October 25, 2017
Paris Agreement: U.S. Climate Finance Commitments
International Environmental Assistance
Among the obligations outlined in Article 4 of the
Many governments hold that environmental degradation
Convention, higher-income Parties (i.e., those listed in
and climate change pose international and trans-boundary
Annex II of the Convention, which were members of the
risks to human populations, economies, and ecosystems. To
Organization for Economic Cooperation and Development
confront these challenges, governments have negotiated
in 1992) sought to provide unspecified amounts of “new
various international agreements to protect the
and additional financial resources to meet the agreed full
environment, reduce pollution, conserve natural resources,
costs incurred by developing country Parties in complying
and promote sustainable growth. While some observers call
with their obligations” under the Convention. Further, “the
upon industrialized countries to take the lead in addressing
implementation of these commitments shall take into
these issues, many recognize that efforts are unlikely to be
account the need for adequacy and predictability in the flow
sufficient without similar measures being taken in lower-
of funds and the importance of appropriate burden sharing
income countries.
among the developed country Parties.”
However, lower-income countries, which face poverty and
Over the past several decades, the United States has
economic growth issues, may not have the financial
delivered financial and technical assistance for climate
resources, technological know-how, and/or institutional
change activities in the developing world through a variety
capacity to deploy environmentally protective measures on
of bilateral and multilateral programs. U.S.-sponsored
their own. Therefore, international financial assistance, or
bilateral assistance has come through programs at the U.S.
foreign aid, has been a principal method for higher-income
Agency for International Development, the U.S. State
governments to support actions on global environmental
Department, the Millennium Challenge Corporation, the
problems in lower-income countries. Often, this assistance
Export-Import Bank, and the Overseas Private Investment
can serve as a cost-effective strategy for donor countries to
Corporation, among others.
provide greater market access for their environmental goods
and services abroad and increased environmental benefits at
U.S.-sponsored multilateral assistance has come through
home.
contributions by the U.S. Departments of State and the
Treasury to environmental funds at various international
The United States and other industrialized countries have
financial institutions and organizations such as the Global
committed to providing financial assistance for global
Environment Facility (GEF), the Green Climate Fund
environmental initiatives through a variety of multilateral
(GCF), the U.N. Development Program, the U.N.
Environment Program, the UNFCCC’s Special Climate
agreements, including, among others, the Montreal Protocol
(1987), the United Nations Framework Convention on
Change Fund and Least Developed Country Fund, and the
World Bank’s
Climate Change (UNFCCC, 1992), and the U.N.
Climate Investment Funds and Forest Carbon
Convention to Combat Desertification (1994). International
Partnership Facility, among others. Each channel has its
financial assistance takes many forms, from fiscal transfers
own mission and particular capacities.
to market transactions. It may include grants, loans, loan
Global Environment Facility
guarantees, export credits, insurance products, and private
sector investment. It may be structured as official bilateral
To facilitate the provision of climate finance under the
development assistance or as contributions to multilateral
UNFCCC, the Convention establishes a financial
development banks and other international financial
mechanism to provide funds to developing country Parties.
institutions.
Article 11 of the Convention states that the operation of the
financial mechanism can be entrusted to one or more
Ultimately, U.S. government assistance to developing
existing international entities.
countries for environmental initiatives is determined by
Congress. Congressional committees of jurisdiction include
The GEF was established in 1991 as an independent
the House Committees on Foreign Affairs, Financial
international financial institution to provide grants, promote
Services, and Appropriations and the Senate Committees on
cooperation, and foster actions in developing countries to
Foreign Relations and Appropriations.
protect the global environment. The GEF subsequently
became an official operating entity of the financial
Finance Under the UNFCCC
mechanism of several international environmental
The UNFCCC is the principal international treaty to
agreements, including the UNFCCC. The relationship
acknowledge and address human-driven climate change.
between the UNFCCC and the GEF is outlined in a
The United States ratified the treaty in 1992 (U.S. Treaty
memorandum of understanding contained in UNFCCC
Number: 102-38).
Conference of Parties (COP) decisions 12/CP.2 and
12/CP.3.
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Paris Agreement: U.S. Climate Finance Commitments
The George H. W. Bush Administration supported the
adaptation projects, programs, and activities. The GCF is
establishment of the GEF in 1991. The United States has
capitalized by “financial inputs from developed country
made commitments to all six GEF resource replenishments,
Parties to the Convention” and “may also receive financial
including $430 million in 1994, $430 million in 1998, $430
inputs from a variety of other sources, public and private,
million in 2002, $320 million in 2006, $575 million in
including alternative sources” (3/CP.17§§A29-A30).
