The global political order is undergoing a transformation with far-reaching consequences for international climate policy. Not only does the rise of right-wing authoritarianism increase the barriers to future climate finance commitments, but it also puts at risk existing climate finance schemes, jeopardizing emission reduction and adaptation efforts in developing countries. With the US and its allies withdrawing from multilateral agreements, hope now lies in the emergence of new alliances for ambitious climate policy and climate finance commitments — between the EU and China, for example.
We are bearing witness to a paradigm shift in international cooperation. The rise in right-wing authoritarianism has gone hand-in-hand with a push to dismantle multilateralism, and with it shrinking of aid budgets, rising global debt, and reassigning funds intended to fight the climate crisis.
David Williams directs the Rosa Luxemburg Foundation’s Climate Justice Programme in New York.
Tetet Lauron lives in the Philippines and works as a consultant to the Rosa Luxemburg Foundation’s New York Office.
A case in point would be the United States, the world’s largest historical polluter. In January 2025, Donald Trump signed an executive order to dismantle USAID, the governmental aid agency. This illegal move puts at risk up to one tenth of global climate finance, understood as financial assistance industrialized countries are obligated to provide to developing countries to respond to the effects of climate change. USAID provided approximately one third of US climate finance, around 3 billion US dollars in total. US funding for the Green Climate Fund (GCF), which was also cancelled, provided 4 billion.
Meanwhile, Ajay Banga, the head of the World Bank, has been trying to disassociate the bank’s activities from anything to do with climate. In recent months, he has emphasized the focus on job creation and stemming migration flows to align more with Trump’s agenda and gain favour with the bank’s largest financial contributor and shareholder. Going forward, it is hard to see how the US will fulfil its commitments to climate finance made under Biden, let alone increase those commitments to anywhere near the 5 trillion US dollars which it owes in historical ecological debt to Global South countries.
Yet authoritarian creep is not limited to the US, it is merely one of the most recent examples. On the international stage, new right-wing alliances are being formed, as recently showcased by the US, Israel and Argentina in the UN General Assembly. The EU itself also has right-wing member states, with Italy, Hungary, and Slovenia being the main contenders. El Salvador has become a key ally to the Trump administration, in whose footsteps now Ecuador may step. Under Modi, India has been sliding further towards autocracy.
While positions on climate may vary significantly between those countries, one thing is clear: the global political order is experiencing a major reshuffle, shifting the global response to climate change. At this critical moment, it is important to analyse the current paradigm shift and contextualize it within the pre-existing frameworks determining international climate policy with a focus on climate finance.
What Is Climate Finance?
This year marks the tenth anniversary of the Paris Agreement, a legally binding international treaty on climate change adopted at the twenty-first Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2015. It brings together almost all governments in the world to commit to limiting the world’s average temperature increase to well below 2 degrees, or ideally 1.5 degrees Celsius. Under the Paris Agreement, each country has to disclose how much it will reduce its emissions, and publish five-year plans for how they will implement the necessary changes. Importantly, it also committed industrialized countries to provide climate finance to developing countries.
The urgency of addressing global warming has become even more pressing in the years since. The latest science has a very dire message for all: we are on the brink of irreversible climate disaster. Last year was by far the warmest on record, and the first calendar year when planet Earth was more than 1.5 degrees Celsius warmer than before the industrial revolution.
Claims of unmet promises and commitments, as well as lack of transparency, continue to beset the negotiations in large part because there is no universal agreement on what actually constitutes climate finance.
The rise in global average surface temperature is increasing the frequency and intensity of extreme weather events such as floods, droughts, heatwaves, or storms, causing huge damages and loss of lives. Last year alone, just ten climate disasters caused over 200 billion US dollars in damages. The majority of these climate disasters occurred in poor and middle-income countries that have contributed very little to climate change, but are a mere preview of what lies ahead.
These and other climate disasters underline the urgent need to bolster structural resilience and undertake rebuilding measures especially in the Global South, where governments are hard-pressed financially, and people are particularly vulnerable to extreme weather events. Developing countries require massive resources to reduce their greenhouse gas emissions (mitigation), prepare for disasters (adaptation), and move towards ecologically sound development (a just transition). Developing countries also need additional resources to finance reconstruction in the aftermath of disasters (loss and damage).
Who Will Foot the Bill?
Dating back far before the Paris Agreement, climate finance takes its roots in industrialized countries’ “historical responsibility for emissions”. Having built and maintained their economies by extracting natural resources and exploiting labour from the Global South, international law clearly states that richer industrialized countries with high historical emissions are obliged to provide climate finance to poorer countries. The key underlying principle is known as ”Common but Differentiated Responsibilities and Respective Capabilities” (CBDR), included in the preamble of the UN Climate Convention. While all countries have a shared duty to address global environmental issues, they are not equally responsible. CBDR stipulates that industrialized countries have the obligation to take the lead on providing climate finance.
