US Democratic victory may have limited impact on climate finance for S-E Asia: Experts at COP31 - The Straits Times

Climate finance, or funds that developed countries like the US are obliged to contribute to developing countries, is a key topic of discussions at the climate summit.

ANTALYA, Turkey – The victory of the Democrats in the Nov 3 US mid-term elections may inject some positivity into the ongoing talks at the UN climate conference COP31, but observers say this is unlikely to immediately translate into more green investments in South-east Asia.

The developing region would likely need to continue relying on regional governments, multilateral development banks and private capital to finance its energy transition, experts told The Straits Times.

Climate finance, or funds that developed countries like the US are obliged to contribute to developing countries, is a key topic of discussion at the climate summit.

COP31 kicked off on Nov 9 in the Turkish city of Antalya and is expected to conclude on Nov 20.

Such funds are meant to help poorer nations cut emissions and protect their people from climate impacts.

Developing countries are expected to call on richer nations to provide more clarity about when funds will flow and in what form – such as whether it will be disbursed as grants or loans, which could entrench debt.

South-east Asia will require US$281 billion (S$361 billion) a year by 2035 to fund its energy transition, according to an October report by energy think-tank Ember.

But the Trump administration has pulled funds out of overseas climate projects, including those in South-east Asia.

This includes the Just Energy Transition Partnership agreements with Indonesia and Vietnam to help them transition away from coal.

The US also pulled the US$4 billion it had pledged from the Green Climate Fund, which is the world’s climate fund to support developing countries to reduce emissions and adapt to climate change.

Tan-Soo Jie-Sheng, director of the Institute for Environment and Sustainability at the Lee Kuan Yew School of Public Policy, noted that the biggest obstacle facing green investments in the region is bankability.

This refers to the difficulty in attracting commercial financing due to high upfront costs, uncertain revenue streams and regulatory risks.

“Public subsidies, concessional financing and guarantees remain important for getting many green projects off the ground,” he said.

He added that the region would need to rely on other pots of money, including from multilateral development banks and the private sector.

But the political environment in the US over the past two years has created considerable uncertainty around climate-related investments and philanthropy, Tan-Soo noted.

The “blue wave” that swept Congress could encourage investors to prepare for a different regime of climate policies after the 2028 presidential election, Tan-Soo said.

But it is also likely that the policy uncertainty will cause investors to remain cautious about making long-term commitments. Climate infrastructure often requires investments spanning several decades.

Tan-Soo said that for US investments to continue flowing into the region, it is important for other major economies to signal their commitment to decarbonisation.

“As long as the rest of the world continues moving towards decarbonisation, US companies will face strong incentives to follow suit, particularly in their overseas operations,” he said.

Regardless of the direction of US climate policies, these companies will have to respond to regulatory requirements, market expectations and supply-chain pressures in the countries where they operate, he said.

“In this sense, global decarbonisation efforts can continue to influence US corporate behaviour even without strong leadership from Washington.”

Kelly Sims Gallagher, dean and professor of energy and environmental policy at The Fletcher School at Tufts University, said that with the Democrats in control of Congress, they will be able to appropriate funds for US investments in clean energy technology innovation to better position the US to compete with China.

However, US investments into the region are still more likely to be driven by policies and incentives in Asia, she added.

“The stunning defeat of the Republican Party in the US midterms sends an unmistakable message that a majority of Americans do not support President Trump’s actions and policies,” Gallagher said.

The Democratic victory in the US midterms is also seen as an indication, in the medium term, of climate leadership from the US, said Jorge Gastelumendi, senior director of the Atlantic Council’s Climate Resilience Center, a US-based think-tank.

The election results will shape US energy and climate policy in the coming years, climate policy think-tank E3G’s executive director for its Washington office, Clarence Edwards, said.

For instance, he noted that a bipartisan Bill to streamline permitting and energy infrastructure development could have equally important near-term implications for energy and climate investors and advocates.

Since US President Donald Trump returned to the White House in January 2025, he has dismantled several climate agencies and weakened regulations for large emitters in the US.

The war he waged with Israel against Iran has also caused an energy crisis that hiked up energy prices worldwide – and even states that were once firmly entrenched in the Republican camp swung blue.

The US withdrew from the Paris Agreement – the world’s climate pact – in January. There is also no official US delegation at COP31, which has a strong focus on electrification.

But Gastelumendi noted that there is strong corporate participation – be it financial, agricultural, pharmaceutical and energy – at the conference.

This signals a robust sense of business and investment opportunities in the climate space, he added.

Asked what indicators would reflect a true change in the US’ approach in tackling climate change, Tan- Soo said he would watch for efforts to rebuild the US Environmental Protection Agency, which was heavily restructured.

Another indicator would be stronger US backing for climate finance through multilateral development banks, for example.

Chin Hui Shan is a journalist covering the environment beat at The Straits Times.