It’s been COP time again. In the UN’s annual Climate Change Conference of Parties (COP), political representatives from across the world come together to measure progress and negotiate the best ways to address climate change. This year, they met in Baku, the capital city of Azerbaijan. The outcome of this year’s summit was expected to be an ambitious new climate finance goal, among other points. But the negotiations proved to be tough.

There was quick agreement on uniform rules for a global carbon market, an advance considered by many to have been overdue. Emission targets and phasing out fossil fuels remained contentious, however. In the area of climate finance, developing countries had demanded up to $1.3 trillion annually. The COP parties were able to agree on a compromise of $300 billion after long drawn-out negotiations. But what does this actually mean?

Let’s take a step back. In 2009, the Copenhagen Accord set forth a bold commitment: developed countries pledged to collectively mobilise $100 billion a year by 2020 to address the needs of developing countries in mitigating and adapting to climate change – a global problem mainly caused by the industrialised world. “New and additional” funding to be “mobilised” by developed countries was to come from a "wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance."

More than a decade later, however, uncertainty looms over whether this goal was achieved. According to the OECD, which tracks progress at the request of donor countries, the 100 bn goal was achieved in 2022 for the first time through a mix of bilateral and multilateral public contributions, export credits and mobilised private capital. A lack of clear definitions and standardised measurement methods, however, has led to competing ways of tracking climate finance. This problematic situation is discussed in more detail in three articles here.

Austria's Struggle with Definitions

Austria provides a case in point. Beginning in 2012, the country embarked on systematically collecting data to fulfil its international reporting obligations. However, two major definitional questions soon emerged: First, what does ‘mobilised’ funding mean? At what point can we say funds have been ‘mobilised’—when they are promised, allocated, or spent?

Second, what constitutes ‘new and additional’ funding? Should climate finance be separate from existing Official Development Assistance (ODA), or can it be counted within ODA as long as it is directed towards climate objectives? Including ODA in climate finance totals can inflate figures, while excluding it may understate the contribution. Different answers to these questions can yield vastly differing results.

Faced with these ambiguities, Austria had to make decisions to establish a workable reporting system. It chose to define ‘mobilising’ as commitments—the volume of finance contracts signed. On ‘new and additional’ Austria decided to include ODA in its climate finance reporting. Since climate goals were meant to be ‘mainstreamed’ into ODA portfolios since the mid-1990s anyway, there was an inherent overlap that couldn't be ignored.

To harmonise its reporting, Austria aligned its data collection with the OECD's Development Assistance Committee (DAC) system. This included using the DAC's ‘Rio Markers’ to identify projects with climate mitigation and adaptation objectives. Projects are quantified based on these markers: those marked as ‘significant objective’ have been counted at 50% of their committed amount, while ‘primary objective’ projects have been counted at 100%.

The Cost of Ambiguity

Despite these efforts, Austria faced challenges in ensuring its figures accurately reflected its climate finance contributions. One issue was projects that addressed both mitigation and adaptation goals, risking double counting if not carefully managed. Austria developed specific quantification methods to avoid this, but acknowledged that these were estimates rather than precise calculations.

Furthermore, the lack of international harmonisation meant that Austria's approach differed from other countries. Some nations reported on disbursements instead of commitments and applied different percentages to projects marked as ‘significant’. And, unlike other provider countries, Austria so far has not included market-term export credits in its climate finance (since their focus on mitigation/adaptation goals is not clearly documented). This inconsistency, and others, make international aggregation of climate finance figures ‘problematic’ to say the least.


Austria’s contribution to climate finance 2018-2022