US Exit From Paris Agreement Threatens Climate Finance For Developing Nations: Icra
This move is expected to reduce overall contributions by developed nations and may pause committed disbursements
The United States’ withdrawal from the Paris Agreement may cause a big drop in funding to help developing countries to tackle climate change, according to a new report by ICRA. The US is one of the key contributors to the climate funding goal by developed countries. This move is expected to reduce overall contributions by developed nations and may pause committed disbursements.
The US is the largest contributor for multilateral climate funds with more than 50% share by Global Climate Fund (GCF). However, more than 65% of the pledged GCF funds are yet to be released by the US, which may face hindrances with the new USA administration.
US's contribution to the climate finance doubled in 2024 from 2022. However, with the new administration, the progress has been halted.
The Paris Agreement, adopted in 2015, is a landmark global treaty to limit temperature rise to well below 2°C, with efforts to cap it at 1.5°C. The US, the world’s second-largest greenhouse gas emitter, has been a key contributor to global climate finance, pledging over 50% of the Global Climate Fund (GCF) commitments. However, more than 65% of its pledged GCF funds remain unpaid, and its announced withdrawal in July 2025 under the Trump administration has cast doubt on whether the remaining funds will be delivered.
The ICRA report says that the decision may undermine the New Collective Quantified Goal (NCQG) on climate finance due to start in 2025 and reduce overall contributions from developed nations. The report adds that losing such a key donor could also discourage other countries and private players from sustaining or expanding their climate funding.
The US had doubled its climate finance between 2022 and 2024, but the new administration cited economic concerns and disproportionate responsibilities as reasons for the pullout. ICRA notes the absence of US contributions could slow global efforts to limit temperature rise and hinder inclusive climate action.
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