Build Durable Capacity Internationally

To limit the catastrophic warming that threatens national and economic security, the United States must not only transform its domestic energy system but also contribute constructively to the global energy transition. International climate finance is essential in this regard: When implemented effectively, it helps reduce carbon emissions and build poor countries’ resilience to climate change effects like famine, conflict, displacement, and migration. Alongside the benefits gained through improved global and regional stability, support to friends and allies can help build out green supply chains that are critical to the domestic transition.

Yet like its overall climate policy, the US international climate finance strategy has suffered from deep seesawing between administrations. Inconsistency interrupts the flow of funds and undermines the US ability to design and implement coherent policy, let alone see its effects materialize. While the Biden administration tried to articulate a vision for a “foreign policy for the middle class” that more tightly yoked US economic interests to those of the world’s needy, it was more thought experiment than reality, and was quickly undone by the Trump administration.

How might the administration in 2029 make the global climate finance agenda more durable? This essay proposes three ways of doing so: building a new cadre of climate finance experts, infusing multilateral development banks (MDBs) and other finance institutions with domestic green statecraft, and taking concrete steps to broaden domestic political support to sustain progress across administrations.

On the Seesaw: Industrial Policy and Climate

As in the domestic debate, American ideas about the role of the state in economic development abroad have shifted over time. Guided by the idea that economic stability is necessary to sustain democracy, New Deal economists like Harry Dexter White envisioned MDBs as a means to support industrial policy to grow economies in Latin America and beyond.¹ The Roosevelt administration hoped to establish an MDB for Latin America to support allies, win new ones, and curb the appeal of Nazism and other radical nationalist movements. MDB policies waxed and waned over time, but the winds shifted dramatically during the 1980s debt crisis. In that decade, the World Bank reorganized its lending in response to US demands that lending be made conditional on market-liberalizing reforms. This ushered in an era of privatization, spending cuts, and removal of barriers to trade.² Now ideas have evolved again: MDBs are contemplating how best to support economic growth through industrial policy,³ with emphasis on the green variety.⁴

If the shifting fortunes of industrial policy to promote development over the decades is akin to a gentle seesaw, US climate finance policy in the last five years qualifies as whiplash. In 2021, the Biden administration released the first US International Climate Finance Plan, which set goals for providing more climate finance abroad and outlined a whole-of-government approach to achieving them.⁵ The plan called for the following: doubling US public international climate finance relative to an Obama-era baseline; prioritizing climate investments, with an emphasis on leveraging private capital from the Department of State, USAID, the Development Finance Corporation (DFC), the Export-Import Bank (EXIM), and other domestic agencies; exerting US influence at the MDBs to push for ambitious climate lending; and renewing US leadership and funding for the Green Climate Fund (GCF) and other multilateral climate institutions. Overall, the administration exceeded its goals in increasing international climate finance, which reached more than $11 billion in 2024, with adaptation finance increasing sixfold, to over $3 billion.⁶

Since then, the US government has done an about-face. On the bilateral side, USAID, which was central to delivering adaptation finance, was entirely eliminated. The DFC and EXIM, which had yet to meet their green investment potential,⁷ are steering away from renewables. On the multilateral side, under Donald Trump the US has pushed the World Bank to roll back climate goals and fund fossil fuel projects.⁸ US funding for the GCF, the world’s largest climate fund, has been eliminated entirely along with support to the World Bank’s Clean Technology Fund. State Department staff who worked on climate policy and negotiations have been fired.⁹

Current policy is a more extreme version of a persistent trend: Support for delivering climate finance abroad has never been durable in the United States. Policymakers that support action struggle to win congressional budget approval to support multilateral climate funds, while those that oppose it have cut funding or abolished it altogether.

Develop a Cadre of Climate Finance Experts to Bring the US Government Up to Speed

Gutting climate expertise across the government is a devastating blow to state capacity, but it provides an opportunity for strategic hiring to improve future US investments. Hiring should prioritize those with knowledge of the climate strategies and instruments of MDBs, international climate funds, and bilateral aid and finance institutions.

As the US retreats to propping up coal,¹⁰ the rest of the world is moving forward. Chinese investment in clean manufacturing abroad has accelerated rapidly since 2022.¹¹ Annual climate finance from MDBs is estimated to reach $120 billion by 2030.¹² This active and innovative landscape of institutions is building experience in mitigation and adaptation finance through sharing risk, mobilizing private capital, and providing grant-based technical assistance to build capacity in developing states.

