COP31: The Sorry State of Public Climate Finance Will Hamper Needed Ambition

Content
Drops in Public Climate Finance
Quo Vadis, NCQG?
Article 9 Climate Finance Work Programme
Adaptation Finance Shortfall
UNFCCC Funds Facing Headwinds
Just Transition (Finance) Mechanism
Focus on Short-Term Band-Aids instead on Structural Reform
COP Presidencies Action Agendas Banking on Capital Markets 

The Paris Agreement, approved in 2015, was built as a grand deal between developed and developing countries: collectively, as a matter of equity and their common but differentiated responsibilities and respective capabilities (CBDR). All countries, through a bottom-up approach, agreed to every five years put forward their most ambitious nationally determined contribution (NDC) for collective climate action that in the aggregate would keep global warming to 1.5C temperature increase. Developed countries, reflecting their respective higher capabilities and historic responsibility, would in turn provide the public core of the financial support to help bankroll developing countries’ efforts to reduce emissions, help them build resilience to ever more devastating climate impacts and support their just transitions away from a fossil-fuel driven, unsustainable development model in order to keep the Paris commitment alive. The third round of NDCs is well underway with so far 150 countries having submitted new NDCs, covering 75 percent of global emissions. However, collectively, by some calculations, they fall short 30.7GtCO2e to stay within the 1.5C temperature increase limit.

Drops in Public Climate Finance

The understanding of how equity and fairness should be reflected in multilateral climate efforts is under threat, as developed countries attempt to renegotiate and weaken their side of the Paris bargain. This comes as the United States, historically the largest greenhouse gas emitter, under President Trump has left both the Paris Agreement and its fair share financial responsibilities for the provision of climate finance behind. Other developed countries, rather than picking up the slack, likewise retreated. For example, Germany, now the largest individual developed country contributor to development and climate finance, dropped its public budgetary climate finance by 23 percent from EUR 6.1 billion in 2024 to EUR 4.7 billion in 2025 – even though Germany’s total reported climate finance fell less dramatically from EUR 11.6 to 10.8 billion as private climate finance mobilized and non-grant financial instruments increased. This is despite the 2025 International Court of Justice Advisory Opinion, which the United Nations General Assembly in May 2026 in a landmark resolution welcomed and operationalized. The ICJ ruling reinforced the legal obligation of countries, irrespective of whether they are a party to the UN Framework Convention on Climate Change or the Paris Agreement, to provide climate finance at a level that makes limiting global heating to 1.5C possible.

Instead, the last years have seen a steady deterioration of public commitments in the climate finance landscape. Official development assistance (ODA), which accounts for most of public climate finance provided by developed countries to developing countries, is projected to further decline 6.9 percent for the third consecutive year after a historic contraction of 23.1 percent in 2025 to USD 174.3 billion. The decline was primarily driven by reductions made by Germany, France, Japan, the United Kingdom and the United States, the latter alone responsible for 70 percent of the drop-off. At the same time, these five countries are among the top ten military spenders in 2026, having further increased their military budgets.

A new collective quantified goal on climate finance (NCQG), promising mobilization of USD 300 billion per year by 2035, which was approved at COP29 in Baku, rather than rebuilding confidence by developing countries that mandated support will be forthcoming, further weakened it as it lacks a clear commitment to public provision and an action plan to ramp up commitments from 2025 levels with intermediate goal posts. This is also evident in the lackluster ambition of many of the 3rd generation NDCs, outlining countries’ climate ambition until 2035. Last year’s NDC Synthesis Report made clear that even if NDCs submitted then were fully implemented, this still would lead to a 2.3 to 2.5 degrees temperature increase by 2100. The updated 2026 report just released improves its best estimate warming to 1.7 to 2.3 degrees, but only if all conditional elements of the new NDCs are fully implemented.

Many developing countries’ actions listed – to the extent that they are fully costed – are labeled as conditional on receiving financial support. Of the needs of between USD 5 to 6.8 trillion identified by 98 countries for over 2,700 costed climate interventions identified in the UNFCCC’s second needs determination report, less than a fifth were indicated as being implementable through domestic resources. This showcases and reinforces the real link between increasing climate ambition globally and increasing climate finance flows to developing countries.

Quo Vadis, NCQG?

