Norway is one of the largest contributors to climate finance in the world, relative to the size of its economy. In 2010 and 2011, the majority of Norway’s fast-start finance (FSF) was channeled through multilateral institutions and supported mitigation activities in developing countries, with a particular focus on efforts to reduce emissions from deforestation and forest degradation.

This working paper considers the scope and distribution of Norway’s self-reported FSF. It discusses innovative climate finance mechanisms, sources of finance that Norway counts as FSF, and whether the contribution is considered new and additional.

Key Findings

We recommend that Norway:

  • Sustain its support for international climate finance, which can play an important role in global efforts to support ambitious collective action on climate change

  • Disclose underpinning project-level spending information alongside aggregate reporting to the UNFCCC

  • Ensure that project lists consistently specify the recipient institution for finance to reduce discrepancies and enhance transparency

  • Report more consistently on the status of disbursement of projects

  • Work in cooperation with other donors and multilateral institutions to strengthen and harmonize reporting on climate finance, particularly with regard to the status of disbursement

Executive Summary

Developed country governments have repeatedly commit¬ted to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment considers Norway’s efforts to provide “fast-start finance” (FSF) in 2010 and 2011 in the con¬text of the pledge by developed countries to mobilize USD 30 billion from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series of studies scrutinizing how developed countries are defining, delivering, and reporting FSF.

Norway has made a substantial effort to mobilize climate finance. Norway’s bilateral climate finance contribution was USD 676 million in 2010, and USD 734 million in 2011. Norway’s contribution is one of the largest amongst developed countries, even though it is one of the smaller economies. The majority of Norwegian bilateral climate finance has supported mitigation measures under a program to reduce emissions from deforestation and degradation (REDD+). While at the time of publication official reporting on 2012 spending was not yet available, budget numbers for 2012 indicate climate finance was maintained at a similar high level. Meanwhile, the budget for 2013 entails a very large increase in grants to renewable energy.

Norway counts only public grants as its FSF contribution, most of which are clearly linked to climate change. Some of the multilateral funds to which Norway makes grant contributions (for example, the Climate In¬vestment Funds), in turn make finance available to developing countries using concessional loans and other instruments. The majority of the projects supported do seem to have climate change as a primary or significant objective.

Norway’s FSF contribution can be considered new and additional by some, although not all, definitions. Norway has substantially increased international finance that explicitly targets climate change. From 2006 to 2011 the share of bilateral climate finance increased from 3 to 21 percent of total Norwegian official development assistance (ODA) (Norway, 2011). Yet, at the same time Norway counts funding delivered against pledges that were made prior to 2009 as FSF, notably pledges of funding to support developing country efforts to reduce emissions from deforestation and forest degradation.

Norwegian FSF reporting practices would be substantially strengthened through reporting on the specific programs supported. For 2010 and 2011 Norway provided overview reports to the UNFCCC of its FSF contribution. The Norwegian FSF report includes substantial quantification of the objectives and recipients of climate finance. There is substantial project-level information on how REDD+ finance has been spent. However, there is no comprehensive list of all of the projects that have been supported by Norwegian FSF, which poses significant challenges for independent scrutiny of the contribution. Norway participates in the International Aid Transparency Initiative (IATI) for its ODA spending. This includes relatively comprehensive information on the institutions receiving and implementing projects.