Climate finance pressures

Climate finance has consistently been a highly contentious issue at climate summits, with developing countries expressing deep frustration at delays by developed nations.

Developed countries repeatedly missed the 2020 deadline for mobilising 100 billion USD per year in climate finance. The target was only reached in 2022, after the deadline was extended to 2025.

Developing countries argue that climate finance should be provided in the form of grants, as delivering such funding through loans would only exacerbate the public debt crisis in developing countries.

Grant funding is intended to help developing countries transition to renewable energy and respond to the increasingly severe adverse impacts of climate change.

Facing mounting pressure from poorer countries bearing the brunt of climate change, wealthy nations have made a new commitment to provide 300 billion USD a year by 2035, while also pursuing the more ambitious goal of mobilising 1.3 trillion USD annually from both public and private sources. However, doubts remain over whether this new commitment can be fulfilled.

In reality, global climate diplomacy has come under significant strain following US President Donald Trump’s decision to withdraw the world’s largest economy from climate commitments, along with sharp cuts to foreign aid programmes.

Meanwhile, the European Union (EU), the largest contributor to climate finance, is also facing severe budgetary pressures. EU member states themselves are struggling to address their own climate challenges.

Extreme weather events this summer have shown that European governments will have to spend more to strengthen defences against global warming or face a far larger bill for climate-related losses in the years ahead.

According to a report by the European Commission, the EU needs to invest around 70 billion EUR a year in adaptation measures, while the current figure stands at only about 29 billion EUR.

Climate-related damage to infrastructure and physical assets across the bloc averages around 45 billion EUR a year. In 2026 alone, losses caused by climate-related disasters are estimated to shave 1 per cent off the EU’s already modest GDP growth.

Recently, in preparation for key messages to be delivered at COP31, the Least Developed Countries (LDC) Group, comprising 44 countries, agreed on a common position calling on COP31 to advance urgent emissions-reduction measures, while demanding accelerated implementation of Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs) backed by adequate resources for full implementation.

One of the key points is a call for a substantial increase in climate finance in the form of grants for least developed countries.

Against the backdrop of difficulties in mobilising financial resources, Türkiye, the host country of COP31, has pledged to hold donors seriously accountable for the commitments they have made.

Türkiye is also seeking to put forward a “historic action plan” featuring concrete solutions focused on the issue of finance.