Analysis: £2.1bn of UK Climate Finance Was Relabelled Funding

/ Environment

The UK has met a key international climate finance target only through "questionable accounting", according to new research. Around £2.1bn of the money it counted towards the goal did not come from new spending, the analysis says. Without it, the UK would have fallen nearly £1bn short.

The analysis comes from the specialist publication Carbon Brief and was shared exclusively with The Independent. It lands as climate-vulnerable countries prepare to press rich nations for more cash at the Cop31 climate conference.

A pledge, then looser rules

Under the Paris Agreement, the UK pledged to provide at least £11.6bn in international climate finance between 2021 and 2026. The previous Conservative government made the commitment in 2019, for the financial years 2021-22 to 2025-26.

In 2023, to cut aid but keep the target, that government loosened its definition of climate spending. Carbon Brief says this let the UK stick to £11.6bn without funding new climate projects. Existing money was simply relabelled. Based on numerous freedom of information requests, the analysis says funding for development banks, private-sector investment and aid for Afghanistan, Sudan and other war-torn countries was counted as climate finance.

The current Labour government has kept the approach. It has also pledged a significant cut to the share of foreign aid going to international climate finance, as part of broader aid cuts from 0.5 to 0.3 per cent of gross national income.

Carbon Brief points to three main components:

  • Counting a share of core funding for multilateral development banks, such as the World Bank.
  • Automatically counting 30 per cent of humanitarian aid as climate finance when it goes to a country judged most vulnerable to climate change, including Afghanistan, Sudan and the Democratic Republic of the Congo.
  • Counting more government-backed private sector investment from British International Investment.

Reactions

The findings follow a separate report from the International Development Committee, which also found the UK to be "cutting corners" on climate spending. Sarah Champion, the committee chair, said that if questionable accounting was used to cover a £1bn shortfall, it "only underlines my concerns that the government has been cutting corners to maintain headline climate-spending commitments, rather than working to deliver genuine climate and nature outcomes".

A government spokesperson said: "It would be incorrect to report that we will not hit our International Climate Finance target. We are proud to have both hit, and exceeded, our target."

Catherine Pettengell, executive director of Climate Action Network UK, said there is still time for change. She called on the government to increase international climate finance, reverse the 2023 accounting changes and set out a path to return overseas aid to 0.7 per cent of gross national income, in line with Labour's manifesto commitment.

Source: The Independent