Oxfam: Rich countries massively overestimate their climate finance

A new Oxfam report highlights a massive overestimation of rich countries' share of climate finance, with an estimated difference of $88 billion in 2022. While rich countries reported mobilizing $116 billion in climate finance last year, Oxfam estimates the true value of this finance is between $28 billion and $35 billion.

According to the report, although $92 billion was provided in the form of public financing, nearly 70% of this amount was in the form of loans. These loans, often granted at profitable interest rates, increase the debt burden of countries in the Global South. Oxfam points out that many of these loans require only minimal financial effort from donor countries, making claims of meeting financial commitments exaggerated.

Oxfam points out that only $15 billion has been specifically allocated to adaptation efforts. The organization assesses the true contribution of rich countries by taking into account the grant equivalent of loans and correcting for overestimations. Nafkote Dabi, Oxfam International's climate change policy manager, emphasizes that low- and middle-income countries should receive grants rather than loans to better combat the effects of climate change.

Climate finance is essential for countries in the Global South, which are often the hardest hit by climate change. The gap between promises and reality undermines trust between nations, making effective cooperation difficult. According to Oxfam, reported funding far exceeds actual efforts, preventing real climate action on the ground.

Countries will gather later this year in Baku, Azerbaijan, at COP29 to adopt a new global climate finance agreement, called the New Collective Target. Oxfam is calling on governments to avoid past mistakes and significantly increase financing from rich countries. Strengthening accountability and promoting transparency in financing processes is crucial.

For Nafkote Dabi, it is imperative that climate finance be fair and truly impactful. Countries in the Global South must not be penalized with additional debt in addition to climate damage for which they are not responsible. Future commitments must ensure that finance is allocated transparently and substantially, enabling real adaptation and mitigation of the effects of climate change.

The editorial staff