As world leaders gather in Antalya, Türkiye, for the COP31 climate summit, a new report has exposed a growing financial burden facing developing countries: money provided to help them confront climate change is increasingly flowing back to lenders through loan repayments.
An estimated $20.1 billion in repayments on public climate loans fell due in 2024, almost three times the $6.9 billion estimated for 2020, according to a report released on Tuesday by CARE Denmark and the CARE Climate Justice Center.
The report, The Climate Finance Boomerang, warns that if current lending levels and loan terms remain unchanged, annual repayments could exceed new climate lending by 2036. In effect, developing countries could find themselves paying back more in climate loan obligations each year than they receive in new loans.
The findings raise questions about the real value of international climate finance at a time when countries already struggling with debt are under growing pressure to protect their populations from worsening climate impacts.
The report comes as climate finance remains a central issue at COP31, the annual United Nations climate negotiations taking place from 9 to 20 November. Developing countries have long argued that wealthy nations, whose historical emissions account for a disproportionate share of global warming, must provide more predictable financial support to help vulnerable communities adapt and recover from climate-related losses.
But the growing use of loans means much of that support comes with repayment obligations.
The money flowing back
The CARE report found that loans accounted for 67 per cent of public climate finance in 2024, rather than grants. The Organisation for Economic Co-operation and Development (OECD) reported that developed countries provided and mobilised $136.7 billion in climate finance that year, including $101.6 billion from public sources.
Yet the headline figures do not show the money flowing back to lenders through repayments.
To expose this gap, researchers analysed 18,271 public climate loan records reported between 2011 and 2024, covering 14 bilateral provider countries and 25 multilateral institutions and funds.
They reconstructed repayment schedules for loans worth $489.3 billion, estimating that borrowers would repay $663.3 billion over the loans’ lifetimes. The difference includes about $171.9 billion in interest and $2.1 billion in calculable fees.
A further $42 billion in reported loans lacked sufficient information to construct repayment schedules. Adding that amount as principal alone would push the estimated total repayment burden to $705.3 billion, before interest or fees on those loans.
The report also found that annual repayments from the assessed loan portfolio could reach $31.5 billion in 2031. That projection covers loans reported between 2011 and 2024 and does not include new lending after 2024.
The longer-term outlook is more troubling. Under a scenario in which annual climate lending remains at its 2024 level and loan terms remain unchanged, repayments from existing and assumed future loans would exceed new lending in 2036. If lending declines by two per cent annually, the crossover would occur in 2033; if it grows by two per cent annually, it would happen in 2042.
These are scenarios, not forecasts. They assume that loans are fully used, their terms remain unchanged and there are no defaults or debt restructurings.
Climate action with a repayment bill
The report argues that the growing reliance on loans risks undermining the purpose of climate finance, particularly in countries where adaptation investments do not generate revenue.
While loans may be appropriate for projects capable of producing financial returns, many urgent climate interventions are designed primarily to protect lives and livelihoods.
Flood defences, improved access to drinking water and support for farmers recovering from drought can prevent devastating losses without necessarily generating the income needed to repay a loan.
For countries already facing debt pressures, the repayment burden could further constrain public spending on climate resilience, essential services and disaster preparedness.
CARE’s analysis places the findings within a wider debt crisis. Citing the World Bank’s International Debt Report 2025, it notes that developing countries paid $741 billion more in external debt principal and interest between 2022 and 2024 than they received in new financing. That figure covers external debt generally, not climate loans alone, but illustrates the financial constraints confronting many developing economies.
“Climate finance is meant to help countries confront a crisis they did not create, not to trap them in a cycle of debt,” said John Nordbo, CARE Denmark’s senior climate adviser.
“Within a decade, more money could be due back to lenders than is provided in new climate loans. This is climate finance going backwards. Wealthy countries must provide grants, not repayment bills,” he said.
Rosa van Driel, policy adviser on climate justice at CARE Nederland, said adaptation should not be treated as an investment that must generate financial returns.
“You cannot expect a flood barrier to turn a profit or a family recovering from drought to repay the cost of surviving,” she said.
A gap in climate finance reporting
Beyond the scale of repayments, the report identifies a major transparency problem in international climate finance.
The OECD and the United Nations Framework Convention on Climate Change track finance provided or mobilised for developing countries but do not provide a comprehensive picture of the repayment obligations generated by public climate loans.
As a result, the reported value of climate finance does not show how much borrowers will ultimately return to lenders or when those payments fall due.
CARE argues that this can give an incomplete picture of the financial support available to countries facing the climate crisis, while obscuring the long-term costs attached to that assistance.
The organisation is calling on the OECD and UNFCCC to include loan repayments in future climate finance reporting. It also wants bilateral and multilateral lenders to disclose loan terms, interest rates, fees and actual repayments.
It is urging developed countries and international financial institutions to prioritise grants, particularly for adaptation and loss and damage, and to review existing climate loans that may have contributed to unsustainable debt burdens.
Where necessary, CARE says lenders should consider debt relief, restructuring or cancellation.
For developing countries negotiating at COP31, the findings sharpen a fundamental question about climate finance: whether success should be measured by the billions announced by wealthy nations or by the support that remains available to vulnerable countries after the repayment obligations are taken into account.
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