Ireland’s strategy for financing climate adaptation and reaching the furthest behind

Abstract

Ireland’s climate finance strategy focuses on adaptation and channels the majority of its funding to least developed countries and small island developing states. Ireland’s International Climate Finance Roadmap outlines a clear plan to provide EUR 225 million per year to climate finance by 2025.

This content is part of TIPs In Practice series on poverty and inequalities developed in collaboration with the Development Co-operation Report 2024: Tackling poverty and inequalities through the green transition. 

Challenge

The adverse impacts of climate change exacerbate existing inequalities and development challenges, disproportionately affecting the world’s poorest populations. The international climate finance architecture is currently skewed towards mitigation, with only 25% of global climate finance supporting adaptation measures. The gap in climate adaptation funding, which supports populations the most vulnerable to climate impacts, needs to be closed.

Ireland addresses this gap with an ambitious target of providing at least EUR 225 million per year by 2025 for climate finance, with the vast majority targeting adaptation. This commitment aligns with the primary objective of Ireland’s International Development Policy, A Better World, which pledges to direct development co-operation to reach the furthest behind first. Ireland faces the challenge of scaling up climate finance to meet its target while prioritising vulnerable communities and maintaining the quality of adaptation programmes amidst systemic obstacles (e.g. absorption capacity of LDCs and SIDS).

Approach

In response to the commitments made at COP26 in 2021, Ireland developed an all-of-government International Climate Finance Roadmap outlining a clear framework for scaling-up its climate finance:

• Geographic and thematic focus. Ireland’s climate finance prioritises grant-based climate adaptation and resilience financing in countries most vulnerable to climate change, particularly Least Developed Countries (LDCs), Small Island Developing States (SIDS) and fragile states. The Roadmap also expands Ireland’s focus to encompass key related areas, including support for the livelihoods of coastal communities, Loss and Damage, and climate and security.

• Extensive consultation process. The Roadmap involved a broad consultation with inter-departmental parties, relevant semi-state bodies, Ireland’s overseas missions and civil society organisations (CSOs) (e.g. Concern, Oxfam and Christian Aid Ireland). The consultative process promotes policy coherence and co-ordination among stakeholders as well as transparency and good governance.

• Multiple channels. Ireland’s climate finance is channelled through bilateral (CSOs) and multilateral (e.g. multilateral development banks, international financial institutions and the European Union) channels. This enables wider outreach, targeted assistance to vulnerable populations in fragile areas, and more opportunities for identifying projects addressing both development and climate needs.

• Predictable funding and flexible programming. The Roadmap provides a coherent plan to assist the provision of multiannual funding commitments. This has provided predictability and better planning. Further, it follows a flexible approach and avoids being overly prescriptive to ensure that its climate funding remains responsive to evolving national and international contexts.

Results

• Increased climate finance budget for the countries and people most in need. The Roadmap sets the trajectory to achieve the EUR 225 million target by 2025: a 150% increase from the EUR 88.3 million in 2020. This includes additional climate finance budgets of EUR 25 million for 2023 and EUR 41.5 million for 2024. In 2022, 84% of Ireland’s bilateral climate finance was allocated to LDCs, with 80% of the total spend dedicated to adaptation measures, either fully or in part.

• Incentives to scale up. To ensure a balance between flexibility and effective delivery, the Roadmap defines a range of key commitments and specific measures to reach the climate target. Among these, two funding windows were introduced in 2023: 1) the First Movers Fund to support Ireland’s missions’ overseas climate programming; and 2) the Civil Society Climate Window to further support integrating it to the Civil Society Partnership scheme.

• Active role in climate diplomacy. In line with the Roadmap’s expanded focus, Loss and Damage has become an important priority for Ireland’s climate diplomacy and finance. Ireland played an active role in the negotiations to reach the historic agreement at COP28 for the new Loss and Damage Fund in 2023. Ireland’s flexible approach to climate finance was key to allocating EUR 25 million to this new fund, as it was established after the Roadmap was formulated.

• Establishment of a climate-finance subgroup. In alignment with the Roadmap’s governance plan, a subgroup of Ireland’s Inter-Departmental Committee was established, comprising representatives from each of the four departments responsible for climate finance expenditure.

Lessons learnt

• Effective inter-departmental budget co-ordination. Ireland allocates expenditure annually. Departments manage climate finance through their own engagement process in the budgeting cycle. The retrospective calculation of international climate finance is complex, underlining the need for effective inter-departmental co-ordination. The Inter-Departmental Committee subgroup plays a key role in ensuring effective co-ordination and active engagement across government.

• Private sector engagement. To date, all of Ireland’s climate finance has been sourced from public funding. Despite some attempts to involve the private sector, engagement has been limited. This is partly related to the fact that there is less private sector engagement in adaptation than mitigation. Ireland aims to meet its 2025 climate targets through public sources.

• Need for advocacy. Complex application processes hinder partners from efficiently distributing Irish climate finance to LDCs, SIDS and fragile states. Advocacy is needed with multilateral development banks and climate funds to ensure that risk management protocols are suitably applied and climate finance aligns with the Aid Effectiveness Principles and supports locally led adaptation.

• Potential for enhanced multi-stakeholder collaboration. In addition to inter-departmental governance and coherence, it is essential to foster greater collaboration beyond government actors and engage other key stakeholders (governments, CSOs, think tanks, academia, etc) to drive climate innovation.

Further information

Government of Ireland, A Better World: Ireland’s Policy for International Development, https://www.irishaid.ie/media/irishaid/aboutus/abetterworldirelandspolicyforinternationaldevelopment/A-Better-World-Irelands-Policy-for-International-Development.pdf

Government of Ireland (2022), Ireland’s International Climate Finance Roadmap, https://www.irishaid.ie/media/irishaid/publications/2022-Irelands-International-Climate-Finance-Roadmap-Digital.pdf

OECD resources

OECD (2024), Development Co-operation Report 2024: Tackling poverty and inequalities through the green transition, OECD Publishing, Paris, (forthcoming).

OECD (2023), Scaling Up Adaptation Finance in Developing Countries: Challenges and Opportunities for International Providers, Green Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/b0878862-en.

OECD (2001), Poverty Reduction, The DAC Guidelines, OECD Publishing, Paris, https://doi.org/10.1787/9789264194779-en.

To learn more about Ireland’s development co-operation see:

OECD, “Ireland”, in Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/941ec6f0-en. 

See more In Practice  examples from  Ireland  here:  www.oecd.org/development-cooperation-learning?tag-key+partner=ireland#search.