Practically a tenth of worldwide local weather finance could possibly be beneath risk as U.S. president Donald Trump’s assist cuts threat wiping out big swathes of spending abroad, based on Carbon Transient evaluation.
Final 12 months, the U.S. introduced that it had elevated its local weather assist for creating international locations roughly seven-fold over the course of Joe Biden’s presidency, reaching $11bn per 12 months.
This seemingly quantities to greater than 8% of all worldwide local weather finance in 2024.
Nonetheless, any progress in U.S. local weather finance has been thrown into disarray by the brand new administration.
Trump has halted US overseas assist and threatened to cancel just about all U.S. Agency for International Development (USAID) tasks, with local weather funds identified as a chief goal.
USAID has offered round a 3rd of US local weather finance lately, reaching almost $3bn in 2023, based on Carbon Transient evaluation.
One other $4bn of U.S. funding for the UN Green Climate Fund (GCF) has additionally been cancelled by the president’s administration.
One skilled tells Carbon Transient that extra local weather funds will seemingly find yourself on the “slicing block.”
One other warns of an “huge gulf” to assembly the brand new world $300bn climate-finance goal nations agreed final 12 months, if the U.S. stops reporting — not to mention offering — any official local weather finance.
Carbon Transient’s evaluation attracts collectively accessible knowledge to clarify how the Trump administration’s cuts endanger world efforts to assist creating international locations deal with local weather change.
How A lot Did Local weather Finance Enhance Beneath Biden?
The U.S. is by far the world’s largest economy and biggest historical emitter of carbon dioxide (CO2).
Because of this, whereas it’s the fourth-biggest nationwide supplier of worldwide local weather finance, its total share is low relative to the nation’s wealth and responsibility for climate change. Consequently, the U.S. has long been seen as a laggard on this space.
The U.S. offers 0.24% of its gross national income (GNI) as assist for creating international locations, which incorporates some local weather funding. This is identical share because the Czech Republic, a nation with a per-capita GNI thrice smaller.
U.S. climate-finance contributions stalled throughout Trump’s first four-year time period as president, when other developed countries had been ramping as much as meet their goal of offering and mobilising $100bn a year for creating international locations by 2020.
A shift in focus got here when Biden turned president in 2021. He established an international climate finance plan to scale up U.S. efforts, in step with U.S. obligations beneath the Paris Agreement.
Biden additionally announced that the U.S. would attain $11.4bn in annual local weather finance by 2024.
This objective was achieved, based on “preliminary estimates” introduced by the U.S. through the COP29 local weather summit on the finish of 2024. These estimates, that are unlikely to be confirmed by the brand new administration, are proven within the chart beneath.
The figures are primarily based predominantly on “bilateral” local weather finance reported to the UN. Additionally they embody US finance distributed through multilateral local weather funds, such because the Global Environment Facility (GEF) and the GCF.
Bilateral local weather finance largely comes from assist programmes with local weather advantages, akin to supporting a geothermal project within the Philippines, investing in “climate-smart” agriculture in Bangladesh, or improving water security in Niger.
The U.S. considerably elevated its contribution in direction of local weather finance through the Biden administration. Ramping up related U.S. assist tasks and multilateral funding helped developed international locations to hit the $100bn climate-finance goal — albeit two years late in 2022.
The $11bn reported by the U.S. in 2024 can be the equal of 21% of all bilateral and multilateral local weather fund inputs that 12 months — up from round 4% beneath the earlier Trump presidency. These funds are proven by the blue bars within the determine beneath.
(Estimates for 2023 and 2024 assume a gentle rise in local weather finance from sources past the U.S., as official figures past then haven’t been launched. See Methodology for extra info.)
Even when contemplating different sources of worldwide local weather finance — particularly multilateral development banks (MDBs) and “mobilised” personal finance proven in gray within the determine beneath — the US has contributed a large share lately.
After lingering round 2% over the last Trump administration, the U.S. share of whole local weather finance roughly quadrupled to greater than 8% in 2024, Carbon Transient evaluation suggests.
It’s also value noting that the U.S., as the largest shareholder on the World Financial institution and a serious shareholder at other MDBs, can be linked to a big portion of their finance. This contribution is just not factored into official U.S. reporting, so it has not been included on this evaluation.
Even accounting for MDB contributions, U.S. local weather finance spending continues to be far decrease than its “fair share,” primarily based on its historic duty for local weather change and talent to pay. Some analysts have put the U.S. fair proportion as excessive as 40-50% of local weather finance total.
What Are the Local weather Impacts of Reducing USAID?
Upon taking workplace for the second time in January 2025, Trump instantly took intention at worldwide assist spending and local weather motion with a flurry of government orders.
One order introduced plans to withdraw the U.S. from the Paris Settlement and criticised such treaties for “steer[ing] American taxpayer {dollars} to international locations that don’t require, or benefit, monetary help.” It additionally “revoked and rescinded” Biden’s international climate finance plan.
In one other executive order, Trump introduced a “pause” on U.S. overseas assist “for evaluation of programmatic efficiencies and consistency with U.S. overseas coverage.”