Starting in 2026, the NCQG superseded the old goal of USD 100 billion annually, which was focused on developed countries providing and mobilizing funding. In contrast, in the NCQG, developed countries were only promising “to take the lead” in the mobilization effort and did not detail a share for provision, nor indicate how resources would be divided between mitigation, adaptation and to address loss and damage. Instead they pointed to the private sector to provide the bulk of financing by using public funds to de-risk, leverage and blend with commercial investments and pushed for a broadening of the contributor base to include resource-rich middle income countries (which under the UNFCCC are still classified as developing countries). Multilateral development banks (MDBs) in Baku also promised to increase their climate finance delivery to developing countries from USD 75 billion in 2023 to USD 120 billion in 2030, with an additional USD 65 billion mobilized in private capital – a significant portion of the USD 300 billion NCQG promised annually by 2035 and magnitudes more than what is delivered through the multilateral climate funds that report to the UNFCCC, which together accounted for less than USD 4 billion. For 2025, the MDB’s collectively report that they are well on track to achieving this target, claiming that they provided USD 103 billion to low- and middle-income countries, with USD 35 billion for adaptation; the total climate finance across all MDB operations is listed as nearly USD 163 billion. Notably, though, most of it is in the form of loans, including non-concessional ones; the MDB joint methodology for tracking climate finance has also been criticized as lacking sufficient transparency and granularity. And with the climate change-denying Trump administration as the largest single shareholder in many MDBs threatening to reduce the development banks’ engagement and lending on climate actions, their ability to fulfill this promise in the future is far from certain. The World Bank, following US pressure, officially ‘retired’ its target to provide 45 percent of its annual lending support to projects with climate co-benefits and barely held on to its Climate Change Action Plan, which had also come under attack.

The NCQG goal was supplemented by a COP presidencies’ effort to craft a Baku-to-Belém Roadmap for mobilizing USD 1.3 trillion in finance flows annually by 2035. Presented at COP30 in Belém, its reception by many developing countries and civil society observers was lukewarm at best. Nevertheless, the roadmap, according to the Brazilian COP30 Presidency, is now under implementation, although its future post COP31, as many previous initiatives of prior COP presidencies, is unclear. It draws on calculations by an Independent High Level Expert Group that expects the contribution of the private sector to increase 16fold from its current level to USD 650 billion. Carbon markets (which are not climate finance), South-South cooperation and other concessional finance, including from voluntary levies, special drawing rights (SDRs) issued by the International Monetary Fund (where the United States has a blocking share) or private philanthropies are likewise assumed to rise significantly from current levels to make up another substantial share.

The disappointment of developing countries with the NCQG came to a head at COP30 with their push to add a distinct agenda item focused on climate finance provision under Article 9.1 of the Paris Agreement, which elaborates the continued obligation of developed countries to deliver public finance, to the negotiations in Belem. A lack of public finance commitments has also stymied advances in other negotiation areas, including on adaptation, loss and damage as well as progress in the implementation of mandated efforts resulting from the first Global Stocktake in 2023 on energy efficiency and expanding renewable energy, with preparations ongoing for the second Global Stocktake in 2028. Incidentally, 2028 will also see the first mandated NCQG progress report.

Article 9 Climate Finance Work Programme

In its Mutirão decision, the COP30 in Belém committed to a two-year climate finance work program (CFWP) on Article 9 of the Paris Agreement, including Article 9.1. However, discussions during the intersessional negotiations in Bonn in June of this year made it clear that there is widespread disagreement on the scope, focus, approach, outcome and even the time-frame of the CFWP. While developed countries want it focused on all of Article 9 and argue that COP31 would already mark the halfway point of the initiative, developing countries push for it to center exclusively on Article 9.1 on public provision and want the Antalya meeting through a formal decision to set its starting date only from 2027 onward. In Bonn, they reiterated their demand for a COP31 agenda item on climate finance provision, scoring only a partial victory when the outgoing Brazilian Presidency requested to at least place the CFWP on the provisional agenda for the meeting of the parties of the Paris Agreement (CMA). It remains to be seen if in Antalya this is sufficient to avoid a repeat of the agenda fight that delayed the start of negotiations in Belém for days.

