An analysis by The Guardian and Carbon Brief reveals that China and wealthy oil-producing nations like Saudi Arabia and the UAE are among the recipients of substantial climate finance. The study examined previously undisclosed reports to the UN and data from the OECD, showing how billions in public funds are being used to combat global warming.
The investigation found a generally effective system that transfers money from wealthy, high-emitting countries to more vulnerable nations, assisting them in transitioning to cleaner economies and adapting to climate impacts. However, it also highlighted that the largest portion of these funds lacks central oversight, as distribution is left to individual countries’ discretion, leading to political influence and funds not always reaching the most critical areas.
Although official data is incomplete, the analysis estimated that around one-fifth of climate funding in 2021 and 2022 went to the world’s 44 poorest nations, known as least developed countries (LDCs). Much of this assistance came as loans rather than grants, with some LDCs receiving over two-thirds of their climate finance in this form. In cases like Bangladesh and Angola, loans accounted for 95% or more, potentially worsening their debt burdens.
Developed countries provide climate finance both directly and through multilateral institutions like development banks. At the 2009 UN climate summit in Copenhagen, wealthy nations pledged to mobilize $100 billion annually by 2020, acknowledging their historical responsibility for climate change and financial capacity to help. The target was eventually met in 2022, but the analysis of over 20,000 projects from 2021-2022 showed significant funds going to oil-rich states and China.
For instance, the UAE, a fossil fuel exporter with a high per capita GDP, received over $1 billion in climate loans from Japan for projects including an offshore electricity transmission system in Abu Dhabi and a waste incinerator in Dubai. Saudi Arabia, a top carbon emitter, obtained about $328 million in Japanese loans for initiatives like a solar farm and support for its electricity company.
Six Balkan countries aspiring to join the EU received more than $3.5 billion in climate finance, with Serbia getting the largest share—ten times more per capita than LDCs. Even EU member Romania received an $8 million U.S. grant for a nuclear reactor study.
Joe Thwaites of the Natural Resources Defense Council noted that while climate finance is increasing, it’s insufficient for the poorest and most vulnerable communities. He emphasized that such funding is not charity but a strategic investment addressing root causes of crises like cost of living, supply chain issues, natural disasters, migration, and conflict.
During the two years studied, approximately $33 billion was allocated to LDCs, including nations like Haiti and Yemen, while a larger sum of about $98 billion went to developing countries, including India and China. An additional $32 billion remained unclassified. India was the single largest…During the reporting period, India was the top recipient of climate finance, receiving about $14 billion, while China received $3 billion, mostly from multilateral banks.
The analysis indicates that the low representation of Least Developed Countries (LDCs) is partly due to their smaller populations, but the composition of the developing country group is increasingly causing friction in climate talks. For example, China’s economy has expanded significantly since it was classified as a developing nation by the UN in the 1990s, and its per capita emissions now exceed those of Europe. Although China is believed to be a major funder of climate projects abroad, it has opposed formal accounting of its contributions. The UN’s development categories have remained unchanged since their establishment in 1992.
Sarah Colenbrander, climate director at the Overseas Development Institute, criticized this system, stating, “It allows wealthy nations like Israel, Korea, Qatar, Singapore, and the UAE, which have large carbon footprints, to avoid their international duties. It’s absurd that they are grouped with countries such as Togo, Tonga, and Tanzania.”
Many of the world’s poorest nations receive over two-thirds of their climate finance as loans, despite concerns that they cannot manage the repayment terms and interest. Ritu Bharadwaj, climate finance director at the International Institute for Environment and Development, noted, “The real issue with climate finance isn’t the amount pledged, but its structure. It’s adding to the financial strain on poorer countries, and even concessional loans often come with conditions that favor the lender.”
World Bank data reveals that LDCs paid back nearly $91.3 billion in external debts during the same period—three times their climate finance budgets. Over the last decade, external debt repayments by the poorest countries have tripled, from $14.3 billion in 2012 to $46.5 billion in 2022.