USAID handles 60% of U.S. overseas assist — greater than $43bn in 2023 — whereas the State Division oversees a lot of the the rest. Trump says he desires to “shut [USAID] down” and his advisor Elon Musk has referred to as it a “criminal organisation.”
Trump requires the approval of Congress to repurpose USAID funds or, certainly, abolish the company. His administration’s actions have, subsequently, been described as “illegal” and “unconstitutional” by senior Democrats and assist employees.
But, regardless of lawsuits and court orders instructing the administration to carry the pause, it has since stated its intention to eradicate greater than 90% of USAID contracts and, extra extensively, $60bn of U.S. overseas assist.
This is able to have main implications for U.S. local weather finance.
Information retailers have reported on the climate-related programmes in danger, typically stating that USAID has funded half a billion {dollars} of local weather programmes yearly lately.
This determine, whereas primarily based on USAID’s own reporting of its clear power, local weather adaptation and nature projects, is a big underestimate of its whole climate-finance contributions.
Carbon Transient evaluation means that USAID contributed $2.8bn of local weather finance in 2023, the most recent 12 months for which knowledge is on the market. Different U.S. departments with assist contributions within the OECD database contributed smaller sums, bringing whole local weather spending as much as $2.9bn.
This equates to round a 3rd of US local weather finance that 12 months. If the same share from these departments was counted as local weather finance in 2024, it might quantity to almost $4bn, Carbon Transient finds.
(These are estimates primarily based on “climate-related” assist knowledge reported to the OECD. See Methodology for extra particulars.)
Local weather-finance specialists inform Carbon Transient that these greater figures align with the truth that many assist tasks focusing on different points, akin to agriculture, have local weather parts.
Dr Ed Carr, a centre director at Stockholm Environment Institute U.S. who has beforehand labored at USAID, tells Carbon Transient:
“The best way that the Biden administration was doing stuff and the way in which that [former president Barack] Obama earlier than was doing stuff, [was to] begin to weave a level of local weather sensitivity into all the pieces…So, mainly, an enormous proportion of programmes [are] engaged on some side of local weather.”
In contrast to many types of local weather finance, USAID tasks embody numerous grant-based funding, which many creating international locations view as preferable to loans and higher suited to supporting local weather adaptation.
Related tasks backed by USAID lately embody support for a food-security programme in Ethiopia, upgrading a dam in Pakistan and protecting water provides in Peru.
The Trump administration has made it clear that “local weather” is without doubt one of the points that it’s scrutinising because it assesses assist tasks for consistency with what it defines as U.S. pursuits. A survey sent to grant recipients a number of weeks after the preliminary government order asks:
“Are you able to verify this isn’t a local weather or ‘environmental justice’ undertaking or embody such components?”
Are Different Sources of Local weather Finance at Threat?
The remaining billions in local weather finance are dealt with by greater than a dozen organisations, distributing grants, loans, growth finance and export credit.
Round $1.2bn of U.S. local weather finance in 2022 was paid into worldwide funds, together with the GEF. This quantities to a fifth of the entire U.S. local weather finance that 12 months.
The Biden administration didn’t launch a breakdown of how a lot cash went to those funds in 2023 and 2024. Nonetheless, in 2023 the nation paid out $1bn for the GCF alone.
Such funding can also be in danger as the brand new administration pulls away from what the White Home calls “worldwide agreements and initiatives that don’t replicate our nation’s values.” Notably, the U.S. has now cancelled $4bn in funds beforehand dedicated to the GCF.
(Biden and Obama pledged $3bn every to the fund. Nonetheless, neither of them ever delivered greater than $1bn of their pledge, leaving $4bn excellent.)
Because the chart beneath reveals, this implies the U.S. contribution to the GCF is now decrease than that of Sweden — a rustic with an financial system 50 times smaller.
The GCF is just not the one particular fund that has been focused. The U.S. formally ended its involvement within the UN loss and damage fund, which it pledged $17.6m in direction of in 2023. It has additionally withdrawn from the Just Energy Transition Partnership initiative, which included a minimum of $56m in grants to assist South Africa transition away from coal energy.
One other Trump executive order introduced a assessment of “worldwide intergovernmental organisation” membership, together with MDBs.
There may be an assumption that the U.S. is not going to quit its appreciable energy in these banks. Nonetheless, Trump supporters, together with these behind the influential Challenge 2025, have laid out plans for withdrawing the U.S. from the World Financial institution.
A big chunk of the remaining U.S. local weather finance lately has come from the US International Development Finance Corporation (DFC), which committed greater than $3.7bn in local weather finance in 2024 and the same amount in 2023. This included loans for a wind power project in Mozambique and a railway to hold vital minerals by means of Angola.
DFC is a growth finance establishment that invests in personal enterprises and was arrange beneath the primary Trump administration. It has to date been insulated from U.S. assist cuts and there was speculation that it might now play a bigger position in US overseas coverage.
