Developed economies delay climate finance plans, leaving poorer countries facing funding uncertainty

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Highlights

Developed countries are projected to reach about $229 billion of the $300 billion annual climate finance goal by 2030, primarily via multilateral development banks providing $185 billion.
Climate finance faces a $7 billion gap even if the EU maintains $36 billion annually and the UK, Canada, and others fulfill pledges, with the U.S., Japan, and Australia yet to commit new targets.
Bilateral climate finance to developing nations could drop by up to 70% if expiring targets are not replaced, putting pressure on Cop31 donors like France, Germany, and Australia to clarify their plans.

Climate funding pipeline lacks public commitments

As reported by The Guardian, analysis by the NRDC and E3G thinktanks indicates developed countries are broadly on track to approach the $300 billion annual climate finance goal agreed at Cop29, with about $229 billion a year expected by 2030. Multilateral development banks are projected to provide about $185 billion of that total, suggesting the main risk is not the long-term trajectory but the lack of public detail from major governments on near-term commitments.

Joe Thwaites, international climate finance director at the National Resources Defense Council, says most countries appear to be in relatively good shape on climate finance but are not being transparent enough about their plans. He says that if the EU maintains provision of about $36 billion a year, alongside existing pledges from the UK, Canada and some smaller countries, roughly $7 billion would still need to be filled.

Thwaites adds that the gap could be reduced by the U.S., Japan and Australia, which have not yet set out climate finance goals. Carbon Brief analysis also suggests that if countries do not replace expiring targets, developing economies could face a 70% drop in bilateral finance from rich countries, though Thwaites considers that outcome unlikely because new commitments are still expected.

Cop31 pressure grows for major donors

Climate finance remains a contentious issue at the Cop31 negotiations, which begin on Monday in Antalya, Turkey, under an Australian presidency agreed through a compromise arrangement. Some developing countries want earlier finance decisions reopened because they are concerned that support levels could fall just as climate adaptation and energy transition needs intensify.

The World Bank retired its official climate finance target this summer under pressure from Donald Trump’s White House, though it is still expected to provide tens of billions of dollars annually for climate-related projects. France, Germany and Australia are among the major economies yet to publicly state new goals, an unusual position for a developed country hosting a Cop summit.

The UK cuts its climate finance earlier this year, while France’s AFD aid agency says its 2025 to 2027 strategy maintains targets of 6 billion euros a year in climate finance and 800 million euros a year for biodiversity. Japan says it remains fully committed under the Paris Agreement and points to support delivered through the Japan International Cooperation Agency, international organizations and climate funds, including a commitment of up to 165 billion yen to the Green Climate Fund’s second replenishment for 2024 to 2027.

Earlier, we discussed how sovereign ratings pressure is rising as geopolitical shocks and higher fiscal spending lift borrowing risks.

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