Hosts of the most recent UN climate talks are expressing growing alarm that international lenders are withdrawing from their financial commitments to support developing nations in combating global warming.
This concern has intensified as the Trump administration has significantly reduced foreign aid and discouraged major US-based development lenders, such as the World Bank and the International Monetary Fund (IMF), from prioritising climate finance.
Developing countries, excluding China, are projected to require approximately $1.3 trillion annually by 2035 to transition to renewable energy and bolster their economies against increasingly extreme weather patterns.
However, current commitments fall far short of this estimate. During last year’s UN COP29 summit in Azerbaijan, wealthy nations agreed to increase climate finance to $300 billion per year by 2035, an amount widely criticised as woefully insufficient.
To bridge this financial gap, Azerbaijan and Brazil (host of this year’s COP30 conference) launched an initiative anticipating “significant” contributions from international lenders.
Yet, only two, the African Development Bank and the Inter-American Development Bank, have responded with ideas, as noted by COP29 president Mukhtar Babayev.
He urged their shareholders to address these concerns, fearing that a “complex and volatile global environment is distracting” key players from fulfilling their roles in climate finance.
Azerbaijan’s top climate negotiator, Yalchin Rafiyev, described a “worrisome trend” observed during April’s IMF and World Bank spring meetings in Washington, where institutions previously enthusiastic about climate lending now appeared “very much reluctant to talk about climate at all.”
This reluctance is particularly troubling given the expectation that these lenders would provide necessary finance in the absence of other sources.
US Treasury Secretary Scott Bessent, the World Bank’s largest shareholder, has urged the bank to focus on “dependable technologies,” potentially including gas and other fossil fuel-based energy production, rather than “distortionary climate finance targets.”
Under the Paris Agreement, developed nations, historically most responsible for global warming, are obligated to provide climate finance to poorer countries, though China and others also make voluntary contributions.
Finance remains a persistent source of tension in UN climate negotiations, with donors consistently failing to meet past pledges.
European nations have also recently scaled back foreign aid, raising fears for climate finance budgets.
While multilateral development banks (MDBs) like the World Bank Group estimated they could provide substantial climate financing by 2030, policy experts like Rob Moore of E3G warn that MDBs disengaging from climate change would be detrimental, potentially leading regional MDBs to play a larger role in shaping the future economy.
