Is climate finance in jeopardy?

In her book, ‘The Social Contract’, philosopher Jean-Jacques Rousseau emphasised the interconnectedness of individual actions within a collective.

This philosophy resonates globally when addressing shared challenges such as climate change. When a country as influential as the United States of America withdraws from the Paris Agreement, the implications extend beyond its borders, especially for the Global South, where climate action depends heavily on international financial and technological support.

Recently elected US President Donald Trump’s decision to withdraw the US from the Paris Agreement highlights a troubling shift towardw unilateralism in an era demanding collective solutions. This move not only undermines the global climate finance framework but also jeopardises the climate resilience efforts of vulnerable countries of the Global South including Pakistan, sending ripples of uncertainty through global mitigation and adaptation strategies.

The Paris Agreement relies on the principle of “common but differentiated responsibilities” (CBDR), wherein developed countries are expected to bear a larger burden of climate finance. A key element is the commitment to mobilise $100 billion annually for developing countries, a figure revised to $300 billion under New Collective Quantified Goal (NCQG) by 2035 at COP29 in Baku last year to address increasing challenges.

The US, as one of the largest economies and also one of the top historical emitters, plays a critical role in fulfilling this financial commitment. Trump’s decision to withdraw undermines this mechanism, creating a funding gap that other developed nations may struggle to fill. The move diminishes trust in the reliability of international climate finance and signals to other countries that fulfilling such obligations is optional.

Due to Trump’s withdrawal from Paris Accord, reduced financial support could delay critical projects aimed at mitigating these impacts, such as renewable energy initiatives and urban flood-resilience infrastructure.

The repercussions of Trump’s decision extend well beyond funding gaps. It represents a breach of trust and a destabilisation of the global consensus on climate action. The developing and vulnerable countries have long relied on leadership from developed countries to guide and support their climate strategies. However, the absence of US leadership weakens this support, potentially eroding the resolve of other countries to commit to ambitious climate goals.

The US’s withdrawal also creates a leadership vacuum in global climate governance. While the European Union and China have stepped up their commitments, the absence of the US – a key architect of the Paris Agreement – dampens the momentum needed to achieve its objectives. The decision could also encourage other developed countries to scale back their commitments, further jeopardising global climate efforts.

This vacuum has tangible implications for the Global South because if developed countries fail to meet their climate finance commitments, developing nations’ ability to implement mitigation and adaptation strategies will falter. For Pakistan, this could mean delayed renewable energy projects, increased reliance on fossil fuels, and diminished capacity to cope with escalating climate impacts.

For countries like Pakistan, this shortfall has direct and dire consequences. Pakistan’s climate vulnerabilities illustrate the importance of international support. The country’s geography makes it particularly susceptible to climate-induced disasters, including glacial melting, erratic monsoons, and intensifying heatwaves.

Despite its minimal contribution to global emissions, Pakistan faces disproportionate risks, highlighting the inequities in global climate impacts. The country’s climate goals are ambitious but heavily reliant on international financing. Key areas such as renewable energy, urban flood resilience, and sustainable agriculture require significant investment, much of which comes from climate finance mechanisms.

Without sufficient funding, these initiatives risk being delayed, leaving Pakistan ill-equipped to face the challenges of climate change. The country is actively preparing its NDCs 3.0, which will set new targets aligned with its evolving climate priorities, including ambitious goals for emission reductions and climate resilience. However, a reduced pool of available funds threatens to stall these efforts, leaving Pakistan more vulnerable to climate-induced disasters such as the devastating 2022 floods, which displaced millions and caused economic losses exceeding $15 billion. For Pakistan and other developing countries, this signals an uphill battle to achieve their climate goals without sufficient external support.

Considering these challenges, Pakistan needs to prioritise mobilising local climate finance and strengthening regional climate diplomacy efforts. Leveraging domestic financial resources, such as public-private partnerships and innovative mechanisms like upscaling green entrepreneurship, implementing climate risk insurance mechanism by engaging financial institutions and insurance companies, also working on green skills programmes for youth can provide a more sustainable foundation for strengthening climate action. Local financial institutions including banks, microfinance institutions, and corporate investments must be aligned with national climate goals to bridge funding gaps.

Strengthening regional collaboration through multi-crisis diplomacy can also help Pakistan address shared climate challenges. Regional climate diplomacy offers opportunities for joint projects, technology transfer, and shared financing mechanisms, fostering resilience across borders. Additionally, there is a need to diversify its climate finance sources and explore innovative mechanisms such as blended finance and carbon markets. Also, Pakistan must integrate climate considerations into its national development plans and enhance regional cooperation to tackle shared challenges.

While Trump’s withdrawal is a setback, it also presents an opportunity for other global actors to strengthen their roles in climate governance. The other developed countries must not only honour but exceed their financial commitments to compensate for the US’s absence. Multilateral development banks and private-sector investors can also play pivotal roles in bridging the funding gap.

Although, Rousseau’s assertion of interconnectedness holds true in today’s global climate context as the US’s withdrawal from the Paris Agreement is not merely a national decision; it has far-reaching implications for global climate efforts and disproportionately affects vulnerable countries like Pakistan.

Yet, history demonstrates that collective action can endure despite setbacks. By rallying global actors to fill the leadership and financial void left by the US, the international community can sustain the momentum needed to tackle the climate crisis. For Pakistan and the Global South, climate resilience, innovation and effective advocacy backed by data and action will be key to navigating this challenge and ensuring a sustainable future.

The writer is an environmental scientist. She leads the programme on ecological sustainability and circular economy at the Sustainable Development Policy Institute (SDPI), Islamabad.