By Kate Logan

At the heart of next month’s UN Climate Change Conference (COP29) in Baku, Azerbaijan, are negotiations on a new global goal for climate finance. The mandate to agree on a New Collective Quantified Goal on Climate Finance (NCQG) before 2025 was part of the grand bargain that gave rise to the Paris Agreement in 2015: that all countries need to take action to address climate change, but those that are least responsible historically and suffering the most from climate impacts would require financial support from the largest historical emitters. The new goal will replace a previous target agreed in 2009 for developed countries to mobilize $100 billion annually by 2020 in climate finance for developing countries.

Part of the political compromise underpinning this year’s negotiations is an expectation that the NCQG will expand the base of countries obligated to contribute funding. As former U.S. climate envoy Todd Stern explained in his recent book Landing the Paris Agreement, “The language about maintaining the existing [$100 billion] pledge through 2025 and setting a new goal of at least $100 billion before 2025 was critical for developing countries. There would have been no Paris Agreement without it. At the same time, leaving open the question of who would be expected to contribute post-2025 and the amount of funding, other than to say it would not shrink, was crucial for developed countries.” In other words, as developed countries saw that the emissions of some developing countries would soon eclipse their own, they wanted to ensure that the financial burden of climate change would be shared accordingly.

A key focus of the COP29 negotiations, therefore, will be whether and how the new finance goal will integrate contributors beyond the developed countries identified by the United Nations Framework Convention on Climate Change (UNFCCC) when it was adopted in 1992. China, which has been responsible for approximately 90% of additional global emissions since the Paris Agreement, has been a major target of developed countries’ efforts to avoid sole responsibility for footing the bill for global climate action by expanding the contributor base. This attention has catalyzed a wave of research to quantify and contextualize China’s existing contributions to global climate finance.

Analyzing China’s Contributions to Global Climate Finance

Perhaps most relevant for the NCQG negotiations is a September 2024 study from the World Resources Institute (WRI) that applies the framework used by the OECD to measure developed countries’ climate finance contributions under the UNFCCC to China’s activities from 2013 to 2022, looking at bilateral public finance, multilateral public finance, export credits, and mobilized private finance. Another study by the Center for Global Development (CGD), released just a few days earlier, offers a broadly similar analysis using a slightly different framework to define China’s “climate-relevant” finance. These two studies provide a methodological upgrade and an update to research published in 2023 by the Overseas Development Institute (ODI) and E3G that made initial attempts to provide estimates. Moreover, a new study by Scott Moore at the University of Pennsylvania adds useful qualitative context on how the Chinese government approaches climate-related international investments. 

Figure 1. Summary of Research on China’s Global Climate Finance

The findings of these studies are broadly aligned:

• China is already a significant player in global climate finance, contributing between $3.8 billion (CGD) and $4.5 billion (WRI) annually from roughly 2013 to 2022,[iii] which would account for 5.0% (CGD) to 6.1% (WRI) of the total contributions from developed countries during that period. Putting the quality of finance aside, China’s total contributions make it equal to the fifth-ranked climate finance donor from 2013 to 2018, on par with the United Kingdom. China’s contributions are more or less balanced among bilateral, multilateral, and export credits. The CGD study points out that while China’s bilateral contributions are nearly double those of the United States ($3.0 billion versus $1.5 billion), its multilateral contributions are the inverse, measuring just over half ($4.1 billion versus $7.3 billion) during the five-year period ending in 2021.
• China’s contributions exhibit some key differences from those of developed countries – most notably, they are primarily non-concessional (compared with OECD countries, which provide approximately 75% of finance from Official Development Assistance budgets). CGD estimates that the grant equivalence of China’s finance from 2013 to 2021 would be only 22% of its face value. A lack of data obscures how much of China’s finance has actually been disbursed – potentially as little as $160 million in finance earmarked for South-South climate cooperation. However, China actively engages in many low-cost but high-engagement South-South climate cooperation activities, such as trainings and capacity-building efforts. For instance, the initial tranche of projects just announced for China’s $210 million Kunming Biodiversity Fund will support countries to prepare and implement their national plans for biodiversity conservation. China is now a net provider of climate finance as a result of its significant bilateral lending; that said, China still took in more money from multilateral development banks and multilateral climate funds than it paid out during the five-year period ending in 2021.
• Involving China in efforts to improve accounting standards could deepen understanding and recognition of its climate finance efforts. The studies discussed here all offer conservative estimates of China’s contributions because of a lack of data – especially on “private” finance mobilized (which is, admittedly, difficult to measure in the context of China’s economic system). While the web of actors involved in China’s climate finance complicates reporting, some initial efforts to make climate finance data more accessible are underway, including a statistics system on foreign aid that the China International Development Cooperation Agency is building. International frameworks could leverage these existing domestic efforts to improve transparency.

How Could China be Positioned Within the New Climate Finance Goal?

The recent studies provide invaluable context for understanding how China could fit into the NCQG package that is ultimately advanced in Baku. China’s role is just one of many dynamics shaping the negotiations. However, given the insistence of the United States, the European Union, and other developed countries that the contributor base must be expanded, China’s position could stymy agreement on other critical aspects of the new goal, such as the structure, total size (or “quantum”), and provisions for reporting and transparency. China, for its part, is adamant that the new goal accord with the Paris Agreement – especially Article 9.2, which encourages developing countries to provide or continue to provide support voluntarily.

The first question is how to capture China’s existing contributions within the context of the new goal. Doing so, if managed effectively, could balance developed countries’ desire to improve burden sharing by capturing more contributors, climate-vulnerable countries’ push to expand the overall quantum and pool of available resources, and China’s wish to present itself as a responsible major developing country that actively participates in global climate governance. One way to do this could be to acknowledge China’s finance in the context of Article 9.2 as a contributing developing country that continues “to provide such support.” However, given developed countries’ pushback against bifurcation of donor pools, the NCQG may need to include some combination of universal parameters and differentiated structures for new contributors.

Second, the studies show that the quality of China’s finance still differs significantly from that of existing contributors. Ideally, the NCQG would give China an incentive to improve the quality of its finance over time – for instance, by committing more grant-based and concessional resources, ensuring that its finance is disbursed in a timely manner, and providing a greater share of finance for climate-vulnerable countries’ adaptation needs. To do so, the NCQG may need to ensure that provisions addressing the quality of finance apply to China’s future contributions.

Third, mechanisms to increase transparency and accountability of China’s contributions may need to account for China’s current bureaucratic constraints. The new studies suggest that calculating China’s contributions is technically possible. However, given that these analyses all rely on data collected outside China, domestic government agencies may require more time and resources to build internal capacity to report consistently and accurately. The NCQG’s structure could be designed to accelerate this process and align global standards, such that China could support other new contributors to do the same.

Finally, the studies indicate that more research may be needed to understand the contributions and capabilities of other countries that have contributed voluntarily and could be captured within the context of the NCQG. Various efforts by ODI, WRI, and CGD have analyzed which countries could be positioned to ramp up their contributions, such as the United Arab Emirates, South Korea, Qatar, Singapore, and Saudi Arabia. The NCQG’s accountability mechanisms offer a critical opportunity to increase understanding of more countries’ contributions and improve their quality and quantity alongside that of China.

End Notes

[i] The ODI study directly uses E3G’s data from an earlier paper on China’s bilateral climate finance.

[ii] This figure is based on the percentage of the total OECD figure for developed countries’ bilateral public and multilateral public climate finance in 2017.

[iii] The CGD study looks at the period from 2013 to 2021. The WRI study only includes data on multilateral public climate finance for 2022; data for other categories for 2022 was unavailable as of the study’s publication.