Progress Report on President Biden’s Climate Finance Pledge

The United States is committed to exercising U.S. leadership to implement the goals of the Paris Agreement, to accelerate the global clean energy transition, and to enable vulnerable countries and communities to build resilience against the impacts of climate change.

To that end, the United States will continue to support developing country partners as they pursue ambitious climate action. The United States has prioritized boosting international climate finance, as well as demanding that international financial institutions evolve to better enable emerging market and developing countries to respond to global challenges, including climate change. That is why President Biden launched the first U.S. International Climate Finance Plan in 2021 and committed to work with Congress to scale up international public climate finance to over $11 billion annually by 2024, quadrupling from the highest previous levels of climate finance provided by the United States.

Putting the United States on Track to Meet President Biden’s Historic Climate Finance Pledge

U.S. international public climate finance increased 286% from 2021 to 2022, reaching $5.8 billion in 2022. In 2023, preliminary estimates suggest that U.S. climate finance will exceed $9.5 billion, on track to meet the President’s pledge in 2024. In addition to these amounts, the United States also supports climate finance through its contributions to the multilateral development banks.

These figures also include the largest-ever expansion of U.S. funding for adaptation, which reached $2.3 billion in 2022, on track to reach President Biden’s pledge of working with Congress to scale up adaptation finance to $3 billion per year by 2024, as part of the President’s Emergency Plan for Adaptation and Resilience (PREPARE).  This funding will enable climate-vulnerable countries to safeguard hard-won development goals, including poverty reduction, job creation, improved health outcomes, and better lives and livelihoods for women and girls. The United States is committed to working with countries and communities to help them adapt to a changing climate, including those which have contributed the least to this crisis yet are often the most impacted.

Supporting Efforts to Meet the Collective $100 Billion Goal

Partly in response to the United States Multilateral Development Bank (MDB) Evolution agenda, the MDBs significantly increased their climate finance by $10 billion in 2022 compared to the previous year, for a total contribution of over $60 billion.

Together, these increases in climate finance are a key reason why the OECD recently expressed confidence that the $100 billion collective climate finance goal was likely met in 2022.

Unlocking the Full Potential of the International Climate Finance Architecture

The United States is also leading work and reforms across the climate finance architecture, including with the MDBs, the Green Climate Fund and other multilateral funds, the G20 Sustainable Finance Working Group, the Coalition of Finance Ministers for Climate Action, and other institutions and platforms to mobilize climate finance and to accelerate and improve access to that finance alongside relevant policy and technical assistance support. At COP28, Vice President Harris announced that the United States will pledge $3 billion to the Green Climate Fund, subject to the availability of funds, as part of the Fund’s Second Replenishment.

Mobilizing Private Finance at Scale

The United States has also redoubled efforts to attract significant amounts of private-sector and philanthropic finance for climate action. We are doing this through initiatives such as the PREPARE Call to Action, the Blended Finance for the Energy Transition (BFET) program, the Methane Finance Sprint, and the Energy Transition Accelerator (ETA). In addition, the U.S. International Development Finance Corporation, the Export-Import Bank of the United States, the Millennium Challenge Corporation, and the U.S. Trade and Development Agency have together ramped up private sector mobilization for climate-smart investments around the world.

The United States is proactively forging and nurturing partnerships to leverage public finance for greater impact. For example, we are engaged in Just Energy Transition Partnerships (JETPs) with South Africa, Indonesia, and Vietnam to accelerate their ambitious energy transitions, strengthen the policy and regulatory environment for clean energy investment, and build a pipeline of clean energy projects. We co-lead the International Partners Group (IPG) for the Indonesia JETP with Japan and worked with our IPG partners and the Glasgow Financial Alliance for Net Zero to mobilize over $20 billion in public and private financing.  On forestry, the United States has joined the Forest & Climate Leaders’ Partnership with 25 other countries, committing to work collectively to halt and reverse forest loss and land degradation by 2030. As part of the Global Forest Finance Pledge, the participating countries pledged to collectively mobilize $12 billion for the protection, restoration, and sustainable management of forests by 2025.

Aligning Financial Flows and Driving Down the Cost of Clean Energy

Finally, in addition to our efforts to directly support developing countries, the United States continues to work to build a low-greenhouse gas, climate-resilient economy.  Aligning financial flows with the goals of the Paris Agreement is critical to limiting warming to well below 2 degrees Celsius, keeping 1.5 degrees within reach, and tackling the climate crisis. While we are scaling-up our climate finance, we are also driving down the cost of technologies necessary for the clean energy transition through the historic investments in the Inflation Reduction Act and resulting innovation and market creation. This could drop the costs of these technologies by up to 25 percent in some sectors, according to some estimates.  Given projected spending on clean energy worldwide, that means more than $120 billion could be saved globally by 2030.  The United States is working directly with the private sector to boost green growth, including through the Treasury Department’s Principles for Net-Zero Financing and Investment. The Principles promote consistency and credibility in financial institutions’ voluntary net-zero commitments.

