The critical questions which arise, though, are how these steps taken by the 47th US President (who had earlier been the 45th President) could impact climate finance support provided by advanced countries to their developing counterparts and, also, whether these measures could hinder the momentum which had been building up worldwide, including India, on clean energy transition. 

The reasons for bringing this up lay in Trump’s January 20 executive order on “Putting America First in International Environmental Agreements”, which states that the “US International Climate Finance Plan is revoked and rescinded immediately”, raises serious concerns on the amount of money developing nations can realistically hope to receive by way of climate finance.

The world’s No. 1 economy doubling down on the use of fossil fuels could also potentially lead to other countries having a rethink on the thrust they should accord to clean energy.

Climate Finance Challenge

Although providing less than the EU, the US, in the last few years, had significantly upped its climate finance contribution. In March 2024, the then US Special Presidential Envoy for Climate John Kerry had said that the United States’ climate finance support for developing countries climbed from US$ 1.5 billion in 2021 to US$ 9.5 billion in 2023 and added that it was the “largest such increase, ever”.

In 2023, the European Union and its 27 member states contributed Euro 28.6 billion in climate finance from public sources and mobilised an additional amount of 7.2 billion euro of private finance to support developing countries to reduce their greenhouse gas emissions and adapt to the impacts of climate change. One Euro is equivalent to US$ 1.05.

With the world’s most powerful economy now no longer in the frame, there would be additional pressure on other developed nations to garner the requisite funds for climate finance. 

Given their own national priorities — will these advanced nations be willing to shoulder the extra financial burden? And even if some of them wish to, wouldn’t they find the going tough since they may first have to make a good case for their own domestic stakeholders on why they should do the heavy lifting on the climate finance issue?

Sight must not be lost from the fact that although everyone recognises that climate change is a global crisis and needs all countries to play their part in addressing it, Good Samaritans don’t come along that easily when it involves putting billions of climate finance funds on the table. In the past too, advanced nations have been found dragging their feet on climate finance, despite making all the right noises. 

At this point, it may be relevant to mention that several developing nations, including India, had openly voiced their displeasure with the climate finance target agreed upon at COP29 in Baku, Azerbaijan in November 2024, by asserting that the number was grossly inadequate, given the magnitude of the crisis. 

The Baku Finance Goal set a new global target to channel US$ 1.3 trillion of climate finance to developing countries by 2035. This includes a new core finance goal of US$ 300 billion, which tripled the previous US$ 100 billion target. COP29 president Mukhtar Babayev had then said that the “Baku Finance Goal represents the best possible deal we could reach”. 

Speaking in the same vein at the closing of COP29, UN Climate Change Executive Secretary Simon Stiell had termed the Baku Finance Goal “an insurance policy for humanity, amid worsening climate impacts hitting every country”.

He added that the “deal will keep the clean energy boom growing, helping all countries to share in its huge benefits: More jobs, stronger growth, cheaper and cleaner energy for all”.

But the US walkout from the Paris Agreement has put a huge question mark over that “insurance policy”.  

Clean Energy Conundrum

On a clean energy transition, it would be interesting to track how other nations, especially advanced countries and China, adapt their clean energy strategies after Trump's executive orders. 

If the world’s most powerful country can make a case for greater use of fossil fuels, there is nothing to prevent others from doing the same, claiming energy security and independence as compelling factors. In this regard, developing countries would have the added rhetorical advantage of lack of financial resources to fast-track the transition to clean energy.

It is worthwhile to point out that while speaking at a session titled All Hands On Deck For The Energy Transition at the recently-concluded annual meeting of the World Economic Forum (WEF) in Davos, International Energy Agency (IEA) executive director Fatih Birol said: “With well-designed energy transition policies, we can have the best energy security... We can bring the prices down, bring prosperity to the people and create jobs.”

The question on clean energy transition that would remain is whether countries, including rich ones, would rather take their cue on fossil fuels from what Trump is doing and saying. 

India Budget & Clean Energy

That brings us to India's upcoming Budget.

Over the years, India has been a good example of a country that has been walking the talk on making the shift to clean energy. It has undertaken a series of measures, including most significantly, by fixing a target of generating 500 GW of electricity from non-fossil fuel sources by 2030.

At Rs 19,100 crore, the budgetary allocation of the Ministry of New and Renewable Energy (MNRE) for FY24-25 was more than double the revised MNRE budgetary estimate of Rs 7,848 crore for FY23-24. Interestingly, the budgetary allocation for the Ministry of Power for FY24-25 was Rs 20,502 crore.

As a leader of the Global South, will India use Budget 2025 to reiterate its strong commitment to clean energy by raising the monetary allocation for clean energy? 

Without getting into a guessing game, the hope would be that the latest Budget would continue to showcase India’s seriousness in moving the needle on clean energy. As there could be no better way to demonstrate that the country’s decisions are not just prompted by what is in its own best interests but also that of the world.

India doing so would also be in keeping with the sentiment expressed by PM Narendra Modi at the United Nations General Assembly in September 2021 that “when India reforms, the world transforms.”

(The writer is a current affairs commentator. Views are personal)