Redirecting COP31 funds could deliver Australia’s most important climate contribution yet

The $1 billion saved from not hosting could deliver more impact through Pacific infrastructure than any summit.

Alexandre Dayant

26 November 20254 min read

Australia’s withdrawn bid to host COP31 may look like a diplomatic setback. In reality, it has handed Canberra one of the most powerful climate opportunities it has had in years.

The cost of hosting the global climate negotiations in Adelaide was estimated at $1-2 billion, with revenues from the event expected to cover around $500 million. So that means roughly $1 billion is now sitting unallocated – money that could deliver far more impact for Australia than a three-week summit in South Australia ever would.

Rather than treating the withdrawal as a hiccup, Canberra can use this moment to pivot toward something the region has long called for: serious, sustained investment in climate-resilient infrastructure in the Pacific. Redirecting the funds originally reserved for COP31 into projects that directly protect lives, economies and ecosystems would generate far greater diplomatic and environmental gains than hosting the conference itself.

Australia’s COP31 proposal was driven as much by geopolitics as by climate ambition. Hosting would have allowed Canberra to signal seriousness about what Pacific leaders consistently call the region’s “single greatest security threat.” The Australian and Pacific pitch was meant to highlight alignment with island priorities at a time of rising regional competition.

Pacific governments backed the bid early, hoping it would amplify their voices on the global stage. Canberra’s withdrawal therefore carries political costs, with Pacific leaders watching carefully to see how Australia responds.

The compromise reached with Türkiye salvaged an important outcome: a major pre-COP gathering will now be held in the Pacific, giving the region a chance to push for climate finance, including for the Pacific Resilience Facility (PRF). Some of the funding originally earmarked for COP31 might be redirected to support this gathering.

But more can be done.

Funafuti, capital of Tuvalu (Samuel Phelps/DFAT)

The Pacific’s climate reality makes the case for reinvestment compelling. Climate change is not a distant future risk but an accelerating disaster. Rising seas are swallowing coastlines. Stronger cyclones repeatedly destroy infrastructure. Saltwater intrusion threatens freshwater sources. More frequent flooding undermines food security and wipes out years of economic gains.

The challenge is not the lack of viable adaptation projects; it is the lack of predictable, long-term financing.

At a time when global development budgets are tightening, Pacific governments face rising adaptation costs and shrinking fiscal space. Dollars that would have been spent hosting COP31 in Adelaide could instead fund a seawall, a resilient port, a climate-proofed energy grid, a flood-resistant road or an early-warning system that saves lives. In the Pacific, $1 billion goes an extraordinarily long way.

Australia must choose the kind of climate leadership it wants to project.

Australia already has well-established mechanisms to channel such investments. Its traditional aid program provides grant financing, while the Australian Infrastructure Financing Facility for the Pacific (AIFFP) blends grants and loans, including through its dedicated climate window, the Pacific Climate Infrastructure Financing Partnership. However, as explained in a recent Lowy Institute paper, concessional resources in these facilities are rapidly depleting, even as climate pressures intensify. Injecting COP31-equivalent funding would immediately allow Australia to expand its portfolio of “hard” adaptation investments. And for domestic audiences concerned about spending overseas, project delivery could prioritise Australian contractors, mirroring how COP31 hosting itself was expected to benefit the Adelaide economy.

Increasing support for the PRF is another option. Australia has already committed $100 million to the Facility, which aims to raise US$500 million by 2026 and US$1.5 billion by 2030. Yet the PRF has struggled to attract major donors. A deeper Australian contribution would send a powerful signal of confidence and could catalyse others to follow.

The diplomatic benefits would be equally important. Redirecting the COP funds would be one of the clearest signals that Australia listens to Pacific priorities. It would convert broad climate commitments into tangible outcomes, help rebuild trust damaged by earlier policy disputes – Adani, Kyoto carryover credits – and signal that Australia is serious about shared stewardship. It would also support Canberra’s ambition of becoming a preferred infrastructure partner at a time when China’s regional presence continues to grow.

Ultimately, Australia must choose the kind of climate leadership it wants to project. Hosting a COP may be diplomatically valuable, but investing in Pacific climate resilience delivers tangible, lasting impact. It strengthens partnerships, supports regional stability and advances Australia’s strategic interests far more than a single summit could.

Australia now has a rare second chance. The funds originally set aside for COP31 do not need to go back into consolidated revenue. Redirecting it toward Pacific climate resilience would turn a diplomatic disappointment into a strategic win, strengthening relationships, supporting island priorities and advancing real climate action.

The government should seize this opportunity. Australia shouldn’t retreat from ambition. It should reinvest, where it matters most.

About the author

Alexandre Dayant

Alexandre Dayant is a senior economist and former Deputy Director of the Indo-Pacific Development Centre, a dedicated policy research centre within the Lowy Institute.

Topics

Australia Climate & environment