Congress Appropriates over $830 Million to International Climate Finance in FY2014

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US Policy & Politics

The recently passed Omnibus appropriations bill allocated about $831 million to the Global Climate Change Initiative, a Presidential Initiative that supports clean energy, climate adaptation, and reduced deforestation in developing countries. This is pretty close to the $837 million that the President requested, but below the average $872 million provided in FY2010 through FY2012. It is not yet possible to estimate FY2013 allocations with any confidence.

Key messages, delivered in tasty sips

  • The “glass half full” analysis: Congress allocated $831 million to climate – almost exactly what the President requested – in the face of tight budgets, an overall decline in the total International Affairs budget (-3.1%), and a House that is hostile to all things climate.
  • The “glass half empty” analysis: The 2014 climate budget is 5% lower than the average from 2010-12, and 3% lower than 2012, even though the basei discretionary International Affairs budget increased 6.1% in 2014. And stable is nowhere near good enough – ODA in support of abatement projects and resilient development needs to be growing.
  • The “am I drinking from the right glass?” analysis: The U.S. reports about $2.5 billion a year in climate finance, way more than $831 million. This analysis focuses only on the President’s Global Climate Change Initiative,ii which is just that portion of U.S. climate finance directly allocated to climate line items (about a third).
  • The “if you love forests, you better get a drink” analysis: Almost the entire cut in the climate budget from 2012 to 2014 comes from forest funding, which suffers a decline of more than $25 million (12%).

The Numbers

The recently passed Omnibus appropriations bill allocated about $831 millioniii to the Global Climate Change Initiative, a Presidential Initiative that supports clean energy, climate adaptation, and reduced deforestation in developing countries. This is pretty close to the $837 million that the President requested, but below the average $872 million provided in FY2010 through FY2012. It is not yet possible to estimate FY2013 allocations with any confidence (see below for discussion of FY2013).

My estimate assumes that the State Department will transfer $50 million from the Economic Support Fund (ESF) to Treasury for several multilateral funds, as required by the billiv, at the same proportions as the FY2012 transfer (mostly to the Climate Investment Funds, with some to the Global Environment Facility). If this transfer doesn’t contribute to climate funds, FY2014 climate spending will only reach $788 million – a 10% drop from FY2010-FY2012; if the transfer goes entirely to the climate funds, the total FY2014 number would be about $838 million.v

The U.S. climate budget since FY2010 is shown below, broken down by agency and by purpose (or pillar as the categories are known). The underlying data for this chart is in a supplemental table. Compared to FY2012, most of the drop in FY2014 is in the Treasury allocation, and in the Sustainable Landscapes pillar.

ClimateBudget - Figure 1

What’s the story with FY2013? And why the high/lows?

FY2013 was a pretty wacky year in the U.S. budget process, even compared to the dysfunction that appears to be the new normal. Between continuing resolutions, the budget sequester, and significant agency discretion for allocating funds, the FY2013 international climate budget is a bit of a black hole. A few sources of uncertainty dominate.

First, the FY2012 budget included authorization for a transfer of up to $200 million from the State Department to Treasury for multilateral funds; $100 million was in fact transferred, $85 million of which went to climate purposes. It is not yet clear (at least to me) whether a similar transfer of FY2013 funding was or will be made; how much; and to which multilateral funds. Second, State and USAID got less guidance from Congress in FY2013 than most years, and thus had significant discretion in how to allocate their funds. Third, two key accounts for the climate budget changed substantially beyond the sequester amounts—due to a transfer between them in the FY2013 full-year Continuing Resolution. Development Assistance (DA), from which most USAID climate spending is drawn, actually increased from FY2012 to FY2013 by about 7%. The Economic Support Fund (ESF), which is the source of most State Department climate money, got cut substantially. It isn’t clear whether these changes trickled down equally to various subaccounts, or whether Congress intended the changes for specific purposes.

All this uncertainty means that we won’t actually know what happened in FY2013 until the Administration provides a clearer picture.vi But until then, I’ve put together high and low estimates of FY2013, which are captured in the charts above and supplemental table. The high estimate assumes an ESF transfer similar to FY2012; the low estimate assumes no ESF transfer. The high/low values for USAID and State were calculated for each agency and pillar at the maximum/minimum of: the President’s FY2013 request (assuming that the Administration had enough flexibility to allocate as it had wanted); the FY2012 values minus a 5% sequester (generally the lowest reasonable value to expect); and the FY2012 values scaled by changes in the each account (+7.8% for USAID budgets mostly from DA, -14% for State budgets mostly from non-OCO ESF).

Where’s the rest? Doesn’t the U.S. contribute more than that?

I mentioned above that this analysis is focused only on the budget of the Global Climate Change Initiative – about 1/3 of the full U.S. climate finance contribution that has been reported internationally. For example, the U.S. included the following tables in its 2012 fast start finance report:

ClimateBudget - Table 1

The GCCI is just a portion of the first row (“Congressionally Appropriated Assistance”) of the first table – about $2,616 of the $4,717 million listed above. For FY2010 through FY2012, the proportion of total climate finance that is directly appropriated to the GCCI is easily plotted (see below, excluding development finance and export credit). While it is difficult but possible to estimate the GCCI values for FY2013 and FY2014, it is impossible to do the same for the indirect portions – the two thirds of U.S. climate investments that aren’t directly appropriated to climate line items. For those, we’ll need to wait for ex-post analysis by the Agencies, and hope that there is sufficient transparency to see what is being included as part of the U.S. contribution.

ClimateBudget - Figure 2

What’s next?

My colleague Abigail Jones and I have been working on a web-based interactive data visualization tool that will allow users to fully explore the U.S. climate budget data we’ve compiled in a number of ways. It uses Tableau, and makes really sharp images. Look for that to come out in the next week or two. I’m also working on a more in-depth brief on the U.S. REDD+ finance package – going into more detail on the $25 million drop in funding from FY2012 to FY2014, but more importantly assessing how the program is doing and where it could be strengthened. It will use some of the new Tableau graphics, so keep an eye out for that analysis in the next few weeks as well.

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On January 24, 2014

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