Globally, over 600 million people still lack access to electricity and 2 billion people to clean cooking (SDG 7). This has severe implications on health (SDG 3), gender equality (SDG 5), climate (SDG 13) and the other interconnected SDGs.
Governments are trying to address these challenges through international climate finance, supporting mitigation activities such as clean energy and energy access, alongside adaptation efforts in low- and middle-income countries. Under the Paris Agreement, high-income countries committed to mobilising USD 100 billion annually in climate finance. The New Collective Quantified Goal (NCQG) aims to triple this, with a broader ambition of mobilising USD 1.3 trillion per year from a wide range of sources.
With more ambitious financing targets but shrinking climate and development budgets, the question of impact becomes even more crucial. Traditionally, tracking has focused on financial flows, but there is growing interest in the actual outcomes of this financing. These include emission reductions, climate resilience, energy access, health, and gender equality, among other cross-cutting impacts. This shift toward outcomes was highlighted in the Dutch parliament on March 12, where the debate focused explicitly on the effectiveness of climate finance in achieving tangible results, such as mitigation, adaptation, and support for vulnerable countries.
International climate finance should be balanced between mitigation and adaptation, although in practice financing has historically been skewed towards mitigation. Yet relatively few donors systematically track the mitigation outcomes of this financing, including from activities such as renewable energy and energy access.
At Trinomics, we support governments in evaluating and developing their international climate finance strategies and improving impact reporting. Some of our recent work aims to understand the scale of mitigation outcomes that countries contribute to through their international climate finance and how this can be measured in a more streamlined way.
Over the past two years, we have undertaken a range of international climate finance work, including:
Evaluated two international climate finance strategies. One assessed Ireland’s strategy, that includes climate-related humanitarian action and supports projects across least developed countries and vulnerable small island states, with a strong focus on adaptation. The other evaluated Luxembourg’s Strategy (2021–2025), which placed a strong emphasis on nature-based solutions, resilience, and gender equality. We assessed 82 projects against OECD DAC evaluation criteria and indicators.
Estimated the mitigation impact of Dutch international climate finance, including projections for 2030 and 2040 if financing levels remain similar to 2023. Some key findings include:
- The findings indicate that Dutch international climate finance contributes significantly to global mitigation efforts.
- A large share of both the financing and mitigation outcomes flows through Multilateral Development Banks (MDBs) and related funds.
- Tracking the mitigation impact of climate finance remains challenging, largely due to differences in reporting methods across organisations.
- There is a clear need for greater standardisation in how mitigation outcomes, baselines, attribution per donor and finance sources (public vs. mobilised private) are reported.
- Current estimates of mitigation impact involve uncertainties, particularly when impacts are attributed to financial contributions.
- Mitigation outcomes are highly context- and project-specific and should not be the sole criterion for investment decisions. Large-scale mitigation projects in middle-income countries and small off-grid energy access projects in least developed countries will naturally yield very different results.
- Future climate finance assessments will need to consider evolving factors, such as technology costs, new global finance targets (e.g. the NCQG), and policy developments.
- Beyond emissions reductions, climate finance generates other climate and development outcomes that should be measured, including improved energy access, forest restoration, sustainable agriculture, water access, and gender equality.
Curious to know more about our work on Dutch Climate Finance? You can read the full report here.
This work continues, including in collaboration with the OECD. As climate finance evolves and new global targets emerge, strengthening impact measurement and reporting will be key to making sure climate finance delivers real climate outcomes, that reach the most climate-vulnerable groups and contribute to broader development goals.
This article was written by Marie Stjernquist Desatnik and Lenka Volková, Climate Finance Experts at Trinomics
