The problem that the United Nations’ annual climate conference was meant to solve this year was, in one way, straightforward. To have any hope of meeting their commitments to holding global warming at bay, developing countries need at least $1 trillion a year in outside funding, according to economists’ assessments. Failure to meet those commitments will result in more chaotic climate outcomes globally. Everyone agrees on this.

And yet, after two weeks of grueling, demoralizing negotiations, the assembled 198 parties agreed to a deal that was, in the most generous terms, weak. The agreement committed to $300 billion a year, by 2035, in funding for climate action in developing countries—triple the current target but less than a third of that trillion-plus goal.

These negotiations have operated on the presumption that a significant chunk of this money would come from wealthy countries, because where else would it come from? A limited number of places—the U.S., Canada, Australia, New Zealand, Japan, Israel, and Europe—have been the source of 92 percent of excess carbon emissions since industrialization. The countries that are bearing the brunt of climate change largely didn’t emit the carbon causing it. And the wealthiest countries failed to make a financial commitment even close to what was needed. “They’re really finding ways to avoid their responsibility,” Nafkote Dabi, the climate-change-policy lead at Oxfam International, told me.

Even the climate financing that was agreed to is not just a cash handout. Previous agreements had promised $100 billion annually, a goal that the world claims to have finally managed to hit in 2022. But about 70 percent of that financing came in the form of loans. Much of the money in this agreement will likely be structured as debt too—and will add to a global debt crisis that the International Monetary Fund estimates has 35 countries in dire financial straits this year. Dabi described debt—both a country’s existing national debt and climate finance taking the form of new debt—as the elephant in the room at COP. Even as developing countries worried about their debt burden growing from funds promised at the conference, they worried that discussing debt forgiveness would derail the already fragile negotiations.

But both national debt and new climate debt stand in the way of COP’s stated goals. Towering national debts are stifling countries’ ability to invest in climate resilience: Some 3.3 billion people live in countries that spend more on servicing the interest payments on their debt than on education or health, let alone climate adaptation. And as climate change fuels hurricanes, droughts, and other disasters, the country must take on more debt to respond. African nations in particular are struggling. Last year, the chief economic adviser for Kenya’s president tweeted, “Salaries or default? Take your pick.” The country’s economy is collapsing under the weight of debt repayments. Kenya is also ricocheting between drought and flooding, and although climate funding might help build irrigation systems for drought-stricken farmers or finance renewable-energy infrastructure, it could also exacerbate the economic crisis if it arrives in the form of debt, adding to a burden that itself makes people that much less resilient to climate change’s challenges.

Pakistan is perhaps the clearest example of how debt and climate risk can send a country into a downward spiral. It is one of the countries most loaded with external debt, owing some $100 billion to mostly the Asian Development Bank, IMF and World Bank, and a handful of wealthy countries including China, Japan, and the United States. And disasters worsened by climate change only add to its hardship: In 2022, for instance, flood damage amounted to $30 billion in losses. Pakistan can never repay its debts, and natural disasters will push it to rack up more.

Dramatically lessening Pakistan’s debt would offer some recognition that the country is suffering under climate conditions it was not responsible for creating, and to which it will struggle to respond otherwise. Mark Brown, the prime minister of the Cook Islands, has called for countries on the front lines of climate change to have their national debts forgiven, and the president of Nigeria recently wrote that offering climate financing to African countries without restructuring their debts would be like “pedaling harder on a bicycle as its tires go flat.”

There is precedent for mass debt forgiveness: In the 1990s and early 2000s, the IMF led the Highly Indebted Poor Countries initiative to restructure debts. It managed to cut out up to 64 percent of the countries’ debts on average. Kevin Gallagher, the director of the Boston University Global Development Policy Center and an expert on climate finance, told me he’d like to see a new program like it, but one meant to wrangle the many private bondholders that have since entered the debt market. These companies, he says, tend to be reluctant to grant a country debt relief, despite charging extremely high interest rates meant to cover losses in the likely case the country defaults. “They’ve already priced it in,” he told me. Right now, China and other major debt holders are then also wary of offering debt relief, knowing the debtor country will likely use any financial breathing room to pay the private bond market.

China, which is the single biggest creditor of any country in the world, is actually a far more progressive lender than private bondholders, experts say. China can be reluctant to restructure countries’ debts when they’re at risk of default, but it also lends at much lower interest rates than private bondholders. And few other creditor countries have been willing to entertain cutting debts as part of a climate-resilience strategy either, according to Jason Braganza, a Kenyan economist and the executive director of the African Forum and Network on Debt and Development. If a major debt-restructuring initiative managed to get China, other creditor countries such as the U.S., private bond markets, and global-development banks to the table, that could alter the fate of the world: Although every one of the poorest indebted countries could default on its loans without having a huge impact on the global financial system, the financial strain of them defaulting—and tumbling into austerity—would drag down the global economy, Gallagher said. “If these countries can’t even afford to pay back their international debts, they certainly can’t invest in climate resilience, mitigation, and development.”

Debt forgiveness poses a similar challenge to the climate-finance question that COP failed so miserably to address: Solving either crisis would take collective will, and at COP, too few responsible entities were willing. And although COP could agree not to issue new climate finance in the form of debt, a multilateral agreement on debt forgiveness wouldn’t happen at COP, which doesn’t include nonstate actors.

Still, last week in Brazil, President Joe Biden called on G20 countries to swiftly provide debt relief to nations that need it, urging a faster debt-restructuring process. Many analysts say wealthy countries have an obvious interest in preventing default in the developing world: The impact of debt distress is not confined to the distressed country’s borders. Indebtedness breeds austerity, and if countries are unable to shield themselves from the effects of climate change and to transition away from fossil fuels, then that crisis deepens into an issue of global security. Emissions go up, as does displacement. If the world could think differently about debt, perhaps the next round of climate talks, scheduled for November 2025 in Brazil, could go differently too.