EC[ON]OMY

Trump’s Climate Aid Cuts: Global Consequences

The U.S. administration under Donald Trump has decided to cut international climate aid putting global climate projects at risk. This decision threatens key initiatives that help developing countries fight climate change.

In 2024 the U.S. committed a record $11 billion in climate financing—accounting for 8% of global climate investments. However, with Trump back in office, this funding is now in danger. The new administration has frozen foreign aid and plans to shut down most programs run by the U.S. Agency for International Development (USAID), with climate initiatives being one of the main targets for budget cuts.

As the world’s largest economy and the biggest historical emitter of CO (27% of total emissions), the U.S. has historically provided little support for global climate projects. That started to change in 2021 when President Joe Biden introduced an ambitious plan to meet the U.S.’s commitments under the Paris Agreement.

Trump Administration’s Impact on Climate Policy

Since January, 2025 Trump’s administration has taken a series of steps that put U.S. climate commitments—and global climate financing—at risk.

Key decisions include:

• Exiting the Paris Agreement and canceling Biden’s climate policies;

• Freezing $60 billion in foreign aid, including $3 billion in annual USAID climate funding;

• Revoking $4 billion allocated to the Green Climate Fund (GCF);

• Ending contributions to the Loss and Damage Fund, which helps vulnerable countries recover from climate-related disasters;

• Withdrawing from the Just Energy Transition Partnership, which provided $56 million to help South Africa shift away from coal.

These cuts will make it harder for developing nations to transition to clean energy and adapt to climate change. For example, freezing USAID programs threatens water security projects in Niger, while cutting GCF funding could slow down climate adaptation efforts for small island nations facing rising sea levels.

The Global Impact of U.S. Climate Budget Cuts

Without U.S. financial support many developing countries may struggle to invest in clean energy and climate adaptation. Beyond the financial loss, the symbolic damage is even greater. The world’s biggest polluter, responsible for one-quarter of all CO emissions, is now stepping away from its climate responsibilities. This undermines trust in global climate agreements and sets a dangerous precedent for other donor countries.

Key Climate Budget Cuts:

• $3 billion – USAID climate programs

• $4 billion – Green Climate Fund (GCF)

• $17.6 million – Loss and Damage Fund

• $56 million – Energy transition support for South Africa

These reductions create a huge gap in global climate financing. In 2024, the U.S. provided $11 billion out of the $137 billion in total global climate funding. Without U.S. contributions, achieving the new global climate goal of $300 billion by 2030 will be far more difficult.

What About Kazakhstan?

Kazakhstan has not been an active player in international climate financing. Between 2019 and 2023 developing nations received an average of $80 billion per year in climate aid. However, Kazakhstan secured less than 1% of this funding—roughly $489.5 million annually. As a result, the U.S. climate budget cuts will have little direct impact on the country.

The U.S. decision to slash climate funding is more than just a shift in policy—it’s a major setback for global climate efforts. Without support from the world’s largest economy, achieving international decarbonization goals becomes nearly impossible, and the financial burden on other donor countries grows.

Developing nations, already struggling with the effects of climate change, may be left without the resources they need to adapt and transition to cleaner energy. The global community now faces a tough choice: find emergency solutions to replace lost funding or accept that climate justice will remain just a slogan.

 

Prepared by: Kuanysh Beisengazin, Managing Partner of the National Bureau of Economic Research,

specifically for the portal www.economykz.org

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