Who will finance global climate solutions? Not the West.

Yahoo

01-05-2025

International climate action has long rested on the consequential distinction between the Global North and the Global South. Wealthier, earlier-to-industrialize nations contributed the most to a warming planet while developing countries bear the brunt of the climate crisis. As a result, developed countries have been called on to help developing nations reduce their carbon emissions and adapt to climate change by providing financial assistance, technology, and other resources.
This essential premise has been embedded in various climate agreements signed since the 1990s, including the most recent pact inked at the 29th Conference of Parties, or COP29, in Baku, Azerbaijan, late last year. There, wealthy countries agreed to provide $300 billion per year to developing nations by 2035.
Wealthy countries, however, have frequently failed to live up to their promises, slowly eroding the Global South's trust in a multilateral approach to the climate crisis. Over the last three months, the Trump administration has only accelerated that process. First, President Donald Trump withdrew the United States from the Paris Agreement, the 2015 climate treaty to keep global warming to less than 1.5 degrees Celsius. Then, Trump cut funding for various international climate programs, including the Just Energy Transition Partnerships and other initiatives supported by the U.S. Agency for International Development. And most recently, Treasury Secretary Scott Bessent criticized the World Bank and International Monetary Fund, prominent financial institutions that have made climate a priority in recent years, for straying from their mission.
'The IMF was once unwavering in its mission of promoting global monetary cooperation and financial stability,' Bessent said last week. 'Now it devotes disproportionate time and resources to work on climate change, gender, and social issues.'
These changes in the U.S.'s stance are taking place at a time when the European Union is also slashing its development funding, which includes climate aid. Countries including the United Kingdom, Switzerland, Germany, France, and the Netherlands have cut as much as 37 percent of their aid budgets, moving the money instead to defense and stimulus measures. According to one analysis, the aid cuts add up to nearly $40 billion.
While it's unclear exactly how much total climate aid will be lost as a result of these changes, the figure is a substantial portion of international climate finance. The U.S. alone provided $11 billion last year — 8 percent of global climate aid. Much of that has already been lost this year through cuts to the U.S. Agency for International Aid and the Green Climate Fund.
'We are at a very uniquely devastating moment,' said Harjeet Singh, founder of the Satat Sampada Climate Foundation, a nongovernmental organization based in India, and a climate justice activist. 'The U.S.' retreat, more fossil fuel production, no climate finance or aid, and trust in the multilateral system at the bottom — that's where we are. It's not inspiring.'
The resulting vacuum in leadership is increasingly being filled by countries in the Global South, primarily China. In the wake of the Trump administration's yo-yoing on tariffs, President Xi Jinping reaffirmed China's commitment to climate action at a meeting of global leaders. In a speech last week, Xi announced that China would set more stringent emission targets ahead of COP30, the annual climate conference taking place in Brazil later this year.
'However the world may change, China will not slow down its climate actions,' he said.
At the same time, China is forging stronger alliances across the world. With tensions rising between the United States and European countries over tariffs, China has been deepening diplomatic ties in Europe. Similarly, it has called for a 'Dragon-Elephant tango' with India, a country with which it has historically clashed over border disputes.
'We're seeing an inflection point in the global world order,' said Kaveh Guilanpour, a climate finance expert at the Center for Climate and Energy Solutions and a former climate negotiator for the United Kingdom, European Union, and small island states. 'It's accelerated in a matter of weeks, something that was probably going to take decades.'
The shift in the global order toward the East is being recognized by top climate officials. COP30 President André Correa do Lago told reporters last month that with the U.S. retreating from climate leadership and Europe prioritizing defense spending, countries in the Global South have an opportunity to step forward.
'The Global South has an important role to play at this stage,' he said. 'We followed the agreements and engaged in extensive debates but remained constructive. We accepted the Paris Agreement, among others. However, the North's commitments related to financial support and accelerating emission reductions have not materialized as planned.'
It's unclear exactly what these changing political dynamics might mean for climate negotiations in Belém, Brazil, in November. For one, the distinction between developed and developing countries has been enshrined in climate agreements since the convening of the United Nations Framework Convention on Climate Change, the 1992 international treaty and process by which countries limit global temperature rise. That crucial classification was based on countries' economic status at the time — and hasn't been revised since. As a result, even as countries like South Korea, Singapore, United Arab Emirates have grown economically and contributed increasingly more to climate change, they continue to be classified as developing nations during climate negotiations.
While developing countries have worked to preserve the distinction on paper, many have contributed funding to poorer nations outside of the United Nations framework in recognition of their responsibility to help tackle climate change. According to one estimate, China, for instance, has provided $24 billion in climate aid to Global South countries since 2016. In 2023, during COP28 in Dubai, the United Arab Emirates pledged $100 million to help emerging economies manage the losses that have already resulted from a warming planet. Similarly, Brazil, Russia, and India have also contributed billions of dollars to multilateral banks and other international institutions that provide climate aid.
Ultimately, these shifts in climate action and funding may allow for new partnerships to form and new climate leaders to emerge.
'If advanced economies are pulling back and ceding power and influence, and other countries are stepping up, shouldn't we recognize that?' said Joe Thwaites, an expert on international climate funding at the nonprofit Natural Resources Defense Council. 'That realignment is going to determine how successful a lot of climate action is going to be in the next decade or two.'
This story was originally published by Grist with the headline Who will finance global climate solutions? Not the West. on May 1, 2025.