Global climate finance architecture is complex and evolving. The UNFCCC is the main platform for financing efforts to combat climate change. A huge chunk of resources for these financing efforts comes from industrialized countries’ federal budgets, as well as contributions from UN funds and Multilateral Development Banks (MDBs). Some financing comes from private sector investments, and a number of developing countries have even set up their own national climate plans funded from their federal budgets.
Finance has always been a thorny issue in climate change negotiations — the need for and the perennial lack thereof, who needs to pay up and how much, and who receives funds in which form. Claims of unmet promises and commitments, as well as lack of transparency, continue to beset the negotiations in large part because there is no universal agreement on what actually constitutes climate finance.
The 2009 UN Climate Change Negotiation (COP15) in Copenhagen was a defining moment in this regard. Instead of arriving at a negotiated sum informed by scientific evidence and responsive to developing countries’ needs and priorities, developed countries struck a political compromise to pledge 100 billion US dollars annually by 2020. The deal stipulated that funding from industrialized countries would be ”new” money, additional to existing international aid, along with a balance between financing for mitigation and adaptation activities.
Industrialized countries successfully lobbied to include the private sector as a source of climate finance, with investments targeting mitigation initiatives with a promise of financial returns like renewable energy, rather than projects and programs that build resilience against climate shocks, such as flood protection or drinking water provision. Public funding, on the other hand, tends to come in the form of grants, and thus much more valuable to recipient countries.
Because Copenhagen’s definition of climate finance remained so vague, industrialized countries were free to interpret it as they chose. Countries have disingenuously counted as climate finance projects not even remotely connected to addressing the climate crisis, or are even detrimental to the environment, such as coal power plants, hotels, chocolate stores, airports, or even movie productions. Industrialized countries also tend to inflate and double-count their climate finance in their aid budgets, while only three countries (Luxemburg, Norway, and Sweden) spent funds on climate finance that exceeded their budgetary allocations for foreign aid.
At the 2015 UN Climate Change Negotiations in Paris, industrialized countries pushed for an extension of the 2020 finance goal until 2025, after which a new collective finance goal would be negotiated. Industrialized countries even developed a roadmap for meeting this initial finance goal, and pushed to include grants, loans, bonds, investments, and other contributions from MDBs and the private sector as sources of climate finance.
Yet even after the extension, industrialized countries have consistently failed to meet the 100-billion- dollar annual climate goal. The only occasion on which they fulfilled their obligation was in 2022, when they provided and mobilized a total of 115.9 billion in climate finance for developing countries.
Climate Finance at the 2024 Negotiations
The 2024 UN Climate Change Negotiations (COP29) in Baku, Azerbaijan ultimately did result in an agreement on a new collective finance goal. It calls on industrialized countries to “take the lead” in mobilizing at least 300 billion dollars per year for developing countries. This is set within the wider goal of raising at least 1.3 trillion US dollars per year by 2035 from different sources, including public and private, bilateral and multilateral, and alternative sources. Meanwhile, developing countries are “encouraged” to contribute funds on a voluntary basis. On the surface, it may appear that the core amount has increased significantly from the 100 billion US dollars previous finance goal. But set against the much higher estimates of 6.88 — 9 trillion US dollars needed annually to finance climate action in developing countries, it remains grossly inadequate.
Developing countries, supported by civil society climate justice advocates, are dismayed that the new finance goal focuses only on reducing emissions and adapting to extreme events, leaving out compensation for loss and damage. If resources for reconstruction are not made available in the aftermath of destructive climate change impacts, the Loss and Damage Fund runs the risk of being an empty shell. The 768 million US dollars industrialized countries have thus far promised to fill the fund is a pittance compared to the trillions needed. Industrialized countries, those primarily responsible for providing grants to developing countries to meet this new goal, appear to have evaded that responsibility, and are now merely expected to “take the lead” in mobilizing resources. Crucially, the decision made in Baku means that bank loans and private investments will be counted towards the overall climate finance goal, meaning developing countries will ultimately have to pay them back.
Most development practices reproduce a logic based on neoliberal economic practices and unfair power relations. We need the inversion of such logic and the implementation of practices that are truly democratic, inclusive, and sustainable.
MDBs project around 120 billion US dollars in loans for low- and middle-income countries, while the private sector aims to raise 65 billion US dollars by 2030 for investment projects. In principle, loans and investments can yield positive results, but that has proven to be more an exception than the rule for many developing countries. The growing debt burden hits the poorest countries hardest, as they end up repaying more than double what they received, with debt servicing costs tripling and interest payments quadrupling over the past decade. It should come as no surprise, then, that developing countries face severe budget constraints, and are unable to finance both their people’s needs for social services and climate action. As negotiators from developing countries consistently point out, after losing loved ones and homes to disasters they have not caused, they are now expected to take out loans at high interest rates to rebuild their lives.
