Annex II Countries

Annex II Countries are a specific group of developed nations recognised under the United Nations Framework Convention on Climate Change (UNFCCC). These countries have special financial and technological responsibilities within the international climate regime. While Annex I Countries (developed economies and economies in transition) are required to adopt emission reduction policies, Annex II refers exclusively to the subset of high-income industrialised nations that must provide financial resources and technology transfer to assist developing countries in addressing climate change.
The classification of Annex II countries reflects the principle of “common but differentiated responsibilities and respective capabilities” (CBDR–RC) — acknowledging that developed countries, having contributed most to historical greenhouse gas emissions, bear a greater obligation to support mitigation and adaptation efforts globally.

Background and Historical Context

The UNFCCC was adopted in 1992 at the Earth Summit (Rio de Janeiro) and entered into force in 1994. It established a framework for international cooperation to combat climate change by stabilising greenhouse gas concentrations in the atmosphere.
The Convention categorised nations into three main groups:

1. Annex I Countries: Industrialised nations and economies in transition.
2. Annex II Countries: Wealthier subset of Annex I, required to provide financial and technological assistance.
3. Non-Annex I Countries: Developing nations with fewer obligations but eligible for support.

Annex II comprises mainly members of the Organisation for Economic Co-operation and Development (OECD) as of 1992, excluding those with transitional economies (e.g., former Soviet states). This classification remains important for determining climate finance commitments and obligations under subsequent agreements such as the Kyoto Protocol (1997) and the Paris Agreement (2015).

Composition of Annex II Countries

The Annex II list includes 24 countries and the European Union. These nations represent the world’s most advanced economies at the time the UNFCCC was drafted.
Annex II Countries are:

• Australia
• Austria
• Belgium
• Canada
• Denmark
• Finland
• France
• Germany
• Greece
• Iceland
• Ireland
• Italy
• Japan
• Luxembourg
• Netherlands
• New Zealand
• Norway
• Portugal
• Spain
• Sweden
• Switzerland
• Turkey*
• United Kingdom
• United States of America
• European Union (as a regional economic organisation)

*Note: Turkey was originally listed under Annex II but later requested and obtained removal from Annex II obligations in 2001 (COP7, Marrakesh) due to its developing-country characteristics at the time. However, it remains an Annex I Party.

Responsibilities and Commitments

Annex II countries have specific obligations distinct from other UNFCCC parties. These include:

1. Financial Assistance
   • Provide funding to developing (Non-Annex I) countries to help them meet their UNFCCC obligations.
   • Contribute to mechanisms such as the Global Environment Facility (GEF), which serves as the financial arm of the Convention.
   • Support adaptation, mitigation, capacity building, and technology transfer initiatives.
   • Under the Paris Agreement, provide contributions to newer institutions such as the Green Climate Fund (GCF) and the Adaptation Fund.
2. Technology Transfer
   • Promote and facilitate access to environmentally sound technologies and know-how for developing nations.
   • Support cooperation in renewable energy, carbon capture, and sustainable agriculture.
3. Support for Capacity Building
   • Help developing nations strengthen institutional, technical, and human capacities for climate planning, data management, and reporting.
4. Leading by Example
   • Demonstrate leadership through domestic climate policies, emission reductions, and sustainable development practices that set benchmarks for global action.

These obligations reflect not only moral responsibility but also the economic capability of these nations to fund the global response to climate change.

Role in the Kyoto Protocol

Under the Kyoto Protocol (1997), Annex II countries maintained their financial and technological obligations in addition to the quantified emission limitation and reduction targets (QELROs) assigned to Annex I nations.
They were expected to fund mechanisms such as:

• The Clean Development Mechanism (CDM) – facilitating emission-reduction projects in developing countries.
• Joint Implementation (JI) and Emissions Trading schemes – enabling cost-effective emission reductions.

By providing both capital and technology, Annex II countries were instrumental in supporting developing nations’ transition towards low-carbon economies.

Role under the Paris Agreement

Although the Paris Agreement (2015) replaced the Kyoto Protocol’s strict division between Annex categories with a more flexible approach, the principles of differentiation and responsibility-sharing remain.
Annex II countries continue to have special obligations to:

• Provide predictable, transparent, and scaled-up climate finance to support developing nations.
• Report on financial contributions and progress under the Enhanced Transparency Framework (ETF).
• Support capacity-building, technology development, and transfer initiatives in developing and least-developed countries.

The Paris framework explicitly reaffirms that developed nations should collectively mobilise USD 100 billion annually for climate finance — a goal primarily directed at Annex II countries.

Importance in Global Climate Governance

Annex II countries play a pivotal role in ensuring equity and trust in international climate negotiations. Their financial and technical support underpins cooperation between the Global North and South.
Key areas of influence include:

• Climate Finance Architecture: Establishing and sustaining institutions such as the GCF and GEF.
• Leadership in Technology Innovation: Advancing clean energy, carbon-neutral transport, and sustainable industry practices.
• Diplomatic Leverage: Acting as mediators and facilitators in UNFCCC negotiations, bridging developed and developing world priorities.

Failure by Annex II nations to meet financial commitments has often been a source of contention in global climate talks, with developing countries calling for greater accountability and transparency.

Criticisms and Challenges

While Annex II countries have contributed significantly to climate initiatives, several challenges persist:

• Insufficient Funding: The USD 100 billion annual goal has not consistently been met, raising concerns about credibility and equity.
• Uneven Burden-sharing: Some countries contribute disproportionately more than others, leading to calls for clearer contribution criteria.
• Accountability Issues: Lack of uniform reporting mechanisms sometimes obscures actual financial flows.
• Emerging Economies’ Role: As global economic power shifts, questions arise about whether countries like China, South Korea, or the Gulf states should share similar responsibilities despite being Non-Annex I members.

Contemporary Relevance

Although the strict Annex structure is less central under the Paris Agreement, the Annex II concept remains fundamental for understanding historical responsibilities and ongoing equity debates. It continues to define the financial backbone of international climate cooperation, ensuring that developing countries have the means to pursue sustainable, low-carbon, and climate-resilient development pathways.
In practice, Annex II nations are now expected to expand their commitments beyond traditional aid, embracing innovative financing mechanisms such as green bonds, climate insurance schemes, and public–private partnerships to mobilise additional resources.

Significance

The Annex II Countries embody the global commitment to fairness and shared responsibility in addressing climate change. They acknowledge the historical imbalance in greenhouse gas emissions and the disproportionate impacts faced by developing nations.