumistheonlybasisformeasuringsuccessoftheNCQG.

21.IPCC(2022).ClimateChange2022:Impacts,AdaptationandVulnerability.ContributionofWorkingGroupIItotheSixthAssessmentReportoftheIntergovernmentalPanelonClimateChange.CambridgeUniversityPress,Cambridge,UKandNewYork,NY,USA.

https://www.ipcc.ch/report/ar6/wg2/

22.MarkandyaAandGonzález-EguinoM(2019).IntegratedAssessmentforIdentifyingClimateFinanceNeedsforLossandDamage:ACriticalReview.In:MechlerRetal.,eds.LossandDamagefromClimateChange.SpringerCham.343–362.Availableathttps://link./chapter/10.1007/978-3-319-72026-5_14

23.Estimatedannualneedsforadaptationandlossanddamagetookthemid-pointofprojectionsfromaforementionedstudies.

24.IEA(2021).Financingcleanenergytransitionsinemerginganddevelopingeconomies.WorldEnergyInvestment2021SpecialReport.Availableat

/reports/financing-clean-energy-transitions-in-emerging-and-developing-economies/executive-summary

25.UNEP(2022).AdaptationGapReport2022.Availableat/resources/adaptation-gap-report-2022

26.MarkandyaAandGonzález-EguinoM(2019).IntegratedAssessmentforIdentifyingClimateFinanceNeedsforLossandDamage:ACriticalReview.In:MechlerRetal.,eds.LossandDamagefromClimateChange.SpringerCham.343–362.Availableat

/

chapter/10.1007/978-3-319-72026-5_14

27.WatsonC(2023).OptionsforembeddingdevelopingcountryneedsintheNewCollectiveQuantitativeGoalonclimatefinance.Workingpaper.ODI:London.

2023CLIMATEANDDEVELOPMENTSERIES

4

2.ChALLENGESwiThExiSTiNGfLOwSOfCLiMATEfiNANCE

2.CHALLENGESWITHEXISTINGFLOWS

OFCLIMATEFINANCE

AccordingtoanalysisbyClimatePolicyInitiative,totalglobalclimatefinanceflowsduringthelastdecadealmostdoubledfrom$364billionin2011to$665billionin2020.28Themajorityofthisfinancewasdomestic,withonly$171billionconstitutinginternationalflows.Furthermore,thisfinanceisconcentratedinafewlargeeconomies,withOECDcountriesandtheEastAsiaPacificregionaccountingformorethan80percent.Whilethereisaclearneedtosignificantlyscaleupclimatefinanceinallregions,thisdistributionalimbalancesignalstheparticularshortfallfacingmanydevelopingcountries.

TheanalysisrevealsseveralinterestingdetailsofexistingflowsthatbearrememberingwhenconsideringthedesignoftheNCQG.

Firstly,mitigationcontinuestofaroutstripadaptationfinancingglobally.Indeed,financingdedicatedtoadaptationmadeuponlyabout8percentofthetotalin2019/2020.Whileadaptationfinancinghasbeenincreasinginthepastdecadefrom$14billionin2011to$56billionin2020,thisstillfallsfarshortoftheestimatedneedsoutlinedabove.

Secondly,developingcountriesingeneraldependtoamuchgreaterextentonpublicfinancing.Thereareseveralchallengestomobilisingprivatefinanceindevelopingcountriesincludinghighborrowingcostsandelevatedrisk-perceptionsdueforexampletovulnerabilitytoclimateshocks.29Thelackofappropriatelocalcurrency-basedfinancialinstrumentscoupledwithahigh-debtandinflationaryglobaleconomicenvironmentposesadditionalchallengestoaffordableandsustainablemarketfinancingfordevelopingcountries,whethergreenornot.Thiscanalsogosomewaytoexplaintheunevendistributionofmostclimatefinance:thelargestrecipientofclimatefinancefromdevelopedcountrieswasIndia($4billion),andofthetoptenrecipients,onlyEthiopiaandBangladesharedefinedasLeastDevelopedCountries(LDCs).30

Thirdly,themajorityofclimatefinanceisdeliveredasdebt.Indeed,nearly94percentofexistingclimatefinanceisreturn-seeking:aninvestmentthrougheitherdebtorequitywherethefunderisexpectingsomefinancialreturn.Thesefundersincludecommercialbanksandinvestors,governments,andmultilateralandnationalfinanceinstitutions;albeitwithimportantdifferencesbetweenprivateandpublicinstitutionsintermsofthematurityandconcessionalityoftheirlending.Debtfinancingmayaddtoexistingpressuresintermsofdebtsustainability:29ofthe69countrieseligibleforconcessionalfinancefromtheInternationalMonetaryFund’s(IMF)PovertyReductionandGrowthTrustareconsideredhighlyvulnerabletobothdebtandclimatedistress.31Consideringthesignificantsovereigndebtchallengescurrentlyfacingmanydevelopingcountries,thedominanceofdebtfurtherrestrictsthefiscalspaceneededtoinvestinambitiousNDCs.