DETAILED ANNEX: U.S. INTERNATIONAL PUBLIC FINANCE

Climate Finance in 2022

Total U.S. climate finance increased from $1.5 billion in FY 2021 to $5.8 billion in FY 2022.  Of this, $2.3 billion was for adaptation, $2.8 billion was for clean energy, and $655 million was for sustainable landscapes. $2.6 billion was provided as grants, while the remainder was loans, loan guarantees, insurance products, and other financial instruments intended to leverage greater sums of private finance.  This includes a $950 million concessional loan to the Clean Technology Fund.

Climate Finance in 2023 (Projections)

Full ex-post data is not yet available for FY 2023, but preliminary estimates suggest that U.S. climate finance will exceed $9.5 billion, fully in line with and on-track to meet the President’s pledge in FY 2024.

DFI Leadership

The United States recognized the power and importance of scaling public finance for the mobilization of private capital through its bilateral development finance institution, the U.S. International Development Finance Corporation (DFC). Over the past three years, DFC’s annual climate finance commitments have grown from less than $500 million to over $3.7 billion in FY 2023. DFC’s climate commitments encompass private sector investments across nearly every sector of the economy including clean energy, food security, critical minerals, adaptation, and nature-based solutions.

Multilateral Funds

The United States is a committed supporter of multilateral climate funds, which are crucial partners for emerging markets and developing countries working to increase resilience and lower emissions. In 2022, the United States pledged $600.8 million for the Global Environment Facility’s eighth replenishment, subject to the availability of funds, a significant portion of which is dedicated to climate. President Biden also doubled his pledge to the Adaptation Fund to $100 million, subject to congressional notification, and we have provided the first $25 million of those funds.

Earlier this year, the United States provided $1 billion to support the Green Climate Fund (GCF), bringing total U.S. support for the GCF to date to $2 billion. In 2023, the United States co-chaired the board of the GCF, making significant progress on further improving access to the Fund and increasing mobilization of private funds, including with the hiring of a new, visionary Executive Director and the approval of a Strategic Plan focused on concrete programmatic and operational improvement targets.

The United States announced a multi-year U.S. pledge of $3 billion for the GCF for its Second Replenishment, subject to the availability of funds.  This funding will support the GCF in its mission to mobilize finance to help developing countries reduce their emissions, enhance energy security through diversification of energy sources, assist the most vulnerable to adapt to climate impacts, and strengthen the resilience of their economies and critical infrastructure.  In the context of our pledge, the United States will continue to champion an ambitious GCF evolution agenda to help ensure that future U.S. funds provided to the GCF have maximum impact for U.S. taxpayers with respect to climate and diplomacy.

MDB Evolution

Under President Biden, the Treasury Department has championed efforts to evolve the MDB to be more fit-for-purpose to respond to global challenges, including climate change, with urgency and impact.  Significant progress was achieved this year, beginning with the World Bank, which has adopted a new vision statement of creating a world free of poverty on a livable planet.  Among many other reforms, the United States has pressed for measures to free up additional MDB lending capacity, which in turn will boost MDB climate finance, and improve operational models, including to strengthen crisis response toolkits and incorporate climate-resilient debt clauses into loan agreements.

The United States has also championed the use of innovative financial approaches across the MDBs, including guarantee platforms, hybrid capital, and securitization.  As one example, we aim to support the Innovative Finance Facility for Climate in Asia and the Pacific (IFCAP) at the Asian Development Bank, which could mobilize as much as $15 billion in new climate finance.  We are also pushing the MDBs to maximize the impact of private capital mobilization reforms by increasing investor co-financing, creating robust private capital mobilization goals and metrics, and increasing data transparency.  Measures already adopted or under consideration are expected to increase MDB lending capacity by $200 billion over 10 years, and additional work remains to build on this year’s progress.

Private Finance & Philanthropy

The United States is working to mobilize more private and philanthropic capital for climate action. Since Special Envoy Kerry and USAID Administrator Power launched the PREPARE Call to Action to the Private Sector at COP27, ten companies have mobilized an estimated $610 million in additional finance to build climate resilience in partner countries. These investments have supported more than 9.3 million people in Africa, Middle East, and Latin America to better manage the impacts of climate change.

The United States is also collaborating across government agencies to support innovative private sector-led approaches to blended finance. Through the Blended Finance for the Energy Transition (BFET) program, the State Department, in partnership with USAID’s Climate Finance for Development Accelerator, will help mobilize over $1 billion of capital to accelerate the energy transition in emerging market and developing countries. With co-funding from the Danish Ministry of Foreign Affairs and development finance institution, IFU, and engagement from the U.S. International Development Finance Corporation, BFET competitively awarded funding to two private sector-led blended finance investment funds.

Philanthropies have been stepping up as part of the Methane Finance Sprint, launched in April 2023 by President Biden to increase overall funding for methane abatement. Overall, methane grant funding mobilized since COP27 has significantly exceeded the goal set by President Biden. Philanthropies have been an essential part of this effort.

We are also working with philanthropic partners to design and launch the Energy Transition Accelerator (ETA) to catalyze private capital to speed up the transition from dirty to clean power in developing and emerging economies through high-integrity carbon crediting.  The ETA partners – the State Department, the Bezos Earth Fund, and The Rockefeller Foundation – will join with interested countries and leading companies to pioneer an innovative sectoral-scale crediting approach.  This approach will generate high-quality credits based on verified emission reductions achieved across the power sector, ensuring strong environmental integrity and incentivizing large-scale sectoral transformation.