The OECD tracks progress towards the USD 100 billion goal, presenting trends of annual climate finance provided and mobilised by developed countries for climate action in developing countries from 2013, and further analytical insights. Our regular reports include breakdowns by climate theme, sector, financial instrument and country grouping. They also help inform further analyses, notably in relation to the pressing need to scale up adaptation finance and mobilise private finance.
Finance and investment for climate goals
Scaling up climate-aligned finance and investment is critical to accelerating global emissions reductions, building climate resilience, and keeping the 1.5°C temperature goal within reach. In line with the Paris Agreement’s commitment (in Article 2.1(c)) to make finance flows consistent with a pathway towards low emissions and climate-resilient development, the OECD is supporting efforts to shift the financial system to achieve climate goals.
Key messages
Measuring progress on aligning finance with the Paris Agreement requires developing assessments and indicators for both real economy investments and the financial sector. Such assessments and indicators can help to inform investment and financing decisions, as well as policy actions that can contribute to and drive the climate alignment of finance.
Despite a rapid rise in financial and corporate pledges, commitments and frameworks, there are concerns relating to fragmentation, opacity and greenwashing, as well as evidence of limited real economy impacts and delayed climate action. Climate alignment assessments and indicators must therefore be grounded in robust methodologies and data, and involve co-ordination across policymakers, methodology and data providers, and financial market players.
There is an urgent need for policy makers to provide coherent, whole‑of‑government co‑ordination, and integrated budgetary, financial regulatory and climate policy planning and implementation, to meet climate ambitions. Additional policies are needed to boost the risk‑return profiles of low‑emission and climate‑resilient investments, phase out investment in fossil fuels, create and ramp up pipelines of bankable projects, and provide investors with necessary certainty and unambiguous investment signals to sharply accelerate the low‑carbon transition.
Mobilising finance and investment for clean energy and industry decarbonisation is critical to deliver just energy transitions and improve access to affordable clean energy, especially in emerging markets and developing economies (EMDEs). The OECD Clean Energy Finance and Investment Mobilisation (CEFIM) Programme helps EMDEs to unlock finance and investment in renewable energy, energy efficiency and industry decarbonisation. Our work focuses on strengthening domestic enabling conditions for such investment, creating pipelines of bankable projects and catalysing finance for private capital mobilisation, including through the use of blended finance and other financial instruments.
Closing the climate financing and investment gap will not be possible without more effective use of public finance in mobilising private investment and action to phase out or reorient environmentally harmful subsidies to free up resources for investments in the net‑zero transition.
The OECD provides a platform to help governments evaluate their allocation of budgetary resources to fossil fuels and their alignment with environmental and well-being goals. As part of this, the OECD Inventory of Support Measures for Fossil Fuels documents and estimates government measures that encourage fossil‑fuel production or consumption relative to renewable alternatives.
Context
Reaching climate mitigation goals will require shifting and scaling up private‑sector investment
Global financing needs to mitigate climate change are estimated at USD 5 trillion a year until 2030. Financing needs for climate action in developing economies alone are estimated at USD 2.4 trillion a year between now and 2030. Achieving our collective environmental goals, combatting climate change, and building sustainable and resilient economic systems will require accelerating private investment towards climate‑friendly, nature‑positive and sustainable pathways, and a shift away from harmful activities. The window to reduce global emissions by 45% by 2030, in line with a 1.5°C target, has become vanishingly small.
Developed countries met the annual USD 100 billion goal for the first time in 2022
In 2022 developed countries provided and mobilised a total of USD 115.9 billion in climate finance for developing countries, exceeding the annual USD 100 billion goal for the first time. This achievement occurred two years later than the original 2020 target year, but one year earlier than in projections produced by the OECD prior to COP26.
Public climate finance (bilateral and multilateral attributable to developed countries) accounted for close to 80% of the total in 2022 and increased from USD 38 billion in 2013 to USD 91.6 billion in 2022. Following a small drop in 2021, adaptation finance reached USD 32.4 billion in 2022, three times the 2016 level. Mitigation continued to account for the majority, representing 60% of the total. Private finance mobilised by public climate finance grew by 52%, following several years of relative stagnation.
Adaptation is cost-effective, with some estimates showing economic benefits of 2-10 dollars for every dollar invested
Investments across all sectors of the economy can help countries prepare for the impacts of climate change. How can governments improve their domestic policies to strengthen investment for climate adaptation?
The OECD Climate Adaptation Investment Framework sets out a comprehensive approach to address market failures, correct misaligned policies and provide incentives for investments. The Framework identifies six key areas for governments to improve their domestic policies, based on international good practices.
Climate Investment Summit 2024
Climate Investment Summit is the globally leading event for climate solutions by 2030. Climate Investment Summit is organised by the World Climate Foundation in partnership with the Climate Investment Coalition and co‑hosted with the London Stock Exchange Group.
The 5th annual edition of Climate Investment Summit took place on 26 June 2024 at the prestigious London Stock Exchange.