The dissonance on climate finance realities is bound to be further increased by the presentation of two technical climate finance reports at COP31 mandated by previous COPs and overseen by the Standing Committee on Finance (SCF), in which advances in increasing the quantity of climate finance will be presented. Given that annual climate finance flow numbers are reported with a two-year delay, the third and likely final progress report on the fulfillment of the USD 100 billion goal up to 2025, and the seventh biennial assessment report with an overview of all relevant climate finance flows covering data from 2023 and 2024 are already superseded by the stark reality of a downward trend in climate finance at the time of the presentation. Thus, the latest OECD numbers stating that USD 132.8 billion and USD 136.7 billion were provided and mobilized respectively in 2023 and 2024 by developed countries mark a highpoint not going to be reached in 2025 and 2026 numbers in both quantity and quality.

Already in 2023 and 2024, only a quarter of this funding supported adaptation, with more than two thirds of public finance delivered as loans, including non-concessional ones. The most concessionality was delivered through the multilateral climate funds (MCFs), which channeled just a bit over half of their funding as grants. This is bound to worsen, as the outlook for all of the UNFCCC funds, which under the NCQG are expected to at least triple their financial outflows from 2022 levels by 2030, is grim.

Adaptation Finance Shortfall

At COP30 in Belém, the Adaptation Fund, which supports urgent adaptation action with grants, fell short of its modest annual resource mobilization goal of USD 300 million for the third year in a row, garnering only USD 135 million in new pledges. At the same time efforts to transition the Adaptation Fund fully from the Kyoto Protocol, under which it was established, to exclusively serving the Paris Agreement have stalled in Belém and in Bonn in June primarily because of a political stalemate over its Board membership and potential changes in the Board’s composition and designation. In Antalya, there will be another attempt to resolve the standoff, which also delays the ability of the Adaptation Fund to receive a monetized five percent share of proceeds from the carbon market under Article 6.4 of the Paris Agreement. It is now active and has issued its first carbon credits under a small-scale “proof of concept phase” in February of this year. Fundraising talks for two other adaptation-focused funds under the Global Environment Facility (GEF), the Least Developed Countries Fund (LDCF) and the Special Climate Change Fund (SCCF) were canceled due to a lack of interest by potential contributors.

This flies in the face of promises made in Belém under the Mutirão decision to at least triple adaptation finance by 2035 to roughly USD 120 billion per year (albeit without a clear delivery plan and commitment to focus on finance quality through provision), assuming that the old Glasgow goal from 2019 for doubling adaptation finance by 2025 to about USD 40 billion can even be reached. In 2024, the number was still only USD 34.7 billion in finance delivered for adaptation to developing countries against an annual needs-based adaptation funding gap estimated at up to USD 387 billion; for 2025 the numbers of adaptation finance delivered are likely worse. The failure to include a clear link to the Mutirão decision’s promise for adaptation finance in a two-year technical workplan for a set of 59 Belém Adaptation Indicators (BAI) for the Global Goal on Adaptation (GGA) led to a crash of adaptation talks in June in Bonn, as developing countries argued that a focus on voluntary GGA indicators is meaningless without a clear inclusion of finance as a core means of implementation.

UNFCCC Funds Facing Headwinds

Other UNFCCC funds are also facing headwinds: the GEF serving as financial mechanism for UN conventions on climate change, biodiversity and desertification in its ninth replenishment accumulated only USD 4.3 billion in pledges for programming until mid-2030, close to a quarter less than during its last GEF-8 fundraising cycle, and with the smallest allocation of just 9 percent or USD 387 million of this funding for its climate change focal area. At the same time, the Green Climate Fund (GCF), preparing for its third replenishment in 2027, did see in 2026 the cancellation of about USD 1billion of existing British signed contribution commitment under its second funding period. Both the GEF and the GCF are counting on investment income and reflows from non-grant instruments to make up for shortcomings in the quantity and quality of fresh pledges. Anticipating a challenging effort ahead at its GCF-3 funding period (2028-2031), the GCF as the largest multilateral climate fund plans to do away with previous caps for loan and capital inputs for contributors, looks at maximizing its balance-sheets through the addition of guarantees as callable capital (like the MDBs) and is courting philanthropists and high-net worth individuals in a way that could undermine its role as a UNFCCC fund bound by the principles of the convention. This will limit how much the GCF as a significant provider of adaptation support to small island states, least developed countries and African nations can channel as grants to developing countries, most of which already face unsustainable debt burdens. The outlook is also bleak for the Fund for responding to Loss and Damage (FRLD), the newest UNFCCC fund, which so far has only received USD 516 million in paid-in contributions, most of it already committed for a start-up funding phase of USD 342 million to run through 2027, against funding requests received worth USD 2.8 billion. This does not yet include an emergency funding appeal by Nepal after it suffered the August 2026 glacier collapse and catastrophic floods with over 1,400 dead and thousands missing and estimated total reconstruction and recovery costs of more than USD 5 billion, or one-tenth of the country’s total gross domestic product. Put to the test, the FRLD convened an extraordinary meeting to set aside USD 21.6 million for Nepal, the most it can commit under its start-up procedures giving funding limitations. The FRLD’s first replenishment efforts are not expected until 2028 at the earliest, pending the development of its long-term operational policies; it might have run out of money by then.

