Climate Finance Paradox: Billions Pledged, But Vulnerable Nations Still Struggle to Access Funds

Climate finance has become a central issue in global climate diplomacy, with international commitments increasing over the years. Yet countries most vulnerable to climate change, including Bangladesh, continue to face significant difficulties in accessing the funding needed to strengthen climate resilience and support low-carbon development.

Experts describe this situation as a “climate finance paradox”—global financial commitments continue to grow, while countries that need the resources most often struggle with complicated funding procedures, institutional barriers and limited technical capacity. The issue is expected to remain important as countries begin implementing the New Collective Quantified Goal (NCQG) agreed at COP29 in Baku.

The global climate finance framework has developed considerably since developed countries pledged in 2009 to mobilize $100 billion annually for developing countries. The Paris Agreement subsequently placed finance at the centre of global climate action, linking funding with mitigation, adaptation and resilience. At COP29, countries agreed to raise the collective climate finance target to $300 billion annually by 2035.

Despite these commitments, the gap between available finance and actual requirements remains substantial. Climate economists estimate that developing countries need between $5 trillion and $6 trillion every year to meet climate objectives while continuing their economic development. This has shifted the debate from simply increasing financial pledges to questioning whether the existing global financial architecture can effectively deliver resources to countries facing the greatest climate risks.

For Bangladesh, the issue is particularly significant. The country regularly faces cyclones, floods, river erosion, sea-level rise and salinity intrusion. Although Bangladesh has established a broad policy framework that includes the Bangladesh Climate Change Strategy and Action Plan, National Adaptation Plan, Delta Plan 2100 and Nationally Determined Contributions, substantial financing gaps remain in areas such as resilient infrastructure, renewable energy, disaster risk reduction, food security and climate-induced migration.

The late Dr Saleemul Huq, founder of the International Centre for Climate Change and Development (ICCCAD), had consistently argued that climate finance should ultimately be judged by its impact on vulnerable communities rather than the size of international pledges. He also warned that vulnerable countries can spend years preparing funding proposals when resources and technical capacity are limited.

Other climate policy experts have raised similar concerns. Professor Navroz K. Dubash of India's Centre for Policy Research has argued that climate finance needs to support national development priorities instead of creating parallel systems. Dr Rachel Kyte has emphasized the importance of predictable, long-term financing in attracting private investment, while Mafalda Duarte, executive director of the Green Climate Fund, has acknowledged that accreditation and access procedures can remain overly complicated for developing countries.

Accessing major international climate funds often involves extensive feasibility studies, environmental and social safeguards, fiduciary standards, gender assessments, procurement plans, audits and monitoring frameworks. Researchers say these requirements can make the preparation of large funding proposals particularly difficult for institutions that lack the necessary technical and administrative capacity.

The problem is especially important because much of climate adaptation takes place at the local level. Communities need resilient infrastructure, municipalities require better drainage systems and local authorities are responsible for disaster preparedness. However, only a limited portion of international climate finance reaches local institutions directly. Funds are frequently channelled through national or international agencies, which can slow implementation and reduce local ownership.

The climate finance debate is also closely linked to the question of climate justice. Developing countries argue that nations responsible for a large share of historical greenhouse gas emissions have a responsibility to support countries suffering severe climate impacts despite contributing comparatively little to global emissions. This principle is reflected in the United Nations Framework Convention on Climate Change through the concept of Common but Differentiated Responsibilities, or CBDR.

Bangladesh faces the additional challenge of pursuing several development priorities at the same time. The country needs to expand renewable energy, maintain affordable electricity, attract investment, build climate-resilient infrastructure, create employment and reduce poverty. Climate economists argue that these objectives cannot be considered separately because the transition toward a low-carbon and climate-resilient economy is fundamentally connected with broader development.

There are also limitations to relying heavily on private investment. Private finance can play an important role in commercially viable renewable energy and green investment projects, but many adaptation initiatives do not generate sufficient financial returns to attract private investors. Cyclone shelters, mangrove restoration, flood protection and community resilience programmes can deliver major social benefits while producing limited direct commercial revenue. For such projects, grants and concessional public finance remain particularly important.

Another concern is the short-term, project-based structure of much climate finance. Many projects operate for three to five years before their funding ends. Researchers increasingly argue that international support should also strengthen national institutions, public budgeting systems, long-term planning and policy capacity instead of focusing mainly on isolated pilot projects.

Policy experts have consequently called for simpler application procedures, greater direct access for vulnerable countries, stronger financing for local governments, increased grant-based support, better transparency and stronger alignment between climate funding and national development priorities. They also emphasize the importance of blended finance and investment in institutional capacity so that countries can prepare and implement high-quality climate projects.

Speaking to Dhaka Tribune, Md Abul Basar, team leader of Swisscontact Bangladesh, said climate finance should be considered a strategic development opportunity for Bangladesh, particularly as traditional official development assistance continues to decline.

“Climate finance is a strategic opportunity for Bangladesh. However, accessing global climate finance requires strong technical and institutional capacity. Therefore, climate finance readiness and capacity building should be a national priority,” he said.

Md Shamsuddoha, chief executive of the Center for Participatory Research and Development (CPRD), also stressed the need to make global financing mechanisms more accessible.

“Climate finance must become simpler, more accessible, and aligned with the development priorities of climate-vulnerable countries like Bangladesh,” he told Dhaka Tribune.

Bangladesh has already developed an extensive framework for addressing climate change, but experts say the country's success will depend not only on the amount of money pledged at future climate negotiations. The crucial question is whether those commitments can be converted into predictable, accessible financing that reaches projects and communities where the need is greatest.

For climate-vulnerable countries such as Bangladesh, the challenge is therefore moving beyond ambitious international promises toward effective delivery. Unless climate finance becomes easier to access, more predictable and better aligned with national priorities, the gap between global commitments and climate action on the ground is likely to remain a major obstacle to building long-term resilience.