Industrialised nations appear to have belatedly met the goal of mobilising $100bn of climate finance a year in developing economies, according to a new analysis from the OECD.

The influential group yesterday published its sixth assessment of progress towards the Paris Agreement goal of mobilising $100bn a year of climate finance from 2020.

It confirmed that richer nations missed the target in 2021 with total climate finance hitting $89.6bn. However, it also showed that flows of finance rose eight per cent between 2020 and 2021, marking a significant improvement on the average 2.1 per cent increase seen between 2018 and 2020.

Preliminary data suggests the upward trend continued throughout the following year, meaning the $100bn goal “looks likely to have already been met as of 2022”.

“The overall upward trend is positive and shows that countries are continuing to increase action to scale up and mobilise climate finance,” said OECD Secretary-General Mathias Cormann. “The increase needed to reach the $100bn goal that was set for 2020 has not yet been achieved, but preliminary data available to the OECD indicates that countries look likely to have met that objective ahead of 2023. Of course, developing countries urgently require these significant investments so climate finance providers need to continue to ramp up their efforts in line with their stated commitments.”

The report also suggests that flows of climate finance are being better targeted at some of the most climate vulnerable countries. Between 2016 and 2021, the share of climate finance targeting lower middle-income countries (LMICs) and upper middle-income countries (UMICs) remained stable, whereas the share targeting low-income countries (LICs) increased from four per cent in 2016 to 10 per cent in 2021. The share of climate finance targeting small island developing countries (SIDS) also increased from two per cent in 2016 to four per cent in 2021, and the share targeting least developed countries (LDCs) increased from 12 per cent in 2016 to 20 per cent in 2021.

In addition, public climate finance almost doubled over the 2013 to 2021 period, climbing from $38bn to $73.1bn.

However, the report warns that levels of private climate finance and adaptation finance remain “stubbornly low”. Private climate finance of $14.4bn in 2021 accounted for only 16 per cent of the total, while adaptation finance fell by 14 per cent in 2021, resulting in a decrease in its share of total climate finance from 34 per cent to 27 per cent.

“There is a pressing need for international providers to significantly scale up their efforts in two key areas: adaptation finance and the mobilisation of private finance,” said Cormann. “Adaptation finance is essential to building resilience and private finance from a range of commercial actors in developed and developing countries is critical to closing the financing gap for investments in climate action, notably in clean energy systems, agriculture, forestry, land-use, adaptation, and resilience.”

The results come ahead of the COP28 Climate Summit next month, where negotiations over climate finance are once again expected to dominate proceedings.

Richer countries have faced fierce criticism in recent years over the failure to meet the $100bn target and as such evidence the milestone has been reached will be seized upon by the US, EU, and others as proof pledges made under the Paris Agreement are being belatedly honoured.

However, developing economies are set to continue to call on richer governments to ratchet up flows of climate finance to make up for the years when the $100bn target was missed. Developing economy governments are also keen to see a deal finalised on a new Loss and Damage Fund and are pushing hard for the adoption of wider reforms to the international financial system – dubbed the Bridgetown Agenda – which are designed to unlock higher levels of climate finance from multilateral development banks and the private sector.

Keep up to date with all the latest green business news by signing up to the free Daily and Weekly BusinessGreen Newsletters.