The decision at COP29 called for “all actors” to contribute to the new collective finance goal. The Baku to Belem Roadmap to 1.3 Trillion, a proposed finance mobilization strategy, was established to bridge the period between COP29 in Azerbaijan and COP30 in Brazil in 2025.The roadmap seeks to provide a structured pathway to clarify how the new climate finance goal could be achieved in an increasingly fraught political context. There is now an ongoing process to solicit views and proposals from different actors, including civil society, on where the necessary resources should be drawn from, and how political pressure can be generated. But precisely because everyone is deemed responsible for meeting the new goal, there is a real danger that, in the end, no one will be.
Where Do We Go From Here?
In this confused melee, many are focused on whether China and the EU can overcome past tensions and strike a balance between cooperation and competition, forge an alliance, and evolve into the new leaders in international climate diplomacy. While it is too early to tell how such an alliance could develop, the close collaboration between China and the EU in the final negotiations at COP29 is a promising sign. That said, Germany, France, and the Netherlands among others have recently announced drastic reductions in their foreign aid budgets, which will invariably impact the provision of climate finance.
Climate finance should also be understood as reparations for climate debt, owed to the people of the Global South for historical and continuing harms caused by disproportionately large contributions to the climate crisis. It is important for industrialized countries to understand that prosperity is fragile when built on the suffering of others, and that supporting climate action across the globe can enhance political stability and prosperity. For governments to align with this approach, it is crucial to reclaim the narrative. While many policymakers and media outlets in industrialized countries frame climate finance as a form of aid or even charity, in fact it is enshrined under international law as a component of a binding international treaty. It is not an act of mere benevolence, but an obligation. When European policymakers speak to upholding international norms and values in the face of the moral bankruptcy of the US under Trump, that attitude must extend to their own positions on international cooperation and climate finance.
Most development practices reproduce a logic based on neoliberal economic practices and unfair power relations. We need the inversion of such logic and the implementation of practices that are truly democratic, inclusive, and sustainable. The question is how to get there. For achieving structural change, several multilateral policy arenas are significant.
This year at COP30, each country will submit plans detailing their response to the climate crisis (known as Nationally Determined Contributions, or NDCs) and how they intend to keep the Paris Agreement alive. It represents an opportunity to mount pressure on those who are under-delivering with regard to their own emissions. The Baku to Belém Roadmap to 1.3T should offer a realistic pathway to generating climate finance sufficient to the needs of recipient countries.
For civil society, the utmost priority lies in challenging the status quo and mounting pressure for a fundamental transformation of the global financial architecture.
It is also clear, however, that climate finance on its own will not be enough. Because the problem is systemic, a restructuring of the international financial architecture and international political economy is required. Unless we begin to think differently, the resources of the Global South will continue to be exploited, and global parity will remain unattainable. Besides the UN Climate Change Negotiations, the Financing for Development negotiations take place in Seville in July, another key opportunity for the UN to set global norms and coordinate international economic governance. Debt restructuring will be a central point on the agenda, with the aim of reducing the high cost of borrowing und unsustainable debt burden facing many countries in the Global South. Governments should go further, cancelling the illegitimate debt occurred since colonial rule. With the US effectively occupying a reactionary position in the multilateral arena, the EU will be forced to position themselves more clearly. Thus far, however, the position taken has not been progressive. In April 2025 over 200 NGOs signed a public letter citing concern over “the lack of visible positive change in the European position in the negotiations of the Conference’s outcome. Instead of backing proposals for more democratic decision-making on global economic issues, European countries have so far opposed any meaningful reform”.
Geopolitical turmoil is constraining fiscal space and global capital, highlighting the dangers of developing countries over-relying on private foreign investment. The ability to raise revenue domestically is key to decreasing dependence on foreign economies. Currently, the African continent loses 88.6 billion US dollars every year to illicit financial flows, primarily through multinational corporations and high net-worth individuals who engage in intricate tax evasion schemes. To combat this, a process to establish a new UN Framework Convention on International Tax Cooperation has been initiated, designed to prevent tax evasion, mainstream progressive taxation, and in a broader sense support the democratization of the global economic system. While the US has unsurprisingly already pulled out of the convention, the recent ratification of a carbon levy on shipping, while disappointing in some aspects, shows that meaningful outcomes can be achieved even if certain states leave the negotiation table.
On the official level, aligning positions and diplomatic strategies on climate finance, debt, and tax that prioritize the Global South is crucial. For civil society, the utmost priority lies in challenging the status quo and mounting pressure for a fundamental transformation of the global financial architecture to enable an adequate response to the risks posed by the climate crisis. Community and grassroots-led mass movements can directly contest entrenched systems of inequality and injustice. In addition, in the current atmosphere of political apathy and authoritarian drift, direct action and civil disobedience serves to reinvigorate and revitalize public discourse and participation. They can be the counterweight to the utter abomination on display from global leaders today.