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Morocco and Mexico are the big winners from international climate funds, while many poor countries are left behind – new ranking EMBARGOED 00.01 GMT DECEMBER 8, 2014

Written by Kevin Watkins, Smita Nakhooda

Press Release

The most detailed study yet of international funding to adapt to climate change and cut emissions reveals that half of the US$7.6 billion approved to date is targeted at just ten countries. 

In the new report Climate finance: is it making a difference? the Overseas Development Institute (ODI) analyses a decade of contributions and spending to nine major international and two national funds set-up to tackle climate change.

It finds that the top recipients of finance were Morocco, Mexico, and Brazil, receiving half a billion dollars in loans each. Mexico and Brazil are among the top 10 emitters of greenhouse gases, and with Morocco, all have huge renewable energy potential.

Whilst rich oil states in the Middle East have received very little from international climate funds, the report finds that they also have contributed almost nothing to the pot. This is despite being major emitters of greenhouse gases, and the clear link between burning fossil fuels and climate change which is provoking extreme weather conditions and impacting poor countries.

The report includes the first comprehensive breakdown of how climate finance has been spent in 135 countries. It argues that getting climate financing right is crucial to securing an ambitious global agreement on climate change in Paris in 2015.

ODI Research Fellow and Report Author, Smita Nakhooda, said: “Effective use of climate finance will help win the support of poor countries which have contributed the least to climate change but bear the brunt of its impacts.”

Findings show that these funds are helping make a difference, with money to help poorer countries adapt to the impact of climate change increasing from $3.8 million in 2003 to a total of $2 billion in 2014. Poor countries such as Niger, Bangladesh and Nepal have received nearly $400 million over the last decade to help them cope with this growing threat. While not enough, the trends in spending are positive.

Among other results, funds have helped:

·         Mexico massively increase its installed renewable energy capacity in an energy system previously only powered by fossil fuels.

·         Morocco to develop its solar energy resources.

·         Brazil complete three separate projects that resulted in nearly 3,000 hectares of reforested land, benefitting some 13,000 people.

·         Financing 5 million super energy efficient fans in India.

But with such modest sums of money available, many countries receive very little money. Conflict-affected and fragile states such as Ivory Coast and South Sudan, where it is generally difficult to spend finance, received less than $350,000 and $700,000 respectively. Several middle income countries that are vulnerable to the impacts of climate change and have significant clean energy potential, such as Namibia, El Salvador and Guatemala, also received less than $5 million each.

While these funds have broken new ground, the report finds that there is substantial scope to improve results and learn from experience. Funds need to become less risk averse, and open to support innovative technologies and approaches. Intense scrutiny from donors and other stakeholders has led many funds to set up complex procedures to ensure programme quality, but this often slows the approval and disbursement of funds.

Nakhooda added: “These start-up climate funds were pioneering in their approach, and a huge amount has been learnt from their experience. There are now too many small climate funding ‘pots’ with substantial overlap and finance is spread too thinly between them, creating an urgent need to learn from experience and improve the system. The lives of millions of people in poor countries affected by climate change depend on getting this right.”

In this context, the new Green Climate Fund (GCF) which will begin to approve programmes in 2015 has a major opportunity to build and improve on the experience of existing funds, having raised nearly $10 billion in only seven months, more than the previous funds have spent in 10 years.

ODI Executive Director Kevin Watkins said: “A great deal is at stake as delegates gather at the climate summit in Lima this month. They need to pave the way for a comprehensive international agreement to prevent dangerous climate change to be reached in Paris by end of next year.”

“The report shows that climate funds have broken new ground by helping developing countries tackle climate. The new Green Climate Fund, armed with nearly $10 billion, has a great opportunity to reduce emissions and support resilience to climate change. But more funds need to be raised to tackle this growing threat and ensure that poor countries support a new climate deal.”