2010, and $546 million in 2014, for a total of $2.732
billion. U.S. commitments correspond to about 13% of
The GCF was officially opened for capitalization at the
GEF’s total. U.S. disbursements to the GEF since 1994
U.N. Climate Summit in September 2014. Parties called for
have totaled approximately $2.2 billion.
an immediate capitalization of between $10 billion and $15
billion over the course of the first year. Initial funding came
Finance Under the Cancun Agreement
from Germany, France, and a dozen other countries that
The 2009 COP in Copenhagen, Denmark, took note of a
pledged approximately $2.3 billion. Further pledges
non-legal political document called the Copenhagen
brought the total to approximately $10 billion.
Accord. The following year, in Cancun, Mexico, the COP
officially adopted many of the accord’s elements into the
U.S. Commitments: The Obama Administration announced
Cancun Agreements (CA), including several quantified
a U.S. pledge of $3 billion over four years during the G-20
financial arrangements. The CA puts forth a collective
meetings in Australia on November 15, 2014.
commitment by developed country Parties (not specified in
the text) to seek to provide new and additional resources
U.S. Contributions: Under the Obama Administration, the
approaching $30 billion for the period 2010-2012 to address
U.S. State Department made two separate contributions of
the climate finance needs of developing countries
$500 million to the GCF on March 8, 2016, and on January
(1/CP.16§95). The CA takes note of the pledge by
17, 2017. The funds were obligated with FY2016 budget
developed country Parties to achieve a goal of mobilizing
authority from the agency’s “Economic Support Fund”
jointly $100 billion per year by 2020 to address the climate
account. No contribution was made for FY2017.
finance needs of developing countries (1/CP.16§98). The
CA states that “funds provided to developing country
The Trump Administration
Parties may come from a wide variety of sources, public
The Trump Administration’s FY2018 budget request,
and private, bilateral and multilateral, including alternative
released on May 23, 2017, proposes to “eliminate U.S.
sources” (1/CP.16§99).
funding for the Green Climate Fund (GCF) in FY2018, in
alignment with President Trump’s promise to cease
Finance Under the Paris Agreement
payments to the United Nations’ climate change programs.”
In 2015, the COP in Paris, France, adopted the Paris
Notwithstanding, the U.S. disbursement of $1 billion to the
Agreement (PA). Article 9 of the PA reiterates the
GCF under the Obama Administration ensures that the
obligation in the Convention for developed country Parties
United States remains a member of the GCF board at least
to seek to mobilize financial support to assist developing
through 2018, the end of the initial phase of capitalization.
country Parties with climate change mitigation and
adaptation efforts (Article 9.1). Also, for the first time
On June 1, 2017, President Trump announced his intention
under the UNFCCC, the PA encourages all Parties to
to withdraw from the PA. Under the provisions of the PA,
provide financial support voluntarily, regardless of their
this could not be completed before November 4, 2020.
economic standing (Article 9.2). The agreement states that
While a withdrawal from the PA would release the United
developed country Parties (not specified in the text) should
States from specific obligations under the PA, it would not
take the lead in mobilizing climate finance and that the
release the United States from the obligations under the
mobilized resources may come from a wide variety of
UNFCCC to provide “new and additional financial
sources. It adds that the mobilization of climate finance
resources to meet the agreed full costs incurred by
“should represent a progression beyond previous efforts”
developing country Parties in complying with their
(Article 9.3). The COP decision to carry out the PA
obligations” under the Convention or the collective pledge
(1/CP.21) uses exhortatory language to restate the CA’s
by developed country Parties to achieve “a goal of
collective pledge by developed countries of $100 billion
mobilizing jointly $100 billion per year by 2020.”
annually by 2020 and calls for continuing this collective
mobilization through 2025. In addition, the Parties agree to
The effects of the Trump Administration’s announced
set, prior to their 2025 meeting, a new collective, quantified
withdrawal from international climate finance commitments
goal for mobilizing financial resources of not less than $100
would rely on assumptions regarding the efficiencies of
billion annually to assist developing country Parties.
these programs and the sum of the collective assistance
provided by other nations, regional governments, cities, and
The Green Climate Fund
the private sector. Some analysis suggests the impacts could
The GCF is an official operating entity of the financial
be minimal if other contributions compensate for the lack of
mechanism of the UNFCCC. The fund was proposed during
U.S. assistance. However, the U.S. decision could also lead
the 2009 COP in Copenhagen, Denmark, and its design was
to an erosion of international efforts to help developing
agreed to by all Parties during the 2011 COP in Durban,
countries confront climate change.
South Africa. The GCF was made operational in 2014. The
GCF aims to assist lower-income countries in their efforts
Richard K. Lattanzio, Specialist in Environmental Policy
to combat climate change through the provision of grants
and other concessional financing for mitigation and
IF10763
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Paris Agreement: U.S. Climate Finance Commitments


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