The Trump administration’s recent decision to rescind $4 billion in U.S. pledges to the United Nations’ Green Climate Fund (GCF) has sent shockwaves through the global climate finance community. This move, coupled with significant cuts to the U.S. Agency for International Development (USAID), threatens to reduce global climate finance by nearly 10%, a substantial setback for international efforts to combat climate change.
This isn’t just a fiscal hit; it’s a political signal. When one of the world’s largest climate finance donors backtracks, it threatens to erode the multilateral trust that underpins international climate agreements. The risk isn’t isolated—others may follow. Already, some countries are openly reconsidering their commitments under the Paris Agreement.
“More countries are indicating this time around that they’re considering doing so. Besides Indonesia, Argentina is also discussing a potential withdrawal,” Mongabay reported in February 2025.
Indonesia has voiced frustration over what it perceives as an unfair distribution of responsibility and resources. “We are being asked to cut emissions at the expense of our development, while rich nations fail to deliver promised finance,” said one senior official from Indonesia’s Ministry of Energy.
As global climate finance fractures, Thailand is squarely in the line of fire. The country has been a recipient of U.S.-backed funding through both the GCF and USAID—two pipelines now under threat.
In a flagship GCF project, Thailand secured $17.5 million to boost climate resilience in the agricultural and water sectors across vulnerable river basins. Meanwhile, USAID programs have delivered drought-tolerant crops in Chiang Rai and satellite-based climate data under SERVIR-Mekong.
These projects are part of a broader, patchwork system of climate finance that Thailand has built over the past decade—one that blends multilateral grants, bilateral aid, and emerging domestic mechanisms. But the architecture is still fragile.
The government has proposed a National Climate Fund with a headline target of ฿1.1 trillion ($30 billion) by 2050, yet clear operational frameworks remain in development.
While earlier assessments show Thailand allocated 2.7% of its national budget and 0.5% of GDP to climate-related expenditures between 2009 and 2011, nearly 70% of that went toward adaptation, primarily in water management and agriculture
But much of it is questionable in classification—often standard infrastructure spending rebranded as climate adaptation, with limited alignment to resilience outcomes. The result is a public finance system that looks climate-aligned on paper, but lacks the targeting and transparency needed to drive real impact.
The scale of future needs far outpaces existing commitments, and fiscal space is narrowing. To meet its second Nationally Determined Contribution (NDC) 2030 targets, submitted in November 2022, the country requires an estimated ฿5 trillion for its unconditional goals—those it has pledged to achieve using domestic resources—and up to ฿7 trillion if it is to meet its conditional targets, which hinge on international support.
In this context, any disruption to catalytic foreign capital—like the U.S.-backed GCF or USAID—doesn’t just thin the margins. It risks paralyzing the entire scaffolding that enables Thailand to mobilize public funds, crowd in private finance, and stay within striking distance of its net-zero trajectory.
With U.S. funding in retreat and long-term targets ballooning, Thailand needs to broaden its funding base—fast. That means deepening climate finance partnerships across Asia-Pacific, from South Korea’s Green New Deal investments to Japan’s JCM (Joint Crediting Mechanism) platform.
Bilateral channels with Germany and the Nordic countries have potential but remain underleveraged relative to their capacity. Germany has supported projects like Thai Rice NAMA and provided over ฿1.78 billion through its IKI fund.
Nordic involvement exists—mainly via multilateral schemes like the NAMA Facility—but remains thin on direct bilateral engagement. In a tightening finance climate, deepening these under-tapped relationships could offer Thailand a hedge against U.S. retreat.
Sustainability bonds are another lever: while Thailand issued its first sustainability bond of ฿30 billion in 2020, the market is still nascent. Unlocking it will require stronger regulatory alignment, credit enhancement tools, and clearer project pipelines to attract institutional capital.
“Most of the green projects in Thailand are relatively small in scale… Bundling small-scale green projects into a single bond issuance is difficult due to diverse project characteristics and management requirements,” said a report by Climate Bonds Initiative. Without reforms to address these structural barriers, capital won’t flow at the scale required.
Even with diversified funding, public money alone won’t cut it. Thailand will need to scale up private sector engagement to meet its climate targets. That means building credible, investable project pipelines—and more importantly, sharing risk. So far, private investment has lagged behind largely due to fragmented data, unclear returns, and regulatory ambiguity.
The government’s own Climate Finance Strategy notes, “the private sector’s limited investments are due to a lack of expertise in the climate projects and bankability constraints of the majority of the emerging business cases.”
Yet unlocking private capital is non-negotiable. In the energy sector alone, 72% of total investment needs through 2037—estimated at ฿779 billion ($22 billion)—must come from private debt, with another 23% from private equity, according to the Thailand Integrated Energy Blueprint published by the Office of Natural Resources and Environmental Policy and Planning and UNDP .
The climate finance equation doesn’t balance without private capital. Fixing the bottlenecks will require co-investment models, blended finance, and performance-based incentives. Climate resilience isn’t just a public mandate—it’s a market opportunity waiting to be unlocked.
Thailand’s climate ambitions are real. But without the capital to match, ambition doesn’t cut emissions. As global finance fractures and U.S. support fades, the burden shifts inward.
Thailand must move fast to build a shockproof financing strategy—one that doesn’t crumble when foreign donors retreat. That means rewriting the rules: turning risk into investable returns, scaling local funding mechanisms, and bringing the private sector off the sidelines. The question isn’t whether Thailand can afford to act. It’s whether it can afford not to.
