BARCELONA (Thomson Reuters Foundation) - Global investment in tackling climate change fell for a second year in 2013 to $331 billion, largely due to a drop in the cost of solar power technology, according to an annual report on climate finance.
Overall, the world is falling further and further behind its low-carbon investment goals, warned the Climate Policy Initiative (CPI), a research and advisory group.
“Our analysis shows that global investment in a cleaner, more resilient economy is decreasing, and the gap between finance needed and actually delivered is growing,” said Barbara Buchner, senior director of CPI.
“As policymakers prepare a new global climate agreement in 2015, climate finance is a key ingredient to bring the world on a 2-degree Celsius pathway,” she said.
Private investment totaled $193 billion in 2013, dropping 14 percent ($31 billion) from 2012. Climate finance from public sources stayed steady at around $137 billion.
The report described lower costs for solar photovoltaic systems as positive, because they boosted solar energy deployment. Without the drop in costs, 2013 solar deployment would have resulted in an increase of $12 billion in climate finance flows from 2012 rather than a decrease of $28 billion.
Climate change investment was split almost equally between developed and developing countries in 2013. But the amount flowing from developed to developing countries fell to $34 billion, down $8 billion from 2012, with less coming from development finance institutions and the private sector.
Almost three quarters of all spending happened in the country where funding originated, the report said. Private investors had an especially strong domestic focus, with 90 percent of their finance staying in the country of origin.
“Our numbers demonstrate that most investment is happening at the national level, with investors favoring familiar environments they perceive to be less risky,” Buchner said.
In 2013, $25 billion in public resources went to climate change adaptation - efforts to adjust to extreme weather and rising seas - around the world, an increase of $3 billion from 2012.
But this accounted for just 7 percent of total climate finance flows, with 91 percent of funds spent on mitigation, or activities to reduce planet-warming emissions.
The scarcity of funding for adaptation has come into focus with the first round of pledges this week to the Green Climate Fund (GCF), which aims to become the main vehicle for climate finance for poorer countries in the coming years.
It aims to direct half of its funding into adaptation over time, which should channel more money to the countries and communities most vulnerable to climate impacts.
Following donor commitments over the past week, the GCF is set to be capitalized with more than $9.5 billion over the next four years, although domestic politics could make it hard for some governments to deliver on their promises.
Canada was the latest country to contribute, offering some $265 million late Thursday. That comes on top of up to $9.3 billion from more than 20 other governments - contributions confirmed or announced at a pledging conference Thursday.
“Poor countries will arrive at the U.N. climate talks in Lima (in December) with some confidence that rich countries are starting to live up to their responsibilities,” said Sven Harmeling, CARE International’s climate change advocacy coordinator.
“However, (the) GCF pledges must be part of an ongoing increase in levels of climate finance to help developing countries deal with climate impacts,” he said.
They are still waiting for answers to questions such as how much of the GCF money will come as grants versus loans, whether there are conditions attached to the pledges, and if the money will actually be delivered, he added.
While wealthy nations appear to making an effort to fill the GCF, there is still no concrete international plan for how to raise publicly mobilized climate finance for poorer countries to $100 billion a year by 2020, as governments promised in 2009.
Harmeling said many developing countries want to set an interim target for higher levels of support.
“If there is no more clarity on this (in Lima), it will become a hotter issue over the next year,” he said.
Reporting by Megan Rowling; editing by Laurie Goering