Climate Finance: Paris Agreement Faces Impasse Ahead of Cop31

The Paris Agreement is ten years old, and its core mechanism is failing to keep pace with accelerating global heating.

The treaty entered into force in 2016 after being signed in 2015, with the initial goal of limiting warming to 1.5C above preindustrial levels. For two consecutive years, global temperatures have exceeded that threshold. The United Nations recently revised its most optimistic estimate for long-term heating to between 1.7C and 1.8C. This shift has raised questions about the efficacy of the Conference of the Parties process, which is currently in a state of impasse.

The path to the current summit was marked by structural disputes. At the 2025 summit in Belém, Brazil, hosts removed national emissions reduction plans from the negotiation table, arguing they were matters for national governments. A global south negotiator noted at the time that this would result in a very short conference because there was nothing to negotiate. Another diplomat stated that with the US out of the Paris framework, there was no appetite for engagement. The summit concluded with a deal that few supported, but the decision deepened fault lines leading into the current year.

Cop31 is set to take place in Turkey, with Australia serving as co-host. This split presidency represents a compromise between two nations with strong ties to coal. The US, responsible for approximately one-eighth of global carbon dioxide emissions, has withdrawn from the agreement under President Trump. Other developed nations are also retreating from previous commitments. Australia has set no end date for fossil fuel exports, and Turkey plans to increase its carbon output. The United Kingdom is opening a gasfield and considering a new oilfield, while Germany has dropped electric vehicle sales targets. Rich countries are generally reducing climate finance contributions to poorer nations.

Next steps for the summit include a push toward electrification. Hosts are proposing a target for countries to derive 35% of final energy use from electricity by 2035, up from the current 23%. This proposal aims to leverage the efficiency gains of electric systems over fossil fuels. Negotiators will also address the lack of a direct fossil fuel phase-out timeline, a gap that persisted since the 2023 Cop28 in Dubai. Delegates will work to establish side agreements on super pollutants such as methane and black carbon, which could reduce warming by up to 0.5C by 2100 if cuts are deep enough.

Markets are responding to the policy shifts independently of the treaty. In Pakistan, rooftop solar panels now supply about a quarter of electricity use, driven by grid instability and high fossil fuel prices. In Vietnam, electric vehicles from China account for more than 40% of car sales. China, the world’s largest emitter, is increasing its focus on multilateral efforts to support its economic interests in solar and electric vehicle exports. These market movements suggest that decarbonization is proceeding even as the diplomatic framework struggles to keep up.