The UK and the US$100 billion climate finance goal

In 2009, at the 15th UN Climate Conference (COP 15) in Copenhagen, developed countries committed to providing US$100 billion annually in climate finance by 2020 to help developing countries respond to, and mitigate the effects of, climate change.

Data from the Organisation for Economic Cooperation and Development states this goal was met for the first time in 2022.

This briefing explains what international climate finance (ICF) is, progress on the US$100 billion goal, UK Government actions, and the potential successor to the goal, which is expected to be in place from 2025.

What is the US$100 billion commitment?

The 2009 commitment is for 43 “developed” countries, listed under the UN Framework Convention on Climate Change (UNFCCC) and including the United States, Japan and most European countries, to provide US$100 billion annually to 155 “developing countries” to respond to climate change.

The Intergovernmental Panel on Climate Change (IPCC) argues climate finance is needed to help support a global transition towards a low-carbon, resilient world. There is no internationally agreed definition of ICF, however, and it can be provided as loans, grants, or export credits and delivered by both public and private sources. Multilateral bodies including the Green Climate Fund and World Bank also provide international climate finance.

Climate finance is mobilised to address two purposes:

• Climate change mitigation: actions to prevent or reduce greenhouse gas emissions.
• Adaptation to climate change: actions required to manage the impacts of unavoidable climate change.

How often has the target been missed?

The Organisation for Economic Development Cooperation (OECD), which has tracked donor spending since 2015, states the target was missed in every year to 2021. In 2022, it said that the target was met, and surpassed, for the first time. International climate finance totalled US$116 billion.

Most ICF comes from public sources, and the majority of this is in the form of loans rather than grants (69% in 2022, US$63.6 billion).

Oxfam is among the organisations to have raised concerns for the inclusion of non-concessional loans as climate finance (non-concessional meaning they are provided at commercial rates) and the increasing debt burden placed on lower income states in receipt of the loans.

The OECD also recommends greater steps be taken to mobilise private ICF, whose value it described as “stagnating” from 2016 to 2021. In 2022, it increased 52% to US$21.9 billion (up from US$14.4 billion in 2021).

Since 2011 85% of UK finance has been provided as grants, and the government intends to continue this balance going forward. Oxfam judges that in 2019 and 2020 (the most recent years it has assessed), no UK finance was non-concessional in nature. Oxfam estimates that 80% of non-concessional ICF instead comes from multilateral development banks.

What has the UK committed to 2025/26?

In 2019, the UK Government said it would spend £11.6 billion in international climate finance from 2021/22 to 2025/26. This will be evenly split between mitigation and adaptation and includes £3 billion to restore nature and a commitment to raise the value of ICF on adaptation to £1.5 billion in 2025.

UK ICF comes from the UK’s reduced aid budget, which currently stands at around 0.5% of gross national income, down from 0.7%. The majority of the £11.6 billion, 55%, will be spent in 2024/25 and 2025/26, leading the Independent Commission for Aid Impact in February 2024 to raise concerns about the plan. It also criticised the government for “mov[ing] the goalposts” and reclassifying £1.7 billion of existing aid as climate finance in 2023/24.

From 2011/12 to 2021/22, the UK spent £9.82 billion in climate finance. In 2019, the ICAI rated the UK’s work on promoting low carbon development in 2016/17 and 2017/18 as green/amber, the second highest possible rating.

What next for international climate finance?

The US$100 billion goal is expected to be replaced by a higher-value goal in COP 29, due to be held in Azerbaijan in November 2024. The New Collective Quantified Goal is set to be agreed before the conference and, under the 2015 Paris Agreement, to be greater than the US$100 billion (PDF). This reflects the large gap in climate finance for both mitigation and adaptation.