Just Transition (Finance) Mechanism

Progress on in the Just Transition Work Programme, the success story in Belém with the CMA decision at COP30 to develop the Belém-Antalya Mechanism (BAM), has also been stymied in Bonn in June of this year over disagreement on the role of the BAM. While developing countries and civil society calling for a just transition mechanism in Belém had made the deliberate advocacy choice not to push for a separate just transition fund, both see a role for the BAM to help mobilize the money needed for just transition. Many civil society groups are also seeing a role for finance supporting just transition as distinctly different from financing efforts for mitigation, adaptation or to address loss and damage, with core principles to be observed. In contrast, developed countries argue that the BAM should deal with almost anything -- enhancing international cooperation, technical assistance, capacity-building and knowledge sharing and enabling equitable, inclusive transitions – as long as it does not involve financing. That deadlock puts what was supposed to be a win for COP31 in Antalya, namely a decision to operationalize the BAM, in jeopardy.

What little there is of remaining hope is fading that COP31 will see any concrete new climate finance pledges by individual developed countries to show an indication on how they plan to contribute their fair share to aggregate commitments like the NCQG goal and the tripling of adaptation finance by 2035, and earlier promises to reach the tripling of outflows from the UNFCCC funds by 2030. The narrative pushed by developed countries and those proclaiming realism over obligation in Antalya will predictably focus on “how to do more with less”. Claiming to concentrate on implementation, finance discussions at COP 31 are supposed to center instead prominently on the bankability of climate projects and on ways to mobilize private capital, including as the core tasks of public climate finance actors such as the MCFs and MDBs in using scarce public resources to de-risk private sector investments through underwriting guarantees or blended finance structures in public-private partnerships, where the public sector takes first losses – and countries in the Global South might be saddled with debt and even further reduced fiscal space if they fail. Such approaches are increasingly pushed not just for mitigation, but also for adaptation, including through insurance and risk-pooling structures despite concerns of diminishing affordability and insurability of such schemes.

Focus on Short-Term Band-Aids instead on Structural Reform

In Belém, previous discussions on how to make all financial flows consistent with low-emission and climate resilient development (under Article 2.1(c) of the Paris Agreement) were given a new framing as the Veredas Dialogue. They include now the Xingu Finance Talks convened annually by the COP Presidency. Their inaugural meeting was scheduled not during the COP, as other high level climate finance talks mandated by COP decisions, but on the sidelines of the Annual Meetings of the International Monetary Fund and the World Bank in Bangkok in October in order to bring “the climate and finance communities together” by including ministers of finance, MDBs, central bankers and private fund managers. Some observers are concerned that these talks could serve to further blunt the mandate to ensure that efforts to make all financial flows consistent with the Paris Agreement, such as the talk about taxonomies and domestic mobilization efforts, are non-prescriptive, respect the national circumstances and are complementary to and not substituting for continued obligations by developed countries to provide and mobilize funding for climate action in developing countries, something that a set of safeguards agreed as part of the Veredas Dialogue also seeks to ensure. Indeed, the focus of the first Xingu Finance Talks in Bangkok was on ‘practical solutions’ to increase fiscal space and reduce the cost of capital for developing countries such as contingent credit lines or debt-for-climate swaps or risk sharing and guarantees. However, these financial instruments provide at best some temporary relief on the margins, but not the needed broader fundamental restructuring of the global financial system that is needed to address structural inequities that by some accounts drain annually around USD 2 trillion from developing countries. This, incidentally, is the total amount of climate finance that according to the Climate Policy Institute was reached in 2024 globally, although 75 percent of it was invested in developed countries and China, with little reaching poor developing countries suffering from the highest levels of indebtedness and climate impact and the highest barriers and costs to access capital. According to UNCTAD, 3.7 billion people live in developing countries spending more on debt service – almost USD 1 trillion in net interest on public debt in 2025 – then they spend on education or health.

