Can More Nations Boost Global Climate Finance?

The list of countries obligated to provide international climate finance has barely changed since it was drafted at the Rio Earth Summit in 1992, but a new analysis suggests that a changing global economy and shifting geopolitical order are making this rigidity increasingly untenable. A review published in Current Climate Change Reports examines which countries beyond the traditional donor group could—and perhaps should—be drawn into financing climate action in the developing world, and finds that a small but striking set of nations, including South Korea, Russia, Saudi Arabia, and several newer European Union member states, meet many of the justifications for becoming climate finance providers.

The research, led by W. Pieter Pauw of Eindhoven University of Technology and the Stockholm Environment Institute, together with colleagues at the Frankfurt School of Finance and Management and Humboldt University of Berlin, tackles one of the most persistent frictions in United Nations climate diplomacy: the Annex II list of the UN Framework Convention on Climate Change (UNFCCC). This list names 23 developed countries plus the European Union as the parties obliged to provide “new and additional financial resources” to help developing countries cut emissions and adapt to climate impacts. Only two modifications have occurred since 1992: Türkiye was removed in 2001 in recognition of its early stage of industrialisation, and the European Union succeeded the European Economic Community as the listed entity. Otherwise, the roster has been frozen for more than three decades.

That freeze is increasingly at odds with reality. In 1992, Annex II countries held roughly four-fifths of global gross national income; by 2020, that share had fallen to about half. Projections to mid-century suggest an inversion of economic power from the Group of 7 countries—all Annex II members—to the “Emerging 7” economies of Brazil, China, India, Indonesia, Mexico, Russia and Türkiye, whose combined output could be twice that of the G7 by 2050. Meanwhile, the share of global greenhouse gas emissions from developing countries has risen from less than half in 1990 to almost three-quarters in 2019, partly because industrialised nations have offshored emissions-intensive production. The financial stakes are rising in parallel. The US$100 billion annual mobilisation goal, promised in Copenhagen in 2009 for delivery by 2020, was met only in 2022 by the most optimistic accounting, and studies cited in the review identify the United States, Australia, Canada, Italy and Spain as notable laggards in delivering their shares.

The methodology behind the new study is deliberately multi-pronged. The authors conducted a mixed-methods review built on four analytical pillars. First, they examined the financial commitments that Non-Annex II countries have accepted in international agreements, declarations and agendas since 2011, spanning climate, environment and development instruments from the Busan Partnership on aid effectiveness through the Paris Agreement, the Sendai Framework, the Addis Ababa financing conference, the Kigali Amendment to the Montreal Protocol, and the Kunming-Montreal Global Biodiversity Framework. Second, they reviewed and applied literature-based criteria for assessing countries’ responsibilities and capabilities, operationalised through indicators such as cumulative per capita carbon dioxide emissions from 1990 to 2019, emissions in 2019, per capita and absolute gross national income, and average GNI over three decades. Third, they assessed institutional affiliation, treating membership of the European Union, the Organisation for Economic Co-operation and Development, or the G20 as a proxy for political and economic power. Fourth, they gauged willingness by tallying contributions by 168 countries to 27 multilateral funds with global reach, including the Green Climate Fund, the Global Environment Facility, the Adaptation Fund, the Multilateral Fund of the Montreal Protocol, and even the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The responsibility analysis reveals a striking asymmetry. Among 47 Non-Annex II countries that scored above the median Annex II value on at least one indicator, positive scores on emission-based responsibility criteria occurred 3.8 times more frequently than positive scores on income-based capability criteria. Nine of thirteen Middle Eastern countries assessed, including Saudi Arabia, the United Arab Emirates, Qatar and Kuwait, exceeded the median Annex II responsibility thresholds, as did all BRICS nations and seven newer EU member states. Yet on capability, only Qatar, Singapore and Liechtenstein surpassed the median Annex II per capita GNI of roughly US$48,880 in 2019, while Saudi Arabia and Israel sat just below it. This imbalance matters: a country’s theoretical obligation to help pay for climate action may not match its fiscal capacity, particularly once debt burdens and climate vulnerability are considered.

