Clean Air Fund and Climate Policy Initiative analysis shows that international development funding from donor governments, agencies and development banks for outdoor air quality projects ($2.3 billion) exceeded funding for fossil fuel projects ($1.5 billion) for the first time in 2021.
Despite this, air quality projects continue to be chronically underfunded, with only 1% of international aid and other development funding ($17.3 billion) being expressly committed to targeting air pollution.
The report calls on donors to direct more and better funding to clean air and work to unlock potential co-benefits of climate and health finance.
London, United Kingdom – International development funding for clean air projects has, for the first time, exceeded funding for fossil fuel-prolonging projects, according to a new report from Clean Air Fund. The analysis shows that, in 2021, an estimated $2.3 billion was spent on tackling outdoor air pollution in low- and middle-income countries, compared with $1.5 billion on fossil fuel projects such as oil and gas extraction and production.
Aid funding for fossil fuel-prolonging projects has declined year-on-year since it peaked at $11.9 billion in 2019, thanks in part to campaigning against such international assistance. Phasing out this funding, which threatens both public health and the environment, is imperative to addressing rising temperatures.
Investing in clean air will mitigate climate change, reduce global health burdens and boost green growth at the same time. However, between 2015-2021, only 1% of international development funding ($17.3 billion) and only 2% of international public climate finance ($11.6 billion) went towards tackling air pollution.
Jane Burston, Executive Director of the Clean Air Fund, said: “In a rapidly warming world, where outdoor air pollution claims 4.2 million lives per year, there is no space for international aid for fossil fuels. Our findings offer the first tentative sign that we are winning one of the battles in the war against unconstrained fossil fuel development. We urge donors to dramatically increase funding for clean air projects that will improve our health and cut emissions.”
Clean Air Fund’s annual The State of Global Air Quality Funding report provides the only global analysis of international development finance flows from funders such as multilateral development banks, bilateral development agencies, and donor governments to outdoor air quality. This analysis helps to build transparency and provides an evidence base for policy makers, funders and campaigners.
Momentum to end international public fossil fuel finance grew in 2021, with countries pledging at COP26 to stop funding coal, oil and gas projects, and major fossil fuel financiers including Canada, US, the UK, and Germany agreeing at the G7 to phase out financial support for coal development abroad.
However, the small success in cutting development assistance for fossil fuels is overshadowed by the huge sums still being spent by governments on domestic subsidies for oil, gas and coal use and production. The International Monetary Fund reported that subsidies hit $7tn in 2022, the equivalent of 7% of global GDP, and noted that such spending led directly to increases in premature deaths from air pollution.
The report shows considerable regional differences in funding. African countries received only 5% (or $0.76 billion) of all air quality funding between 2017-2021, despite 5 of the top 10 countries with the highest levels of air pollution being in Africa. Meanwhile, 86% ($12 billion) of international development funding for outdoor air quality was concentrated in only five Asian countries – China (37%), Philippines (20%), Bangladesh (17%), Mongolia (6%) and Pakistan (6%).
The report comes ahead of the Annual Meetings of the World Bank Group and the International Monetary Fund (IMF), from 9 to 15 October. The Clean Air Fund is calling on the World Bank to substantially increase development finance for air quality through its own investments and by driving the clean air agenda with other multilateral development banks. The World Bank’s new leader, Ajay Banga, has made access to clean air part of the Bank’s remit, and acknowledged the importance of clean air in delivering development goals, but not yet made it a priority.
In a comment in the report, Helen Clark, former Prime Minister of New Zealand and former head of the United Nations Development Programme said: “When governments are enabled to take smart, considered action to clean up our air, they unlock benefits for the climate and for health and economic development. And because air pollution particularly harms the health and development of children, especially in low- and middle-income countries, action for clean air must be central to our commitments to future generations. It’s time for policymakers and funders to raise their ambitions.”
Clean Air Fund encourages governments and multilateral development banks to explore untapped funding opportunities for air quality, including the deployment of new, more complex financial instruments, to scale up air quality funding globally, alongside traditional loans and grants.
About Clean Air Fund:
Founded in 2019, the Clean Air Fund is a global philanthropic organisation working with governments, funders, business and campaigners to create a future where everyone breathes clean air. It funds and partners with organisations that promote air quality data, build public demand for clean air and drive policy change.
About Climate Policy Initiative (CPI):
CPI is an analysis and advisory organisation with deep expertise in finance and policy. Their mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. Climate Policy Initiative has six offices around the world in Brazil, India, Indonesia, the United Kingdom, and the United States.
Data sources for The State of Global Air Quality Funding 2023:
Jointly developed by Clean Air Fund and Climate Policy Initiative (CPI), the report used data collected from public sources. For air quality funding figures, the Clean Air Fund and CPI relied on data from both development and international public climate finance flows, such as the OECD Creditor Reporting System for 2015-2021, CPI’s proprietary survey data for 2015-2021, Climate Funds Update database maintained by ODI, and publicly available data reported by development finance institutions. For fossil fuel-prolonging funding, the Clean Air Fund and CPI relied on the OECD Creditor Reporting System for 2015-2021. Every effort has been made to ensure the data is representative of the global air quality funding landscape but the accuracy of our analysis relies on the quality of information provided by funders and the availability of funding information. More information on the methodology, sources and assumptions is available in a detailed methodology document.
International development funding: The report covers funding from international development funders, including multilateral development banks, bilateral development agencies and governments which provide international funding to low- and middle-income countries in the form of development only. The analysis in the report does not currently include funding coming from local governments’ domestic resources (e.g. from national budgets) or private-sector funding.
Fossil fuel-prolonging projects: The report looks at both direct and indirect funding for fossil fuel-prolonging projects. Direct funding for fossil fuel-prolonging projects refers to projects or interventions involving the construction of assets and infrastructure which directly cause air pollution, such as the development or expansion of coal power plants. Indirect funding for fossil fuel-prolonging projects refers to projects or interventions leading to the creation of, or promoting, air polluting activities, such as support for research, policy engagement and advocacy in the oil and gas sector.
Air quality projects: The report looks at both outdoor air quality funding and funding for projects with outdoor air quality co-benefits. Outdoor air quality funding refers to finance committed to projects where improvements to air quality are a primary objective (usually explicitly stated in the project description), for example, air quality monitoring. Funding for projects with outdoor air quality co-benefits looks at finance committed to projects where improvements to air quality are a component of a project but are a co-benefit to the investment. The link to outdoor air quality, in this case, may not be explicitly mentioned in the project description.
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