As I walked through the crowded conference hall in Dubai last December, a familiar tension hung in the air. Climate negotiators from nearly 200 countries had gathered for COP28, and once again, the thorny issue of climate finance dominated conversations in both official sessions and hushed corridor discussions.
“We keep hearing about billions pledged, but where is this money actually going?” asked Amina, a negotiator from Kenya I’ve followed for several climate summits. She gestured toward a glossy report on the table between us. “When our communities ask what happened to all this promised funding, what am I supposed to tell them?”
Her frustration echoed what I’ve heard repeatedly in my reporting across the Global South – from flooded villages in Bangladesh to drought-stricken communities in Ethiopia. The disconnect between climate finance promises and realities on the ground has become a crisis of trust.
A troubling investigation published last month by researchers at Oxfam reveals why that trust has eroded. Their analysis found that wealthy nations have been systematically gaming the system, counting everything from investments in ice cream shops to airport expansions as “climate finance” – a practice that amounts to a global shell game with devastating consequences for vulnerable communities.
When the Paris Agreement was signed in 2015, developed nations committed to providing $100 billion annually by 2020 to help developing countries reduce emissions and adapt to climate impacts. On paper, donor countries claim they’ve nearly met this target, reporting $83.3 billion in 2020. But Oxfam’s research suggests the real value may be as little as $21-24.5 billion – less than a quarter of what was promised.
The accounting sleight-of-hand happens in multiple ways. Countries routinely count the entire value of a project with minimal climate benefits as climate finance. Japan, for instance, reported a $630 million loan for a coal power plant in Bangladesh as climate finance because it was marginally more efficient than older plants – despite coal being a primary driver of the climate crisis.
“This isn’t just creative accounting – it’s a fundamental breach of trust,” explains Dr. Saleemul Huq, Director of the International Centre for Climate Change and Development in Bangladesh, whom I spoke with via video call. “Communities facing existential threats from climate change are essentially being told that investments in fossil fuel infrastructure and commercial ventures count as the support they were promised.”
The problem extends beyond fossil fuel projects. The Organization for Economic Cooperation and Development (OECD), which tracks climate finance flows, found that donor countries have claimed climate finance for funding ice cream parlors in Morocco and hotel developments in Tunisia – projects with tenuous connections to climate action at best.
In northern British Columbia last summer, I visited the Tahltan First Nation, where changing precipitation patterns and warmer temperatures are transforming their traditional territories. Elder Marie Quock showed me how salmon runs had diminished and berry harvests had become unpredictable.
“We’re seeing changes faster than our stories can adapt,” she told me. “We need real support for community-led adaptation, not money that disappears into consultants’ pockets or projects that never reach us.”
The accounting problem is compounded by an over-reliance on loans rather than grants. According to Oxfam’s analysis, about 71% of public climate finance is delivered as loans, forcing already debt-burdened countries to repay climate assistance with interest. When adjusted for this loan component, the true grant equivalent of climate finance drops significantly.
“Countries already facing economic challenges due to climate impacts are being asked to take on more debt to address a crisis they did little to cause,” says Harjeet Singh, global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative. “This contradicts the ‘polluter pays’ principle that should guide climate finance.”
The problem is structural. The United Nations Framework Convention on Climate Change (UNFCCC) has never established clear accounting rules for climate finance, allowing donor countries to create their own methodologies. This has led to inconsistent reporting and inflated figures.
Statistics Canada data shows that Canada ranks among the highest per-capita carbon emitters historically, yet its climate finance contributions rank near the bottom among wealthy nations when measured as a percentage of gross national income. Similar disparities exist across most developed economies.
Dr. Jessica Gordon, climate finance researcher at the University of British Columbia, points to another problem: “The transparency gap makes accountability nearly impossible. Without standardized reporting requirements, recipient countries and civil society can’t effectively track where funds are going or assess their impact.”
At COP28, negotiators established a new climate finance goal to replace the $100 billion target, which expires in 2025. But without addressing the accounting problems plaguing the current system, experts warn the new goal may face similar implementation challenges.
Some solutions are emerging. The European Union recently adopted stricter criteria for what counts as climate finance, excluding fossil fuel investments and requiring clearer climate-specific benefits for any reported projects. Independent monitoring initiatives like the Climate Finance Shadow Report are also helping track the gap between reported and actual finance.
“What we need is a complete overhaul of the system,” argues Tina Stege, climate envoy for the Marshall Islands, whom I interviewed earlier this year. “Standardized accounting rules, independent verification, and a focus on grants rather than loans would transform climate finance from an accounting exercise to a genuine tool for climate justice.”
As I left Dubai after two exhausting weeks of climate talks, I thought about what real climate finance accountability would look like. It would mean funds flowing directly to communities like the Tahltan, helping them protect salmon habitat and adapt their food systems. It would mean support for Bangladesh to build renewable energy systems instead of coal plants. And it would mean transparency that allows people like Amina to tell her constituents exactly where the promised money has gone.
Until then, the global shell game continues – with the world’s most vulnerable communities paying the price.
