01 NOV 2022
Despite a marginal up-tick to $20.5 billion a year, climate finance into Asia remains patchy, contentious, and nowhere enough
Major contributors like Japan, Germany, France and multilateral banks need to engage with Asian governments to reform climate financial flows as an issue vital to the UN climate talks
Asian countries have seen an annual 28% rise in climate finance to $20.5 billion in 2020 but this increase hides problems that are being mirrored across the world and are likely to cause tensions at the UN climate summit in Egypt later this month.
Today Oxfam publishes a new report that for the first time analyses climate finance flows worth $113 billion between 2013-20, into 18 countries across Asia. It finds:
- Despite being home to nearly 4 billion people and half the world’s population, Asian countries only receive around 25% of reported global financial flows each year.
- Asian countries need $1.3 trillion a year from now to 2030 to meet their estimated climate needs, or $371 billion a year without factoring in China. Oxfam says current levels are woefully inadequate. A significant share of these estimated needs must come from international support.
- Only a third of Asia’s climate finance went to help countries adapt and cope with climate-induced harm, despite the likes of Bangladesh, Cambodia, Myanmar and Afghanistan being among the world’s most vulnerable and worst-prepared.
- Two-thirds of it went on mitigation initiatives, particularly into the huge Asian transport and energy sectors. Although this split is beginning to shift, it needs to happen much faster.
- The majority of flows into Asia came as loans, often forcing already indebted countries to cut public services in order to repay. Laos and Mynanmar are now at high-risk of debt distress. Only 17% of bilateral climate finance and 6% of multilateral climate finance to Asia came in the form of grants.
- Donors almost completely ignored locally-led initiatives – only about 0.5% of all climate finance went directly to local Asian communities, civil society organisaitons and authorities – giving them less say in how this money is governed.
'Asia is being devastated by climate-driven disaster after disaster, taking lives and costing billions. Pakistan underwater. China and India baked by 50-degree heatwaves. Bangladeshis leaving farmland made unusable by saltwater. Philippines hit by worsening typhoons,' said Sunil Acharya, Oxfam’s Asia Regional Policy and Campaigns Coordinator.
'This is becoming an irreversible humanitarian crisis across Asia where half the population already live below the poverty-line. People are nearing the limits of what they can do to cope,' Acharya said. “They need more help, not debt, and more say in how it happens.'
The report reveals that some lenders including into Asia are counting ‘new’ fossil fuel projects as 'climate related development finance', for example Japan’s $3 billion contribution to Bangladesh to build the giant Matarbari coalfired energy plant. Notwithstanding countries’ right to develop, the report says, no new fossil fuel project should ever be considered as 'climate relevant' to justify these funds.
The report shows that India received the highest total of climate finance between 2013-20 ($37.1 billion), followed by Bangladesh ($14 billion), China ($12.1 billion), and Indonesia ($10.0 billion). However, on a per capita comparison, the Maldives received $59 for every person, compared to India at just $3 per person. China received the lowest “grant equivalent” funding at just 12% - meaning it took on more loans than grants – whilst Afghanistan’s climate finance was given entirely as grants.
Asia’s biggest bilateral climate finance contributors from 2013-20 are Japan ($28.2 billion), Germany ($11.2 billion), France ($6 billion) and the US ($1.1 billion). 70% of Japan’s contribution can be considered as 'grant equivalent', against only 41% for Germany and 44% for France.
Asia’s biggest multilateral climate finance providers are the World Bank Group which committed over $30 billion from 2013-20, and the Asian Development Bank ($17.6 billion). However, when factoring in loans, the World Bank Group had a 'grant equivalent' spend of just $7.6 billion while the ADB was just $2.1 billion.
The Asian Infrastructure Investment Bank (AIIB) has a 'grant equivalent' of zero – meaning its entire $4.1 billion funding came at close to market-rate loans, of which more than 80% went into big transport and energy projects.
'We are forced to look rather cynically at the climate financing of the multinational institutions because the majority of their money is winding up as Asian foreign debt. It’s difficult for Asian countries to maintain health and education budgets when they’re taking on more debt to pay for climate damage that they did little to cause,' Acharya said.
The report says that developed countries should increase their adaptation funding to each Asian country by 2025 to align with the Glasgow Climate Pact of doubling adaptation finance overall, and focus on providing grants rather than loans. No funds lent at market rates should be counted as climate finance, it says.
'Asia’s climate finance providers and governments need to reasses climate finance in a way that is genuinely propoor, locally-led, and targeted to help women and girls who are shouldering the bulk of climate risk and harm,' Acharya said. 'Climate finance must be transparent, easily trackable and spent in ways in which people who are most affected are able to genuinely participate in decision making processes.'
The report also explores the voluntary South-South climate finance flows into Asia, noting that China spent $84 billion into 13 of the 18 Asian countries studied in the same time period. The biggest recepients were Pakistan ($31.4 billion), Indonesia ($10.8 billion), Bangladesh ($10.4 billion) and Philippines ($9.9 billion). The report estimates that more than $35 billion of this went to 'climate relevant' mitigation objectives.
'Voluntary South-South climate finance flows from the likes of China and India are very promising and vital if the Asia region is to get the kind of funding it needs to be safer and greener. But the same principles apply – more grants, more targeted at women and girls and local leadership, none to fossil fuels, and more focus on inequality-busting initiatives,' Acharya said.
- Ends -
Download the full report at: https://policy-practice.oxfam.org/resources/climate-finance-in-asia-assessing-the-stateof-
About Oxfam Hong Kong
Oxfam is a global organisation committed to creating a world without poverty through its advocacy, development and humanitarian work.