US Climate Finance on the Road to 2015

Climate & Energy, Transformative Analysis

We are at a critical moment for international climate policy and action. A moment when two global agreements, both set to be finalized by the conclusion of 2015, are under negotiation that will shape the future of global growth and prosperity for decades to come: the international climate negotiations and the post-2015 development agenda.

Correction, July 251

On climate change, countries have agreed that by December 2015 they will conclude a new global climate agreement for the period beyond 2020 to replace the 1997 Kyoto Protocol. When added together, these national plans will determine the world’s baseline climate ambition through 2025 or 2030. On economic development, world leaders will finalize a new set of global goals for 2030 to succeed the Millennium Development Goals that expire in September 2015—where sustainability is a key pillar. These processes are moving on parallel but distinct tracks with different time horizons for implementation and action.

Concluding these agreements will depend in large part on reaching international consensus on how best to mobilize the investments needed to reduce climate change and end extreme poverty through 2030. And for that, the world will look to the United States and other developed nations for leadership.

It is disappointing then at this critical juncture that the United States would remove from its Foreign Assistance Dashboard — its platform to create transparency on U.S. foreign aid flows across years and priorities — specific numbers highlighting President Obama’s three signature foreign policy initiatives, including the Global Climate Change Initiative (GCCI) as well as the Global Health Initiative and Feed the Future. We understand from the Administration that this change was made during a modernization of the dashboard across the government. In the process of expanding the dashboard to include information on dollars planned, obligated, and spent, Administration budget czars decided to create consistency in their reporting across all agencies by drilling down to the same level of detail across the entire site. While perhaps understandable at first blush, the decision has had the impact of reducing transparency in some important areas, while expanding it in others, because different agencies clump or breakout their budgets very differently. The climate change budget, for example, is part of the overall environment sector, which is only coded consistently across agencies in three categories – a) environment, b) natural resources and biodiversity, and c) clean productive environment. The absence of specific data about international climate finance is frustrating, particularly since it had been featured prominently by the Administration at the international level since 2011 and with good reason given the priority attached to the subject by the President and the significant increases in funding secured since the President assumed office.2

We recognize the challenges and limited capacity to provide detailed reporting of climate finance, but given the importance of transparency and easy access to this information in the next 18 months we would like to help fill the gap left by the void since the Fast Start Financing period ended. As a first step, we would like to share some of the numbers that we’ve gathered so far. There are some important things to note before launching in:

  • These data only represent the portion of US climate finance directly allocated through USAID, the State Department, and the Treasury – so-called “core” or “direct” GCCI funding. This is about a third of what the U.S. reports internationally, for example in its Climate Action Report.
  • We would like to continue assessing the full picture, as we have before; but there is no new information available about the other two-thirds of the pie since fiscal year 2012. The rest of this discussion and all graphs and charts only represent the GCCI portion.
  • There is a lot of missing data for 2013, especially for the breakdown of bilateral funding through USAID and State. For 2014, the Administration’s initial allocation of the budget hasn’t yet been finalized, and isn’t made public until final. We wanted to show everything available to give as complete a picture as possible, but the missing data requires careful interpretation.

Based on our analysis, a few clear signals emerge even with some missing data.

Total direct climate funding slipped in 2013 and there are reasons to worry about 2014 and 2015.

During the first three years of the GCCI, the Administration requested substantially more climate funding than Congress was willing to give – which cut the requests 33% on average. The high water mark was 2010 with actual funding at $939 million; 2010-2012 averaged about $870 million and ended in 2012 with $857 million. Starting in 2013, the Administration’s requests dropped substantially, with a 2013-2015 average of $815 million, which is well below the amount allocated in any of the previous three years.

Note: You can click on the check boxes to see subsets of the data by GCCI pillar, and you can hover over bars and cells or click on them to see more information. The amount displayed as “actual” in 2014 represents only the amounts known so far, which are the Treasury allocations, making the amount incomplete.

Congress’ dysfunctional appropriations process led to 2013 being funded generally at or near 2012 levels rather than by setting new levels with a budget from Congress. The actual climate funding in 2013 of $840 million was significantly higher than the Administration requested, but was a 2% decline from 2012 total, driven by a 4% decline in State and USAID climate funding balanced by a slight increase from Treasury. Whether this decline is an achievement or a disappointment is perhaps debatable: the total State and Foreign Operations budget dropped 3% from 2012 to 2013, while changes in the accounts from which State and USAID climate funding come were mixed, with some up and some down and a fair bit if discretion given to the Administration on how to allocate the changes.3 Regardless, when climate finance remains nearly level solely because Congress’ dysfunction doesn’t allow it to cut the appropriated amounts down to the Administration’s lower request, climate advocates should worry.

At this point in time, when the 2014 value is not yet available and 2015 level has not yet been appropriated, there are still reasons to be concerned. The request for 2014 is lower than the actual 2013 value by a hair, and the Treasury amount drops from about $380 million in 2013 to $306 million in 2014 so far.4 And if conservatives take over the Senate in November’s election, which seems as likely as not, 2015 climate finance could drop precipitously.

