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Climate finance raised by developed countries for developing countries increased by 8% to $89.9bn in 2021, according to the OECD, still some way short of the $100bn annual target.

However, much needed finance for adaptation fell by 14% to $4bn.

Private climate finance also remained “stubbornly low” at $14.4bn, with public finance making up $73.1bn of the total.

The most significant growth in financing came from grants and equity, rather than loans, a positive step for developing countries with high levels of debt.

In 2009, developed countries agreed a plan to raise $100bn a year in climate finance by 2020. The OECD data suggests the target may have been reached in 2022, but the estimate has yet to be verified.

“Developing countries urgently require these significant investments so climate finance providers need to continue to ramp up their efforts in line with their stated commitments”, said OECD secretary general Mathias Cormann.

An earlier analysis by UK-based think tank ODI showed that the US provided $9bn in climate finance in 2021, $34bn short of its “fair share”. 

Loss and damage

The relevance of the $100bn has been increasingly called into question, with estimates of the cost of mitigation and adaptation increasing significantly in recent years as the impacts of climate change become more widespread and severe.

“As we have slowly gotten closer, the target, always a little random, has become irrelevant”, said Avinash Persaud, special climate envoy and negotiator for Barbados. The failure of countries to mitigate means that the annual bill for climate loss and damage and resilience building – stuff the private sector does not fund, unlike wind and solar farms – is now over $500bn a year.”

There have been growing calls for additional sources of financing, as well as fundamental reform of international financial institutions such as the World Bank and International Monetary Fund (IMF). 

Some have called on governments to tax oil and gas majors, whose profits rose sharply last year on the back of geopolitical events.

The five biggest oil and gas majors made almost $200bn in profits in 2022, twice the climate finance target that developed countries are struggling to meet, said Friederike Roder from advocacy group Global Citizen.