The willingness evidence is perhaps the most eye-opening. Twenty-five Non-Annex II countries have made what the authors classify as significant cumulative contributions—more than US$5 million—to the multilateral funds analysed. Russia leads at US$388 million, followed by South Korea at US$259 million, Saudi Arabia at US$131 million, China at US$119 million and India at US$94 million. For perspective, Russia, South Korea, Saudi Arabia and China have each contributed more in aggregate than the bottom five Annex II contributors, including Iceland at US$7 million and Greece at US$37 million. South Korea channelled more than half of its contributions to the Green Climate Fund, whose headquarters it hosts. At the other end of the spectrum, 120 Non-Annex II countries made symbolic contributions under US$5 million—a category that includes eighteen low-income countries and, notably, the Democratic Republic of Congo, which gave US$4 million to the Global Fund. The authors caution that such small sums can still be diplomatically meaningful, citing how modest early pledges helped catalyse the Green Climate Fund’s initial mobilisation and, more recently, the creation of a dedicated loss and damage fund.

Aggregating the four analyses yields a shortlist of natural candidates. Eastern European countries that joined both the EU and the OECD—particularly Czechia, Poland, Estonia and Slovenia—emerge as logical additions, having already provided climate finance either bilaterally or through the EU. Russia qualifies as a developed country under the UNFCCC and the Montreal Protocol, with a large responsibility for climate change, significant demonstrated contributions, and a lower capability that tempers expectations. South Korea’s case rests on G20 and OECD membership, strong capability indicators, and its substantial support for the GCF. Türkiye, removed from Annex II in 2001 but now a G20 and OECD member with a large economy and rising emissions that could soon surpass the Annex II per capita median, also stands out. Monaco, despite its tiny size, is a developed country under three international agreements with per capita emissions above the Annex II median. And the Gulf states—Saudi Arabia, Qatar and the United Arab Emirates—combine high emissions, high per capita incomes and a track record of significant contributions; the UAE’s US$100 million pledge to the new loss and damage fund at COP28 in Dubai was pointedly framed as paving the way for others. Estonia and Slovenia were, notably, the only other Non-Annex II countries to pledge to that fund, a gap the authors say exposes the absence of any normative framework on who should contribute and why.

The historical arc of the negotiations explains why the current system is so resistant to change. At the Paris negotiations in 2015, submissions from the EU and the Independent Association of Latin America and the Caribbean sought to broaden the group of countries contributing to climate finance, but developing countries resisted any dilution of the Convention’s binary divide. The resulting compromise, Article 9.2 of the Paris Agreement, merely encourages “Other Parties” to provide or continue providing finance voluntarily, while Article 9.1 shifted the obligation from “Annex II” to “developed” countries—a terminological broadening that introduced fresh ambiguity rather than clarity. Earlier, the 2010 Cancun Agreements had gestured in the same direction, referring to “other Parties in a position to do so” while simultaneously exempting economies in transition from Article 4.3 obligations. International classifications compound the confusion: Israel, South Korea and Singapore lack developing country status at the International Monetary Fund, nineteen Non-Annex I countries are classified as high-income by the World Bank and thus ineligible for official development assistance, and nine of those, including Qatar and Trinidad and Tobago, hold industrialised country status under UNIDO.

The authors are careful to note what their study does not do. It refrains from assigning fair shares of climate finance, which they describe as inevitably arbitrary and dependent on contested assumptions—an exercise that has proven a dead end in mitigation negotiations. Nor does it prescribe how new providers would be integrated into the UNFCCC’s financial architecture, whether through a formal expansion of Annex II, a separate naming list, or enhanced transparency and reporting requirements. Instead, the paper recommends four innovations. The first, and most conceptually significant, is establishing “net recipients” as a third category alongside providers and recipients: countries that contribute finance while remaining eligible to receive it. Ten such countries contributing an average of US$10 million annually would add a billion dollars per decade to the pool, while allowing countries to finance sectors where they excel—China in renewables, for example—while receiving support where they need it most. The second recommendation is to treat symbolic contributions with more grace, recognising their diplomatic value. The third is to define exclusion criteria, so that countries like Bangladesh, Kenya, Nigeria or Pakistan are never drawn into provider obligations, potentially using vulnerability or debt-service levels as tests. The fourth is to build dynamism into the system now, using the negotiations on the New Collective Quantified Goal—a successor target to the US$100 billion pledge, due before 2025—as a window of opportunity, or at minimum agreeing a date on which the provider question will be revisited.

The researchers also flag the limits of their analysis and point to future work: assessments of contributions to public development banks, an inverse analysis identifying which countries should be excluded, and deeper examination of how credit ratings and debt levels shape a country’s capacity to finance climate action internationally. What is clear, they argue, is that Annex II countries must deliver on their existing pledges if any broadening is to win trust—non-compliance only strengthens the hand of those who oppose reform. As mitigation and adaptation needs climb into the trillions and economic power continues its eastward and southward drift, the question posed by the study’s title is becoming less whether more countries will pay for climate action, and more when the rules will finally catch up with the world as it is.