28.NaranBetal.(2022).GlobalLandscapeofClimateFinance:ADecadeofData.ClimatePolicy.Availableathttps://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-a-decade-of-data/

29.BuhrBetal(2018)ClimateChangeandtheCostofCapitalinDevelopingCountries.LondonandGeneva:ImperialCollegeLondon;SOASUniversityofLondon;UNEnvironment.Availableat

https://eprints.soas.ac.uk/26038/

30.GabbatissJ(2021).Analysis:Whyclimate-finance‘flows’arefallingshortof$100bnpledge.CarbonBrief.Availableathttps://www./analysis-why-climate-finance-flows-are-falling-short-of-100bn-pledge/

31.UNCTAD(2023).Globaldebtandclimatecrisesareintertwined:Here’showtotackleboth.Availableat

/news/global

-debt-and-climate-crises-are-intertwined-heres-how-tackle-both

5

CAGR7%

332

337

339

259

234

235

145

168

170

190

333

303

280

266

237

219

219

201

191

172

61%

34%

16%

Figure3:Climatefinancebypublicandprivatesourcesin2011-2022(USDbillions).

700

600

300

400

200

200

100

0

2011201220132014201520162017201820192020

PrivatePublic

Source:GlobalLandscapeofClimateFinance:ADecadeofData,2022

Figure4:Climatefinancebyinstrumentbetween2011-2020(USDbillions).

5%

84%

Source:GlobalLandscapeofClimateFinance:ADecadeofData,2022

Debt

Equity

Grants

<1%Other/Unknown

Concessional

MarketRate

Lastly,thereistheissueoftransparencyandtrackingofexistingflows,whichtranslateintoongoingtensionsaroundtheveracityofclimatefinancefigures.Thefigurebelowsuggeststhatflowsfromdevelopedtodevelopingcountriesaretheonlyofficiallytrackedresources,howevereventhisdatacomesintoquestion.

Figure5:Datagapsingloballandscapeofclimatefinance.

Datagaps

Private

Global

North-South

Public

domestic

Global

South-South

Transport

EnergySystems

Building&

Infrastructure

Industry

LandUse

Adaptation

Other

Legends

Tracked

Some

tracking

Limited

tracking

No

tracking

Source:GlobalLandscapeofClimateFinance:ADecadeofData,2022

Withnocommonlyagreedmethodologyforcountingfinancecontributingtothe$100billion,therearepersistentoverestimationsintheaccountingpracticesthatdevelopedcountries,multilateraldevelopmentbanks(MDBs),multilateralclimatefundsandotherclimatefinancecontributorsusewhenreportingclimatefinance.Oxfam,forexample,estimatesthattherealvalueofbilateralflowsisonly$21–24.5billionin2020.32

ThwaitesandBos(2021)33provideadatabasebycompilinginformationfromvariousreportingsourcestoevaluatethecompositionofbilateralpublicflowsatthecountrylevelinanattempttoimprovetransparencyandaccountability.However,indoingso,theauthorshighlightthesignificantmethodologicalchallengesandthesubsequentlatitudeneededwheninterpretingthedata.Thisincludesissuesofdoublecounting,forexamplewherebothcommitmentsanddisbursementsarereportedacrossdifferentyears,orinrepeatcountingofbilateralandmultilateralcontributions,whileotherdevelopedcountriesdidnotcompletetheirreportingatall.Doublecountingisalsoanissuewhenitcomestoquestionsofadditionality,sinceanincreasingproportionofOfficialDevelopmentAssistance(ODA)isnowalsocountedasclimatefinanceandmanyprojectswithnegligibleclimaterelevanceareincluded.3435Comparabilityoffiguresacrossinstrumentsisanotherchallenge,sincedevelopedcountriescountnon-grantinstrumentsinthesamewayasgrantsratherthanusinggrant-equivalentreporting,asisnowstandardinODAtracking.Also,somecountriescountcoalfinancingandotherfossilfuelsectorfinancingintheirfigures,whichhasraisedquestionsonhowtoadequatelyensureclimatefinanceisalignedwith