Shakira Mustapha, a finance expert at the Centre for Disaster Protection, expressed concern: “While it’s commonly thought that debt for growth-enhancing spending isn’t harmful, I worry if countries are just borrowing to pay off old debts, delaying the problem.”
Requests for comment from the foreign ministries of China, Japan, Saudi Arabia, and the UAE went unanswered.
Methodology:
The Guardian and Carbon Brief’s analysis covers bilateral and multilateral public funding committed by developed nations for climate projects in developing countries. It does not include other funding sources like private donations or export credits that count toward the $100 billion climate finance goal. Data on multilateral funding comes from the OECD, and bilateral funding is sourced from countries’ Biennial Transparency Reports to the UN Framework Convention on Climate Change. Due to reporting delays, the latest data only goes up to 2022. Since only Annex II countries (23 industrialized nations and the EU) are obligated to contribute to the $100 billion target, the bilateral analysis is limited to these contributors.For these nations, we also used OECD methods to determine their portion of multilateral climate funding.
We further broke down multilateral finance by individual donor countries, based on their stakes in multilateral development banks and total contributions to climate funds. This approach follows a method used by experts at the World Resources Institute and ODI.
Recipients of bilateral projects were categorized according to the UN country classification. However, many projects couldn’t be classified because the recipients weren’t named, were listed as “multi-country,” or were part of a group where funding couldn’t be separated.
These unclassified projects weren’t counted in the amounts allocated to specific developing countries but were included in the overall totals.
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A UN Climate Change spokesperson commented, “The disparities in climate finance flows show why a transformation of the global financial system is urgently needed. Viewing climate finance as charity has hindered necessary progress, as has treating it only as an expense while overlooking its significant human and economic benefits.”
This year, the original $100 billion goal is being replaced by a new target for developed countries to provide $300 billion annually by 2035, with a broader aim of mobilizing $1.3 trillion per year. Recently, leaders of the latest UN climate summits released a report exploring sustainable ways to raise these funds, such as taxes on fossil fuels and climate-resilient debt clauses. The report also advocated for more concessional and grant-based climate finance.
“Climate finance must be accessible, affordable, and equitable,” the spokesperson added. “The reality that many of the world’s poorest countries face obstacles and still depend on high-interest loans for climate funding highlights the pressing need for reform.”
Frequently Asked Questions
Of course Here is a list of helpful and clear FAQs about the topic of China and Saudi Arabia receiving climate loans
BeginnerLevel Questions
1 What are climate loans
Climate loans are funds provided by international organizations or wealthier countries to help other nations tackle climate change These loans must be paid back often with low interest and are used for projects like renewable energy flood defenses or restoring forests
2 I thought China and Saudi Arabia were wealthy countries Why are they getting loans
This is the core of the confusion While they are economically powerful climate loans are often based on a countrys income level from decades ago or their specific need for help with a massive expensive project The goal is to fund climate action where its most effective not just in the poorest nations
3 Who is giving them these loans
The main providers are international financial institutions like the World Bank the Green Climate Fund and regional development banks
4 Whats the benefit of giving loans to these countries
The main benefit is global Climate change doesnt respect borders Helping major economies and large polluters like China transition to clean energy has a huge positive impact on reducing global emissions for everyone
Advanced Detailed Questions
5 If they have to pay the loans back how is this different from a regular bank loan
The key differences are the purpose and the terms Climate loans are exclusively for environmental projects and typically have much lower interest rates and longer repayment periods than commercial loans making them more accessible for largescale infrastructure
6 Doesnt this take money away from poorer more vulnerable countries
This is a major point of debate and a common criticism Critics argue that finite climate funds should be prioritized for nations that are both poor and highly vulnerable to climate impacts like small island states Supporters counter that engaging major emitters is essential and that funding pools can be expanded for all
7 What kind of projects are these loans funding in China and Saudi Arabia
In China loans often fund transitioning away from coal building massive solar and wind farms and developing electric public transport systems
In Saudi Arabia loans are helping fund their Vision 2030 plan which includes giant solar power projects and initiatives to make their cities more sustainable and waterefficient