Leaning extra closely on DFC, in addition to the U.S. Export-Import Bank (EXIM), wouldn’t be appropriate for local weather finance, Ritu Bharadwaj, a climate-finance principal researcher on the International Institute for Environment and Development (IIED), tells Carbon Transient:
“If these mechanisms stay intact whereas grant-based finance is gutted, it indicators a shift away from public, needs-based funding towards finance that prioritises US business and strategic pursuits. In different phrases, what little local weather finance stays will seemingly profit US companies first, quite than frontline communities.”
Moreover, even when such organisations are favoured by the brand new administration, this doesn’t imply their local weather tasks might be protected. Benjamin Black, Trump’s nominee to guide DFC, wrote a blog post concerning the company in January, stating:
“The Biden administration’s emphasis on virtue-signaling — akin to dedicating 40% of [DFC’s] latest commitments to inexperienced tasks — raises critical issues.”
Carr tells Carbon Transient that extra U.S. local weather spending may nonetheless find yourself on the “slicing block”:
“From what we’ve seen to date, it appears to be like to me like they’ll attempt to root out all the pieces that they see as clearly associated to local weather.”
He caveats this by noting that among the cash the Biden administration would have counted as local weather finance might proceed, however not be outlined as such.
This highlights the significance of accounting when assessing local weather finance. Totally different governments world wide report different things as local weather finance, relying on their priorities and political leanings.
For instance, over the last Trump presidency, the U.S. stopped reporting on local weather finance to the UN. When calculating progress in direction of the $100bn objective throughout this era, the OECD needed to estimate US figures primarily based on “provisional data” or averages from previous years.
The Biden administration retrospectively reported the lacking knowledge from the Trump years in 2021, ensuing within the OECD scaling down a earlier estimate.
Clemence Landers, a senior coverage fellow on the Center for Global Development (CGD) who beforehand labored on the U.S. Treasury, tells Carbon Transient {that a} “very educated guess [is] that there might be no reporting from the U.S.” within the coming years.
The U.S. government website monitoring assist has not been up to date since December.
If local weather finance is just not recorded, this might hamper its inclusion within the annual $100bn objective, which lasts till 2025, in addition to the $300bn goal that international locations agreed on final 12 months at COP29 to interchange it, as Landers notes:
“That does go away an infinite gulf when it comes to the brand new world climate-finance goal.”
Methodology
Local weather-finance reporting practices imply that official knowledge can be difficult to analyse intimately.
On this article, annual U.S. climate-finance figures for the interval 2015-2022 are primarily based on these reported by the US authorities to the UN in biennial studies (BRs) and, for the years 2021 and 2022, its first biennial transparency report (BTR).
These may be thought-about “official” climate-finance figures. They align with the figures that the U.S. federal authorities has released and are those used to tell the OECD’s assessments of developed international locations’ progress in direction of the $100bn annual goal.
The figures solely embody bilateral local weather finance and inputs into multilateral local weather funds. MDB shares and personal finance mobilised should not coated. Once more, this aligns with the “climate-finance” totals quoted in progress studies by the Biden administration.
The climate-finance totals for 2023 and 2024 are primarily based on releases from the U.S. Division of State through the Biden administration. These figures are for the US monetary 12 months (FY), which runs from 1 October to 30 September. Nonetheless, the FY figures are the identical because the calendar 12 months numbers reported to the UN for 2021 and 2022, so Carbon Transient assumes the identical is true for 2023 and 2024.
As a result of vital time lag in official reporting to the UN, the figures underpinning these totals should not as a result of be launched till 2026. (The earlier Trump administration didn’t report them in any respect and it’s unlikely that the present one will both, now that the U.S. has introduced its departure from the Paris Settlement.)
Given this time lag, estimates for whole worldwide local weather finance in 2023 and 2024 are derived from a joint evaluation by the suppose tanks Natural Resources Defense Council (NRDC), ODI, Germanwatch and ECCO. This calculated seemingly totals in 2030, primarily based on existing pledges and planned reforms. Carbon Transient assumes a gentle trajectory to the general $197bn estimated beneath the suppose tanks’ “business-as-usual” situation, with bilateral finance, particularly, reaching $50bn by 2025.
Local weather-finance figures reported to the UN by the U.S. don’t embody particulars of the federal government departments and companies accountable, making it troublesome to find out the share overseen by USAID. The Biden administration additionally didn’t report the breakdown between companies.
This knowledge is reported to the OECD Creditor Reporting System (CRS), which accommodates figures as much as 2023. Nonetheless, the data within the CRS is just not “official” local weather finance, however quite “climate-related development finance,” recognized as such utilizing Rio Markers. Most international locations apply easy coefficients to transform the figures they report back to the CRS into their climate-finance submissions to the UN, however the US calculates its climate-finance submissions individually.
However, to acquire approximate figures, Carbon Transient has assumed that 100% of CRS tasks marked as “principal” local weather tasks and 50% of the tasks marked as “vital,” are local weather finance. This aligns with a methodology utilized by different organisations, akin to Oxfam, in addition to other nations, together with Germany, Japan and Denmark.
Nonetheless, it is just a tough estimate. Specialists that Carbon Transient consulted burdened the uncertainties of local weather finance reporting and stated the numbers could possibly be greater or decrease.
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