Global climate finance tops $1 trillion in EMDEs, with domestic funds leading
Emerging markets and developing economies (EMDEs) are increasingly central to the world’s climate finance landscape. The latest Global Landscape of Climate Finance 2025: EMDE Spotlight from Climate Policy Initiative (CPI) shows that in 2023, climate finance across EMDEs exceeded USD 1 trillion. Domestic sources accounted for roughly 80% of these flows, underscoring how homegrown policy alignment and household investment can mobilize large-scale climate action even as international funding remains a smaller slice of overall financing.
What’s driving the growth in EMDE climate finance
The report highlights several levers that EMDEs are leveraging to push climate investment forward. Coherent and stable policy environments give households and private actors clear signals, enabling them to direct capital toward cleaner energy, energy efficiency, and resilient infrastructure. In addition, a rising role for household spending on energy-efficient appliances, rooftop solar, and other low-carbon options demonstrates the demand-side momentum fueling the transition.
Dr. Barbara Buchner, CPI’s Global Managing Director, notes that these economies are at a pivotal moment: “Emerging economies are key players for global progress with an unprecedented opportunity for investment and development.” With COP30 in Brazil approaching, the report suggests domestic policy alignment paired with strategic international support can unlock transformational change.
Key findings and regional dynamics
China accounted for about USD 685 billion of EMDE climate finance in 2023, representing around 64% of the EMDE total. While international climate finance to EMDEs remained modest, constituting less than 20% of flows (USD 209 billion in 2023), public institutions remain the largest source of this international support. Importantly, private foreign investment is growing and is likely to become a more critical source as donor budgets tighten.
Private domestic capital is playing an increasingly important role. Households alone make up the largest share of private investment, now representing roughly 25% of climate finance across all EMDEs. This signals a shift toward more inclusive financing models where everyday households contribute meaningfully to the climate transition.
Mitigation versus adaptation finance in EMDEs
Mitigation finance reached USD 285 billion in 2023, doubling since 2018 and accounting for 92% of tracked climate finance in that year. Adaptation finance, at USD 48 billion, remains substantially below what is needed to meet annual and multi-year climate resilience goals through 2030, with regional disparities evident in access and execution of adaptation projects.
Where the money is flowing: clean energy and policy support
Clean energy investment dominates EMDE financing. Falling technology costs and supportive policies for renewables, electric mobility, and energy efficiency are steering both domestic and, to a growing extent, international finance toward sustainable energy systems. In 2023, renewable energy accounted for about 80% of EMDE climate finance, driven by trailblazing moves in countries such as China, Brazil, Chile, Viet Nam, Morocco, and Uzbekistan.
The momentum reflects a broader trend: EMDEs are forming and reforming policy environments to attract and deploy climate capital efficiently. This, in turn, supports job creation, energy access, and health outcomes—cornerstones of broader development goals.
Implications for policy and investment strategy
For policymakers and investors, the EMDE Spotlight underscores the importance of coherent policy frameworks, predictable public finances, and a conducive investment climate. As international funding remains a smaller share, domestic policy sequencing and household engagement become decisive levers for accelerating climate action. The report also signals growing opportunities in private international finance, especially as public budgets face constraints and climate risk disclosure matures.
Conclusion
EMDEs are no longer just participants in climate finance; they are drivers of global decarbonization. The 2023 milestone of more than USD 1 trillion in EMDE climate finance, largely funded domestically, foreshadows a future where policy-led momentum and household investment sustain rapid progress across energy and infrastructure sectors. As COP30 approaches, the focus on strengthening domestic policy alignment and pairing it with targeted international collaboration could unlock the transformational climate investments needed to achieve sustainable development in these critical economies.
