By Faridat Salifu
Wealthy countries should replace climate loans with grant-based financing to help vulnerable nations respond to climate change without worsening their debt burdens, Oxfam has said.
In a new analysis, the international organisation argued that public, grant-based climate finance is essential for developing countries to adapt to climate change, reduce greenhouse gas emissions and address climate-related loss and damage.
The report found that although wealthy nations reported mobilising nearly $137 billion in climate finance in 2024 for low- and middle-income countries, much of the support was delivered through loans rather than grants.
According to Oxfam, about $106 billion of the reported finance came from public sources, with approximately 65 per cent, or $69 billion, provided as loans, many of them on commercial terms.
The organisation estimated that the actual value of climate finance delivered was between $33 billion and $45 billion, with only $15 billion to $18 billion allocated to climate adaptation.
Oxfam Climate Policy Lead, Mariana Paoli, said the current financing model fails to meet the needs of countries facing the worst impacts of climate change.
“What is needed is public, grant-based climate finance at the scale the climate crisis demands—not accounting tricks, not loans that worsen debt, and not empty promises,” she said.
Paoli said grants provide vulnerable countries with the resources needed to strengthen climate resilience, cut emissions, protect lives and respond to climate-related loss and damage.
She also accused wealthy nations of overstating the value of their climate finance by as much as $100 billion in 2024, compared with an estimated overstatement of $88 billion in 2022.
According to her, richer countries create an illusion of solidarity by reporting inflated figures while shifting the financial burden to nations that have contributed least to the climate crisis.
The report comes as pressure mounts on developed countries to increase climate finance commitments ahead of future international climate negotiations.
Meanwhile, the United Nations Environment Programme’s Adaptation Gap Report 2025 projects that adaptation finance needs in low- and middle-income countries will reach between $310 billion and $365 billion annually by 2035.