In short, while we don’t yet have full details about the distribution of direct US climate funding levels for 2013, and the totals for 2014 and 2015 are not yet fully determined, they are slipping a bit and could slip substantially more under some political scenarios. Even if they are considered to be basically flat after 2010, which is the best-case scenario, flat is not good enough.

Adaptation and Sustainable Landscapes (forest and other land-based mitigation) GCCI funding flow primarily through bilateral channels, while multilateral channels dominate Clean Energy.

Overall, the bilateral-multilateral split in the GCCI is pretty even. About $1.85 billion flowed through the primary multilateral channels from 2010-2014, an average of about $370 million per year. When you dig down in the data some interesting patterns emerge. Click through the different pillars in the dashboard below, which shows the actual levels of funding for years and pillars that you can select, and you will see that the Clean Technology Fund is driving this 50/50 ratio. For Adaptation and Sustainable Landscapes, multilateral is more like a fourth of the total rather than half.

This is one of those moments when missing data comes into play: as you can see from the bar chart below, organized by year and by Agency, breakdowns of funding from USAID and State individually or at the operating unit level are missing in 2013, while the Treasury funds are included for 2013 and 2014 and are all multilateral. So if you include later years in the bilateral/multilateral view, it will appear that a larger portion of the total is multilateral than will be the case when the full picture is clear.

What do these patterns tell us? For one thing, a significant push to channel public sector climate finance through the Green Climate Fund could mean pulling funding from most or all of the current multilateral flows and redirecting it to a single pool assuming that total amounts appropriated for international climate finance do not increase. That could significantly change the mix of finance to these three US priorities (adaptation, energy, land), depending on the GCF priorities.

Note: Try clicking and dragging across all the orange multilateral boxes – or a subset. Then hover your mouse, and you should see the sum.

There were big shifts by sector from 2012 to 2013 in the GCCI – with Sustainable Landscapes and Clean Energy taking the hits.

In the bar chart above, you can observe these changes in prioritization between pillars from 2012 to 2013 by clicking through the Adaptation, Clean Energy, and Sustainable Landscapes check boxes each in turn. Sustainable Landscapes and Clean Energy funding from the GCCI both dropped by more than 13% from 2012 to 2013,5 while GCCI Adaptation funding increased by 34%. These changes appear to be driven by the allocation of the Climate Investment Funds that flow through Treasury. Congress cut the amount for the Clean Technology Fund by almost 15%, and there were also major shifts in decisions about how to distribute the allocation to the Strategic Climate Funds. So even though, as we saw above, bilateral funding was the major source for Sustainable Landscapes and Adaptation, the multilateral funding can drive major changes.

More direct bilateral climate finance goes to Africa than to other regions… and a significant amount of “bilateral” finance flows through regional missions and central bureaus.

In a slightly different view, we group funding into geographic regions and bureaus (for USAID and State) and funds (for multilaterals). Note that groupings are organized by total amount in the group. If you select 2010 through 2012 (again, note that we have no detailed breakdowns for 2013 yet), you can see that the Climate Investment Funds got the largest portion of finance; the Climate Change Offices in the State Department and USAID in Washington DC were the next biggest; followed by Africa and the Western Hemisphere. For adaptation only, the pattern shifts – Africa is second after the State Department.

Could there have been major shifts in GCCI funding from 2012 to 2013 by country, region, or bureau, as there were by pillar? We can’t tell yet without more complete data, but will explore these questions when it is available.

In the absence of consistently released data sources from the US government on climate finance, we will try to step up and fill the gap. We’ll be expanding the underlying data set and visualizations in the coming months and will release detailed briefs based on these data ahead of the Lima COP this fall. Please let us know if there are particular views that would be useful for your work.

1. This version makes several corrections and adjustments from the previously released post based on helpful feedback from colleagues at the State Department and USAID. Climate finance values by pillar, aggregated for State and USAID, were in fact available, which the authors had missed. More detailed data for 2013, such as by Agency, region, or operating unit, remain unavailable but we hope to get them soon. There also remain a few minor discrepancies between our data and the State Department’s internal estimates for 2010 and 2012, but we are working with colleagues to correct them before the next analysis.
2. The “Foreign Assistance Initiatives” pages and the old data are still accessible (see here), but they are relics of the previous version of the dashboard. More information on required reporting for can be found in OMB Bulletin 12-01.
3. The Development Assistance account increased, which is the source of about 2/3 of the GCCI funding from USAID and State. The Economic Support Fund, the source of about 1/5, decreased.
4. The Treasury total could climb back up by the time 2014 is completed, as there is an additional $50 million that could be allocated to climate purposes. Even if this happens, the Treasury total will still be lower in 2014 than 2013 by about $26 million.
5. We understand from the Administration that they shifted about $15 million of the 2012 allocations from Sustainable Landscapes to Clean Energy compared to our data, which is based on the last available public data source. This change would imply that some of the drop in Sustainable Landscapes funding came from 2011 to 2012 rather than from 2012 to 2013; and that Clean Energy increased more from 2011 to 2012 than we show and then also dropped more than we show from 2012 to 2013. We are working with the Administration to get a full update of the 2012 data before our next release.

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On July 14, 2014

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