How is ODA to climate projects evolving?

Bilateral allocable ODA for climate adaptation and mitigation surged from US$38.9 billion in 2021 to a peak of US$58.6 billion in 2022, representing a 51% increase, before declining to US$47.6 billion in 2024. ODA with climate change as a principal objective rose sharply from US$14.6 billion in 2021 to US$31.6 billion in 2023, then fell to US$18.3 billion in 2024. Climate funding's share of total bilateral allocable ODA peaked at 36% in 2023 and remained elevated at 32% in 2024, up from 26% in 2021.

Who are the top donors to climate issues?

The US dominated climate ODA in absolute terms, contributing US$46.2 billion, followed by Germany at US$17.7 billion and Japan at US$14.3 billion. Korea and France demonstrated the strongest prioritization of climate action, each allocating 61% of their total bilateral allocable ODA to climate adaptation and mitigation, followed by Japan at 48% and New Zealand at 47%. Among other major donors, Germany and the UK allocated 41% of their bilateral allocable ODA to climate.

What are the key debates and topics surrounding climate finance?

Reform of the international financial architecture, including fulfilling past financial commitments, optimizing existing financing mechanisms, and mobilizing new sources of innovative financing, is seen by many low- and middle-income countries as going hand-in-hand with better climate action and more climate financing.

Increased engagement of the private sector in climate finance presents a unique opportunity to drive investment, foster innovation, and build thriving markets in clean energy, sustainable transport, green infrastructure, and climate-resilient agriculture. However, private climate finance investments have been slow to materialize. Climate advocates have called for the implementation of policies making climate investments more attractive, and for public institutions, development banks, and climate funds to de-risk private investments by taking on early-stage risks, funding infrastructure, and supporting climate projects.

In 2024, climate finance took center stage at COP29 with parties adopting the NCQG, agreeing to provide US$300 billion annually to 'developing countries' to support their obligations under the Paris Agreement and respond to their needs in the face of rising temperatures. The NCQG replaces the US$100 billion goal, dating back to COP15 in 2009, when developed countries agreed to provide this amount annually to developing countries by 2020. The Paris Agreement reiterated the goal and paved the way for a new goal to be established before 2025, resulting in the NCQG.

While the NCQG marks a key step in global climate ambition, it fell far short of the US$1.3 trillion annual figure sought by many emerging economies. The final negotiations were marred by the uncertainty posed by the re-election of Donald Trump, and the potential consequences of the US exiting the Paris Agreement, casting doubts on overall flows of climate finance.