The US government should learn from this experience and rebuild its bilateral infrastructure to reflect best practices. This is especially true for DFC and EXIM, where personnel must share a commitment to accelerating green investments and ending support for fossil fuels. In addition to renewing calls for MDBs to increase climate lending and restoring US funding to multilateral climate funds, the US should become an expert partner to these mechanisms, helping productively guide the multilateral system. Once the US has a clear sense of the capabilities of existing architecture, it can make an assessment about the need for additional multilateral initiatives, like expanded Group of Seven coordination in clean energy supply chains.¹³

Infuse Multilateralism with Domestic Green Statecraft

Despite changes in the wake of the 2008 financial crisis,¹⁴ neoliberal economic policies have had lasting influence at the World Bank. The current emphasis on derisking to mobilize private capital¹⁵ raises concerns that policies like Maximizing Finance for Development¹⁶ are the latest iteration of neoliberalism, prioritizing international private investors without addressing the needs of vulnerable developing states.¹⁷ Yet the so-called Washington Consensus is no longer dominant at MDBs. Neoclassical economic ideas remain, but they exist alongside green growth ideas that draw on Keynesian thinking.¹⁸ MDBs are partnering more often with national development banks,¹⁹ and a new World Bank report notes that “industrial policy is more replicable than previously thought,” advocating for carefully targeted state interventions.²⁰

The US should encourage MDBs and climate finance institutions to teach states how to discipline capital to protect taxpayers, ensure provision of public goods, and avoid unduly constraining future domestic policy.

The moment is ripe for the US to push MDBs and international climate finance institutions to ensure that investments serve the social purpose of building developing states’ capacity to drive and cope with their own green energy transitions.²¹ This means advocating for grant-based finance to build green state capacity in government ministries, national development banks, and local commercial banks. MDBs can partner with domestic banks that have developed their own green industrial policy to accelerate their climate investments and increase the likelihood that projects are aligned with state priorities. International organizations are known—and sometimes notorious—teachers of norms:²² Alongside teaching states how to mobilize private capital, the US should encourage MDBs and climate finance institutions to teach states how to discipline capital to protect taxpayers, ensure provision of public goods, and avoid unduly constraining future domestic policy. By working to infuse these ideas and practices in multilaterals, the US can achieve more consistency with citizen-centered domestic economic values.

Broaden Support for International Climate Finance

The US is the largest cumulative carbon emitter in history. The US clearly owes developing countries climate finance so they can adapt, and finance for mitigation serves US interests. Despite this, American foreign policy treats bilateral climate funding through USAID or contributions to MDBs, the GCF, or similar mechanisms as aid or charity. Worse, the right wing’s climate denial makes climate finance politically toxic. The result is that the US rarely contributes its fair share. Under the Biden administration, Congress failed to fulfill the president’s $3 billion pledge to the GCF, leading the administration to reallocate $1 billion in discretionary funding. Even that required pushing back against efforts by Rep. Tom Cole (R-OK) and colleagues to prohibit any funding.²³

A durable commitment to delivering climate finance abroad requires taking the political opposition into account and working to expand support. It is particularly important to join with like-minded states to push the MDBs on building green state capacity. MDBs are difficult to steer, but once they turn, they are more likely to stay on track. Development policy scholars see efforts by Treasury Secretary Janet Yellen²⁴ as important in this regard. The US must also ramp up funding to multilaterals that retain some bipartisan support. These tend to be institutions that work on general environmental issues rather than those focused solely on climate, like the Global Environment Facility. The Montreal Protocol fund provides another example: Ostensibly focused on reducing ozone-depleting substances rather than on climate, it supports the Kigali Amendment to phase out hydrofluorocarbons, which are potent greenhouse-gas emitters. The US should generously fund multilateral environment funds that have positive spillover effects for climate to help compensate for potential US shortfalls elsewhere.

Conclusion

After years of seesawing in policy, the US climate movement is questioning its tactics yet again. Some advocates are urging a sole focus on affordability rather than climate jobs or emissions reductions. Others recommend not using the “C word” (climate) at all.²⁵ But too much of this debate takes the basic discursive parameters around climate as immutable, rather than malleable. International climate finance can be delivered and structured in ways that upend narratives about aid. The financial model of MDBs makes them remarkably inexpensive instruments of statecraft for wealthy states, and contributions to grant-based multilaterals take advantage of substantial burden-sharing benefits. In other words, these institutions serve US interests on the cheap.

Climate coverage in the US press fell for the fourth straight year in 2025.²⁶ Congressional knowledge of how international institutions work has never been especially strong.²⁷ Mischaracterizations of institutions like the GCF and Clean Technology Fund as “radical” and “wasteful”²⁸ are harmful, particularly when there is no alternative narrative. Ironically, these institutions explicitly reflect US preferences to prioritize private-sector collaboration. The GCF supports a large private-sector facility;²⁹ engages in lending, guarantees, and equity investments like an MDB; and works through a wide range of “accredited entities” to implement projects. These policies could be recoded to reflect the pro-market entities and strategies that they are.

To build congressional support, the US should take steps to access GCF funding directly by pursuing accreditation for bilateral aid agencies. Organisation for Economic Co-operation and Development (OECD) countries including Germany, Japan, and France have successfully pursued GCF accreditation, and bilateral institutions account for approximately 11 percent of all projects and 13 percent of all funding.³⁰ Accrediting bilateral entities also ensures that these countries’ bilateral priorities are reflected in the GCF portfolio and are funded. The US should seek accreditation for a rebuilt USAID and potentially for the DFC to take advantage of these opportunities to ensure the GCF portfolio reflects US interests. Doing so facilitates learning, coordination, and productive oversight, and just might broaden congressional support and improve durability.