From Paris 2015 to Belém 2025: climate finance explained
Climate finance is sometimes used to refer to broader financial flows into sustainability investments but, in the UN context, it has a much more specific meaning
UN negotiations and commitments on scaling up international funding for climate action face a critical turning point ahead of the next climate negotiations in the Amazon
“Climate finance” generally refers to financial resources devoted to tackling climate change, both in terms of mitigation and adaptation.
Mitigation means reducing emissions through investments in renewable energy, energy efficiency, sustainable agriculture or reducing deforestation or emissions in other sectors. Adaptation is about adjusting and preparing for the effects of climate change – such as building flood defences, adapting agricultural practices to the possibility of drought, creating alert systems or generally being prepared for a variety of extreme events.
Sometimes the term climate finance is used to refer to broader financial flows towards investments in the energy and climate transition, such as sustainable finance or green finance. However, in the UN context, climate finance has a much more specific meaning and generally refers to resources mobilised by governments or with support from governments or multilateral organisations such as the Green Climate Fund (GCF) and the Global Environmental Facility (GEF). Under the 2015 Paris Agreement on climate change, as well as under previous international agreements since 1992, developed countries are obliged to provide financial support to developing countries in order for them to reach their Nationally Determined Contributions (NDCs) – their national level plans to reduce emissions in line with the global treaty.
Funding needs
According to a 2021 review carried out for the UN Framework Convention on Climate Change (UNFCCC) on the cost of implementing NDCs in the developing world, there is a cumulative need to mobilise around $600bn a year up to 2030. Other assessments point to much higher figures: the High Level Expert Group on Climate Finance, which has been supporting the Conference Of the Parties (COPs) to the UNFCCC for a few years with analysis and reports, says investments in all areas of climate action are needed to the tune of $6.5trn globally. This figure includes advanced economies as well as developing ones. The largest increase in investment is however needed in developing economies – excluding China – which are projected to contribute more than 50% of global emissions by 2030.
Beyond the debate on how to mobilise funding from a variety of countries, not just from the developed world, experts agree public funding also needs to catalyse and attract private sector capital to increase the impact of the public level funding
At the COP15 summit in Copenhagen in 2009, developed countries agreed to mobilise $100bn annually by 2020 – a target that has not been fully met, with efforts to boost financing continuing since then. At COP29 in Baku, Azerbaijan in 2024, which was dubbed the “finance COP”, countries struggled to reach an agreement, particularly because of disputes over whether funding should only come from developed countries. These eventually said they would “lead” in mobilising $300bn annually, while calling on all countries to deliver $1.3trn by 2035. This is known as the “Baku to Belém roadmap to 1.3T”.
Beyond the debate on how to mobilise funding from a variety of countries, not just from the developed world, experts agree public funding also needs to catalyse and attract private sector capital to increase the impact of the public level funding. This is even more important in the changing global context, against a backdrop of widespread budget cuts in the developed world.
The history of climate finance
The idea financial mechanisms are needed to support developing countries in mitigation and adaptation efforts has been around since the beginning of international climate change-related discussions and negotiations.
1990: The 1st assessment report of the Intergovernmental Panel on Climate Change (IPCC) covers the need to provide funding to developing countries as part of the response to climate change.
1992: The provision of funding for the developing world is formally recognised as part of the UNFCCC, agreed at the Rio Earth Summit.
1994: The GEF starts serving as the first operating entity of the financial mechanism under the UNFCCC.
1997: The Kyoto Protocol introduces the Clean Development Mechanism, a system for developed countries to fund emission reduction projects in developing countries in exchange for carbon credits.
2001: Countries establish the Adaptation Fund under the Kyoto Protocol.
2009: At the Copenhagen COP15, developed nations pledge to mobilise $100bn a year by 2020 to support developing countries in climate action.
2010: Countries agree to the creation of the GCF as the primary global climate finance institution to channel funding for mitigation and adaptation projects. In addition, they set up the Special Climate Change Fund, the Least Developed Countries Fund, to be managed by the GEF. They also create the Standing Committee on Finance to assist coordination on climate funding.
2015: The Paris Agreement reinforces financial commitments, urging developed countries to scale up support beyond $100bn annually and encouraging private-sector involvement.
2021: COP26 in Glasgow establishes the High Level Expert Group on climate finance and the JETP.
2022: Countries establish the Loss and Damage fund at COP27.
2024: At COP29 in Baku, developed country parties agree to help raise “at least” $300bn a year by 2035 for climate action in developing countries as well as the “Baku to Belém roadmap to 1.3T”.
Funding cuts
Under the previous US administration of Joe Biden, the US’s contribution to climate finance globally had increased considerably, accounting for more than 8% of the global share by 2024. But since taking office in January 2025, the administration of Donald Trump has announced and rapidly moved forward with sweeping cuts to foreign aid, effectively suspending nearly all projects under the United States Agency for International Development. This includes a large portion that was earmarked as climate finance, although precise figures are not available.
In February 2025, the US also cancelled a $4bn commitment to funding the GCF, the UN’s largest climate fund. A few weeks later, it also withdrew from the Just Energy Transition Partnership (JETP), an initiative helping countries to move away from coal to renewable energy, which the Biden administration had helped initiate at the Glasgow COP of 2021.
The sudden absence, from now on, of US contributions to climate finance may affect the world’s ability to reach the $300bn goal agreed only a few months ago.
The US situation is unique because of the administration’s open hostility to climate action. Other countries have meanwhile taken steps to reduce international aid spending for other reasons. These include the UK, Germany, Sweden, Switzerland, France, Belgium and the Netherlands. The need to increase defence spending in a changing geopolitical context is partly behind some of the cuts, which are however much smaller, and far more gradual than the US context.
The extent to which these decisions will affect climate finance goals is for the moment unclear. The impact may be small if governments were to take steps to protect the climate finance portion.
Rough road to Belém
Brazil is set to host and preside over the 2025 UN climate negotiations, known as COP30, which symbolically are to be held in the Amazon city of Belém. In a recent letter to all countries (an unusual intervention at such an early stage of the negotiations cycle), COP30 president-designate, André Corrêa do Lago, suggested the negotiations in November will be an opportunity to showcase that multilateralism can still work.
To do so, Corrêa quoted a concept from Brazilian indigenous ancestral wisdom, calling on the world to adopt the concept of “mutirão”, which refers to a community coming together to work on a shared task. He then also used a football analogy: the idea it is always possible to turn around a match that seems lost, thanks to a “virada” or rapid change in the game result.
More practically, on climate finance, Correa mentioned the “Baku to Belém roadmap to 1.3T” and the global commitment made at COP28 to triple renewable energy capacity, double energy efficiency and phase out fossil fuels fairly and equitably. The climate crisis is driven by the continued extraction and burning of coal, oil, and gas as well as deforestation. Many experts and campaigners suggest further funding for climate action could now be raised through international financial system reform, by using innovative tools such as levies on shipping, aviation, fossil fuels and wealth.
Scientists say global emissions need to peak by 2025 and decline around 50% by 2035 to keep the goals enshrined in the Paris Agreement within reach. The rapid growth of climate risks also has a strong impact on the insurance industry. For example, it means there are locations in the world where insurers are having to escalate premiums or pull out completely. This is happening both in the developing world and in wealthier countries.
The Amazon COP will be a critical moment and a test for the international community’s commitment to climate action at a time of changing geopolitics. And the key question is where funding to reverse these trends across the world will come from and at what speed.
