- The Paris Agreement is the right framework, but emissions cuts and policy follow-through are far too slow to meet 1.5–2C pathways.
- Clean energy investment exceeded US$2T in 2024, yet only ~15% reached emerging and developing economies outside China, leaving a major infrastructure and resilience funding gap.
- Adaptation finance is rising but remains an order of magnitude below needs, with a US$187 6359B annual gap.
- Climate finance commitments are off-track, with only ~4 65% of the US$1.3T/year developing-country target mobilized by late 2025 despite the NCQG path to US$300B/year by 2035.
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The Paris Agreement remains the right framework for global climate action; however, the pace of implementation—in terms of emissions reductions, financing, and policy alignment—is off-track to meet its most ambitious goals.
According to AIIB President Jin Liqun, roughly 10 years after the Agreement’s ratification, infrastructure financing in low- and middle-income countries needs exceed US$1.5 trillion per year just to align with Paris goals. Meanwhile, clean energy investment globally surpassed US$2 trillion in 2024, yet only about 15% flowed to emerging and developing economies outside China. This mismatch between investment and funding destination creates a major bottleneck in enabling the most vulnerable nations to adapt and mitigate effectively.
Adaptation finance is particularly lagging. Public adaptation financing to developing countries rose modestly from US$22 billion in 2021 to US$28 billion in 2022, but the adaptation finance gap is estimated at US$187–359 billion annually—an order of magnitude larger than funds presently flowing. This signals severe under-resourcing of efforts to cope with climate-induced risks already materializing in many regions.
Policy implementation also exposes gaps between ambition and reality. Recent research shows that with existing national policies, the world would have a 22.4–28.2 GtCO₂ equivalent emissions gap by 2030 compared to pathways consistent with 1.5–2 °C targets. Even full implementation of current pledges (Nationally Determined Contributions) only reduces that gap by about one-third. Combined with rising emissions in major economies—for example, France’s emissions flattened early in 2025, with projected annual reductions well below what’s required—momentum is insufficient.
On climate finance, the New Collective Quantified Goal (NCQG) sets developed countries on a path to mobilize US$300 billion/year by 2035, but data from late 2025 indicate that just 4–5% of the broader US$1.3 trillion/year external finance target (encompassing both public and private flows to developing countries) has been mobilized so far. This finance shortfall undermines implementation capacity, especially for adaptation, and threatens trust between Global North and South stakeholders.
Strategic implications for financiers, governments, and MDBs include: sharply increasing private-sector mobilization in frontier markets; improving transparency and tracking of climate finance disbursements to ensure accountability; aligning fiscal policy with climate goals (carbon pricing, subsidies reform); investing in adaptation and resilience infrastructure; and accelerating policy reform and implementation speed in large emitters.
Open questions remain urgent: Which mechanisms will reliably scale finance to the $1.3 trillion/year level? How will global trade, technology transfer, and supply chain constraints adjust to meet emissions-reduction goals? Will fossil fuel phase-out ever be formalized in COP outcomes, given resistance? And can emerging economies build infrastructure without locking in high emissions?
Supporting Notes
- Global clean energy investment topped US$2 trillion in 2024, but only ~15% of those funds reach emerging and developing economies outside China.
- Infrastructure financing gap in low- and middle-income countries exceeds US$1.5 trillion per year.
- Climate finance from multilateral development banks (MDBs) reached a record US$137 billion in 2024, up 10% from the previous year, with US$85.1 billion directed to low- and middle-income countries.
- Of MDB climate finance to developing countries in 2024, ~69% was mitigation-focused and 31% for adaptation.
- France’s greenhouse gas emissions stopped declining in Q1 2025 (up by 0.2%) with projected 2025 annual reduction of only ~0.8%, far short of ~5% needed annually to reach its 2030 goals.
- Implementation of current national policies yields a projected emissions gap of 22.4–28.2 GtCO₂e by 2030 relative to 1.5–2 °C pathways; full implementation of NDCs reduces but does not eliminate that gap.
- Only ~4–5% of the US$1.3 trillion/year external climate finance target for developing countries has been mobilized by late 2025.
- Public adaptation finance flows increased from US$22B in 2021 to US$28B in 2022, but the adaptation finance gap remains estimated at US$187–359B annually.
- MDBs’ stated pledges: projected annual climate finance for low- and middle-income countries to reach US$120 billion by 2030 (including US$42B for adaptation, US$65B mobilized from private sector), still far below total required.