Who could replace US climate financing?

2. The power of bonds. One recent financing innovation that shows no signs of slowing down is climate bonds. Like municipal or government bonds, these fixed income instruments pay a fixed return over time, but with the money raised used to finance environmental, renewable energy, or restoration projects. According to financial clearing house ICE, nearly $600 billion in green bonds were issued in 2024, the largest total ever. Around $150 billion in green bonds have been issued so far in 2025.

3. Red is the new green. With the US retreating to the shadows, other global superpowers are finding their feet. Although China has fewer funding and reporting commitments under UN plans, it has been quietly spending abroad on renewable power, water and sanitation, and disaster preparedness projects, to the tune of over $25 billion since 2016 according to state sources. The Center for Global Development last year calculated that China was already making more climate financing commitments than the US by some measures, and it will certainly be ahead of America in all areas this year.

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What To Keep An Eye On

1. Greyer loans. The US International Development Finance Corporation, which committed over $3.7 billion in climate finance in 2024 seems, to have been spared the ax so far. But it might shift from funding renewable energy in poor countries to fossil fuel projects. Ritu Bharadwaj, a climate-finance researcher, told Carbon Brief that the bank could “signal a shift away from public, needs-based funding toward finance that prioritizes US commercial and strategic interests.”

2. Fickle voters. As unpopular as some of the current US administration actions are, cutting back on climate aid might actually go down well with the electorate. New research from Germany suggests that while richer, more developed governments generally make larger pledges on climate action, citizens of those countries are the least willing to follow through on them.

3. Loans vs grants. All climate finance is not created equal. Grants of money are far better for recipients than loans, which have funneled billions of dollars in interest and other economic rewards back to wealthy nations, a Reuters investigation found last year. As wallets tighten in the likely coming recession, richer countries could look to profit even more from climate loans and projects.