Climate Change

There has been a decline in climate finance during COVID-19: WRI report

Countries have been forced to cut funding for many climate-related sectors to free up money for addressing pandemic-related expenditures and revenue losses

By Kiran Pandey, Madhumita Paul
Published: Friday 05 November 2021

Climate finance being allotted by various developing countries for action on climate change has shown a decrease before and during the novel coronavirus disease (COVID-19), a recent study done by global research non-profit organisation World Resources Institute (WRI) has shown.

WRI’s study analysed 17 developing countries on the basis of data regarding their climate finance needs, expenditures and / or allocations between 2018 and 2020-21.

The study found that countries were forced to cut funding for many climate-related sectors to free up money for addressing pandemic-related expenditures and revenue losses.

Ministries that often provide funding for climate change mitigation, such as transportation and energy ministries and adaptation, including ministries of the environment, often faced cuts on their recurrent yearly budget items.

In Africa, South Africa was the most-affected by the pandemic in this regard. It reduced its budget for the Department of Environment, Forestry and Fisheries, according to the WRI report.

The recurring budget for the department was reduced by nine per cent in 2020. Of this, the budget for climate programmes under the department was reduced by 33 per cent. The allocations for climate change mitigation were 44 per cent less.

The budget for air quality and sustainable management was slashed by 51 per cent, compared to the original plan.

Similarly, the budget for Kenya’s Ministry of Energy was reduced by 23 per cent, one of the largest budget cuts in the 2020–21 budget. Investments under the Alternative Energy Technologies programme were set to decrease by 60 per cent, according to the report.

Alternatively, the power generation programme, focused on coal, is set to grow by 174 per cent over the same period.

Countries like Indonesia, Peru and Honduras also saw a budget decrease in almost all sectors.

The study found that in several countries, budget cuts have targeted climate mitigation, rather than adaptation actions, while fossil fuel spending has increased.

Between 2019 and 2020, the official development assistance (ODA) for projects with climate as a principal objective or a significant focus decreased by 4 percentage and 8 percentage points respectively.

The proportion of ODA for projects with climate as a principal objective fell to 14 per cent from 18 per cent. For projects where ‘climate’ was the significant focal point, ODA declined to 17 per cent from 25 per cent, the study reported.

Climate finance is money paid by wealthy countries (which are responsible for most of the historic emissions) to developing countries to help them pay for emissions reduction measures and adaptation.

Climate finance should be in addition to standard development aid.

OECD Secretary-General Mathias Cormann said: “Climate finance continued to grow in 2019 but developed countries remain $20 billion short of meeting the 2020 goal of mobilising $100 billion.”

Developing countries should create and implement climate-finance tracking systems that are context-specific to help identify needs and mainstream climate action in government planning and budgets, the study said.

Climate action should be mainstreamed in government planning and budgets by the developing countries according to their respective national capabilities and circumstances.

Developing countries should periodically report the climate-finance support needed to achieve their conditional and unconditional nationally determined contributions.

The 17 countries analysed by the report were Bangladesh, Cape Verde, Cambodia, Colombia, Fiji, Ghana, Guatemala, Honduras, Indonesia, Kenya, Mexico, Nepal, Nicaragua, Pakistan, Peru, Philippines and South Africa.

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