UK aid and climate change

The government’s 2023 review of foreign, defence and security policy described climate change as a significant multiplier of other challenges such as migration and food security, and that addressing climate change and protecting biodiversity were the “first thematic priority” for UK action. 

This briefing summarises the potential effects of climate change on global development challenges such as poverty and water security. It also looks at how climate change is prioritised in UK aid policy and aid spending, and its effectiveness in helping vulnerable states respond to climate change.

How does climate change affect development?

The Intergovernmental Panel on Climate Change (IPCC) is a UN body that publishes regular reports summarising the science of climate change.

The IPCC estimates that, without mitigation, a rise in global temperatures by 1.5⁰C would cause the global population vulnerable or exposed to water stress to rise from 1.1 billion to 1.5 billion, and an increase of 1% to 29% in cereal prices by 2050. In 2020, the World Bank also estimated that by 2030 up to 132 million people could be pushed into extreme poverty (US$1.90 per day) by climate change. Countries vulnerable to climate change are often also the most vulnerable to debt distress, a status which may worsen.

There is no single list of countries most vulnerable to climate change, but organisations such as Notre Dame University, the World Bank and German Watch have developed rankings of climate vulnerability.

What are the UK’s aid priorities on climate?

Addressing climate change and biodiversity loss is one of the four priorities for UK aid in the 2022 international development strategy. The 2023 White paper on international development also said the government would go “further, faster to mobilise international finance” to address climate change.

From 2023, all new bilateral UK aid is intended to be aligned with the 2015 Paris Agreement on climate change. This means, for example, that all aid will contribute to the stabilisation of greenhouse gas emissions. Bilateral aid is aid directed to specific countries and programmes, as opposed to multilateral aid spent via international institutions like the World Bank.

Is UK aid funding fossil fuels?

Since 2012, the government has made a series of commitments restricting UK overseas funding for fossil fuels. In 2022, it said that since March 2021 it no longer provides “any new direct financial support for fossil fuel energy overseas”. There are limited exceptions, which include health and safety improvements and gas power generation as part of a clean energy transition.

The government also said that since 2019 the “main area” of overseas aid spending on fossil fuels had been by British International Investment (BII, the UK’s development finance institution) and the Private Infrastructure Development Group (a multi-donor programme, which has invested in gas).

The BII’s fossil fuel policy says it will not make new commitments in the exploration and production of fossil fuels, their transportation, refinement, distribution, or power generation. Its 2022 annual report (PDF) says its carbon-related assets (those excluded by the post-2020 fossil fuel policy and others still permitted), was £605 million in 2021 (around 10% of its portfolio).

How much UK aid is spent on climate change?

There is no specific data for aid spending on climate change. This is because the theme is considered a cross-cutting one in reporting rules agreed within the Organisation for Economic Co-operation and Development (OECD).

However, the UK does report its levels of “development finance for climate and environment” to the OECD (note this is not the same as “international climate finance”). This states that the UK provided around £9.7 billion in climate-related development finance from 2012 and 2021. Around 55% of this was not allocated to any specific country (instead provided to multilateral organisations). Around 29% went to low-income states.

The US$100 billion climate finance goal

In 2009 developed countries committed to provide US$100 billion annually in international climate finance (ICF) by 2020 to help developing countries respond to, and mitigate the effects of, climate change. ICF can be issued as loans, grants, and export credits. The goal was met for the first time in 2022.

In 2019, the UK pledged £11.6 billion in ICF from 2021/22 to 2025/26, of which 55% will be spent in 2024/25 and 2025/26. All ICF comes from the aid budget.

The Commons Library research briefing, The UK and the US$100 billion climate finance goal, provides more on UK ICF and its effectiveness, global performance, and negotiations on a replacement target from 2024.