Global climate finance flows to poorer countries totalled US$741 billion in 2014, an increase of 15% from 2011-12.
That is according to a biennial report from the UNFCCC’s Standing Committee on Finance (SCF) released at UN climate talks in Marrakech on Monday.
It represents progress, the authors said, but pales in comparison to the $1.6 trillion invested annually in fossil fuels.
“Climate finance remains a monumental challenge,” said UN climate chief Patricia Espinosa. “Too much money still flows into high carbon investment.”
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Private sector involvement is needed to bridge the gap between what governments can offer and the vast demand for climate cash, the report said.
That is easier for carbon-cutting projects like solar panels, which can offer a return on investment, than flood defences or other adaptations to climate change.
Amjad Abdulla, chief negotiator for the Alliance of Small Island States (AOSIS), said: “When it comes to adaptation, the return on investment is only humanitarian. And you get an idea of the private investors’ interest if you think that when the SCF invited them to its adaptation forum, they asked for a financial incentive to participate.”
More public investment will be needed for adaptation, he added, in the form of grants rather than loans: “We don’t want to lock in any more debt for adaptation response, because nations such as the small island developing states are already in red. No responsible administration could say yes to more loans, the public would not accept that.”
Jan Kowalzig, climate policy adviser at Oxfam Germany, said the document was based on a flawed reporting system.
“This leads to significant over-estimation, for instance where financed programmes support climate action only as one of many objectives,” he said. “Also, the existing reporting system obscures that the net value of assistance delivered to poor countries is much lower than reported figures at face-value, for instance in the case of concessional loans that, while concessional, still have to be repaid.”
Kowalzig stressed that funds to assist developing countries in adapting to a changing climate remain “woefully inadequate, and still far off the agreed balance between mitigation and adaptation finance”.