Many developing country and civil society voices think the Veredas Dialogue should instead address unsustainable debt burdens by calling for debt cancellation through calls for a UN Debt Convention and a multilateral debt restructuring mechanism in support of comprehensive debt cancellation involving all creditors, sovereign and private. And to expand fiscal space in developing countries, a shift of the global tax rule-making to a fairer tax system that addresses multinational corporate tax avoidance, and illicit financial flows is needed, as is currently negotiated under a new UN Framework Convention on International Tax Cooperation that could be adopted by the end of 2027.

To address the cost of capital systematically, discussions under the Veredas Dialogue should also confront the oligopoly of just three private credit rating agencies (S&P, Moody’s and Fitch) which control 95 percent of global credit ratings and their power to downgrade developing countries, including for efforts to forego fossil fuel exploitation. This was the experience of Colombia, which just this April together with the Netherlands hosted the Santa Marta Conference on transitioning away from fossil fuels (TAFF). These efforts are outside of the UN climate process, where negotiations on fossil fuel phase out are going nowhere – and won’t get an adequate hearing at COP31 (besides a report back to the parties by the outgoing Brazilian COP30 Presidency on their roadmap efforts on transitioning away from fossil fuels).

COP Presidencies Action Agendas Banking on Capital Markets 

Like its predecessors in this role, the incoming Turkish COP31 Presidency will come with an extensive action agenda in various focus areas outside of the formal negotiation process. The Türkiye COP31 Action Agenda features finance as a cross-cutting enabler of ten identified priority themes, rather than as a standalone topic, with the Climate Implementation Bridge (BRIDGE) seen as the central financial mechanism of the Action Agenda. It is not a new fund, but instead a coordinating structure, supported by UNDP, aiming at matchmaking between countries’ financing needs to implement climate plans like NDCs and National Adaptation Plans (NAPs) and existing mechanisms, MDBs and private investors to help structure and deploy climate finance into market-ready “investable asset portfolios” through capacity building and technical project preparation. Ethiopia, Fiji, Indonesia, Pakistan and Uzbekistan are pilot countries for the initial phase. As such, it joins other existing efforts, such as those focusing on supporting country platforms seeking to translate national climate priorities into coordinated, bankable investment pipelines, although it is not clear if and how it would complement those.

This focus on capital markets over public provision and developed countries’ climate finance obligation continues the finance-related action agendas of previous COP presidencies to deliver the headline numbers (with various levels of transparency and accountability for follow up and follow through), such as at COP28 the UAE Global Climate Finance Framework, the promised USD 1 trillion Climate Finance Action Fund (CFAF) with voluntary contributions from fossil fuel-producing companies at COP29 in Azerbaijan (which failed to launch and is not operational), or the COP30 launch of the Tropical Forest Forever Facility (TFFF). The TFFF has USD 7.3 billion in sponsor capital secured but so far is still short of the USD 10 billion target by the end of 2026 needed to unlock Norway’s conditional USD 3 billion commitment and to attract the intended additional USD 100 billion from private investors to ensure payment to tropical forest countries from investment income.

Lastly, in the lead-up to COP31, Australia, the COP31 Presidency for negotiations, was instrumental in setting up another fund, mirroring the model of the TFFF, if not its ambition or scale. The Pacific Resilience Facility (PRF), set up under the Pacific Islands Forum (PIF) architecture, plans to provide grants to Pacific communities directly for climate change adaptation, disaster preparedness and loss and damage. These are financed from the investment income generated by capital. With a capitalization goal of USD 500 million, the PRF could distribute USD 25 million annually. So far the PRF has raised only USD 180 million in pledges.

Developed countries are drawn to initiatives such as the PRF or the TFFF for obvious reasons – they provide their money as one-time capital inputs into initiatives such as the PRF or the TFFF, which are structured to be recovered with interest at the end of the facility’s lifecycle. However, giving a one time capital input to these funding mechanisms cannot be a substitute for regularly and generously contributing to the UNFCCC funds, which are accountable to and receive annual guidance from all parties and are living proof that the bargain between developed and developing countries at the heart of the Paris Agreement remains operational.