Armed with a $5 billion bill, Shah plans to seek compensation from a special UN fund designed for climate-related disasters such as the havoc caused in his Himalayan nation in August by a receding glacier collapse, flooding and mudslide, killing thousands.
The Coalition for Disaster Resilient Infrastructure estimates that $124 billion worth of Nepal’s infrastructure is exposed to climate-driven disasters, which could cause hundreds of millions of dollars of losses each year.
Nepal contributes very little to climate change, unlike its giant neighbours China and India, and has a strong case for compensation under the ‘polluter pays principle’.
Nepal, India and other developing countries are seeking funds that rich countries are loath to provide. The Global South — most vulnerable to climate change — has demanded over $1.3 trillion annually, with a substantial part in the form of grants to help nations adapt and cope with a warming earth and the disasters it brings. But rich nations have contributed less than a tenth so far, and mostly in the form of loans, according to the Organisation of Economic Cooperation and Development (OECD), a thinktank of developed nations.
The tricky subject is once again set to fire up delegates at the next climate summit, the COP31, to be held in Antalya, Türkiye in November.
“The US policy shift is likely to impact energy-related investments and may influence the rate of clean energy transition in other countries,’’ said R R Rashmi, distinguished fellow at the think tank Teri.
Both funds are part of a broader climate finance programme under the United Nations Framework Convention on Climate Change (UNFCCC), designed to help poor countries cope with climate change. At previous UN climate summits, finance has driven a wedge between the wealthy countries, led by the US and Europe, and the developing Global South, led by India, South Africa, Indonesia and Brazil.
“We must make sure we operationalise the pledges that were made during the Loss and Damage Fund, where it was emphasised that adaptation finance should get equal weightage, not just mitigation finance. If the target of $300 billion per year were met, then a country like Nepal, which is putting a bill of $5 billion, has some hope of accessing this funding. But that target of $300 billion per year is far from being met,” said Ulka Kelkar, executive director, climate, economics and finance, World Resource Institute India, a research organisation.
India’s historical contributions to emissions are insignificant — but not its present and future need for climate finance, Rashmi said. In the decade to 2024, India was the ninth-most affected nation by climate-related disasters — recording around 80,000 deaths, or 9.6 per cent of the global total, from extreme weather events. Droughts, cyclones, heatwaves, and floods have led to losses of $170 billion during the past three decades, according to the nonprofit Germanwatch’s Climate Risk Index 2026.
To displace coal, which accounts for over 70 per cent of power generation and achieve net zero by 2070 — where you remove as much greenhouse gas as you put in the air — India needs $500 billion in investments by 2030 and $13 trillion by 2070, said Santosh Sarangi, secretary, Ministry of New and Renewable Energy. These numbers do not include the most critical aspect of climate finance, funds for adaptation and loss and damage – the kind that Nepal needs. Rather, Sarangi was referring to climate mitigation — how to reduce or prevent emissions of greenhouse gases and decarbonise the economy.
“Developing countries need massive international support to be able to implement the Sustainable Development Goals,’’ said UN Secretary-General António Guterres at the 18th Brics summit, held in New Delhi on September 12-13. “The international financial architecture must be reformed, giving higher participation and influence to developing in the decision-making processes to guarantee more equity and justice, and to address historical injustices.’’
Aligning finance with climate policy goals is crucial for achieving net zero and for building resilience to climate change. The 2024 climate summit in Baku, Azerbaijan, set a $300 billion annual financing target, while COP30 discussions pushed for $1.3 trillion annually by 2035. But adaptation targets remain underfunded. Developed countries provided and mobilised only $132.8 billion in climate finance for developing countries in 2023 and $136.7 billion in 2024, according to new OECD data.
“OECD’s latest figures show developed countries technically ‘exceeding’ the $100 billion goal in 2024; this number tells a dangerous story of accounting tricks, donor escape-routes, and a rapidly closing window for climate justice,’’ said Tasneem Essop, executive director of Climate Action Network (CAN) International, an umbrella of climate NGOs. “What’s required is a massive, predictable, and grant-based scale-up of non-debt-inducing public climate finance.’’
“Many European countries have cut their climate finance spending in 2025,’’ Sven Harmeling, head of climate at CAN Europe, said. “These harsh cuts breach their obligations to provide such support, undermining Europe’s reputation as a credible partner.’’
Campaigners also point out that much of what is counted as climate finance is delivered as loans, deepening debt burdens instead of building resilience.
“When you look at it from a private investor’s perspective, adaptation is not ideal because private investment will look for returns whereas adaptation actions are distributed across many beneficiaries,” Kelkar said.
Teresa Anderson, global lead on climate justice, ActionAid International, a poverty-focused NGO, said the OECD provided under $30 billion in grants for climate finance in 2024, far less than what the US spends on its war in West Asia.
“Nato countries have embarked on a major transformation that will see defence-related investment rise to as much as 5 per cent of GDP. We expect to see ambition on a similar scale when it comes to climate security,” said COP31 President-Designate Murat Kurum at the Istanbul Climate Finance Summit earlier this month.
India’s global climate commitment puts its requirement at about $2.5 trillion to 2030, roughly $170 billion a year, with adaptation costs alone assessed at ₹56.7 trillion in India’s first adaptation communication, said Sumant Sinha, founder and chairman of Renew Power, a leading clean energy company. Independent studies put the requirement even higher. Actual flows are less than half of that, and international finance is only a small fraction of what arrives, Sinha added.
“India’s 2031-35 commitments, adaptation requirements and climate-resilient infrastructure require a fresh and transparent national assessment,’’ said Vineet Mittal, chairman, Avaada, a clean energy company. “The more important question is not only how much capital is available, but at what cost.’’
“Indian borrowers routinely pay 100-300 basis points more (in interest) than developed economy issuers for comparable assets,’’ Sinha said.
The New Delhi Brics declaration identified debt as a barrier to climate investment because high debt burdens constrain both development and climate spending.
“Brics is determined to chart its own course on climate and energy, one that emphasises the alignment of development and decarbonisation rather than treating them as competing priorities,” said Li Shuo, director, China Climate Hub, at US-based Asia Society Policy Institute. “Fossil fuels will remain part of the energy mix for emerging economies, signalling that these leading Global South countries intend to define the terms of their own energy transition rather than have them imposed by others.’’
Experts say that unless the rich North loosens its purse strings and meets its climate finance commitments at the Antalya summit, disasters like the one in Nepal will only increase in frequency and intensity.
“A good starting point would be for developed countries to deliver on their commitment to at least triple adaptation finance and fill the fund to address loss and damage. The money is there, but the political will is sorely lacking,” Essop said.
