2020 Projections of Climate Finance Towards the USD 100 Billion Goal, OECD, October 2016

2020 Projections of Climate Finance Towards the USD 100 Billion Goal, OECD, October 2016

CICA Summary

Developed countries committed to mobilize jointly USD 100 billion a year in climate finance by 2020. Public and private finance mobilized by developed countries for climate action in developing countries reached USD 62 billion in 2014 compared to USD 52 billion in 2013. Achieving the USD 100 billion a year commitment depends on three factors:

  • the level of public finance in 2020
  • the way in which it is allocated between projects aimed at mobilizing private climate finance and those which do not
  • the private-public ratio with which public finance is able to mobilize private climate finance.

The projection takes into account the different channels through which climate finance can flow to developing countries. Public finance in OECD was divided between: bilateral flows, outflows MDBs and climate funds attributable to developed countries; and contributions from countries to specialized United Nations Bodies.

Future bilateral inflows to those multilateral institutions whose future outflows are counted need to be subtracted from the country pledges. It is not yet possible to make reliable assumptions about future levels of GCF outflows. Total outflows in 2020 are assumed to be equal to the outflows on average in 2013-14.

There is currently limited tangible and quantified information available to inform a comprehensive projection of the thematic allocation of bilateral and multilateral public finance in 2020. The GCF aims for a 50:50 balance between mitigation and adaptation investment on a grant-equivalent basis over-time. The remaining share of the 2020 projected volume if public finance for each country is then allocated between mitigation and adaptation, taking into account the thematic specification contained in each country’s pledge.

Export credits are separate category form public climate finance because they do not qualify as official development finance. Nonetheless, they can represent an important source of finance for large projects in developing countries. There are specific initiatives to pave the way for an increasing use of export credits to reduce the risk associated with climate projects in developing countries.

Public interventions might mobilize private finance directly or have a lire catalytic effort over time. It is not yet possible to reliably quantify the “indirect” catalytic effects on private investment. Many developed countries and institutions have expressed a determination to increase the ratio with which their public finance mobilizes private climate finance.

Future levels of private finance would require the use of advanced modelling techniques without necessarily yielding reliable projections.

The projection of overall climate finance takes into account the following three determinants: the overall level of public finance provided; the share of projects with a direct finance mobilization potential in the portfolios of bilateral and multilateral actors; and the ratio between private finance mobilized and public finance provided in such projects. All three determinants will be influenced by a number of contributing factors. It would be premature on a purely technical and analytical basis to draw conclusions from this projection about whether or not the USD 100 billion commitment will be met by 2020.

Net flows of overall ODA had declined, though 2015 market a slight rebound as bilateral ODA to LDSs and LICs increased by 4%.

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