Australia on Wednesday pledged Aus$200 million (US$165 million) to the UN-backed Green Climate Fund to mitigate the impact of global warming on poor countries, bowing to international pressure.
With its use of coal-fired power and relatively small population of 23 million, Australia is one of the world's worst per capita greenhouse gas polluters and has been increasingly isolated over its perceived reluctance to do more to tackle the climate threat.
It follows the world's most powerful economies last month urging "strong and effective action" on climate change, catapulting the issue onto the final statement of G20 talks hosted in Brisbane despite pressure from Australia to stick to economic matters.
"All countries should take practical and proportionate steps to take action on climate change while safeguarding economic growth," said Prime Minister Tony Abbott in a joint statement with Foreign Minister Julie Bishop who is at a UN climate summit in Peru.
The pledge follows the United States contributing US$3 billion and Japan up to US$1.5 billion. France, Germany, Britain and Canada had also donated large sums, leaving Australia conspicuous in not chipping in.
The government had previously indicated it would not contribute to the fund, but Abbott said at a press conference: "We've seen things develop over the last few months.
"I think it's now fair and reasonable for the government to make a modest, prudent and proportionate commitment to this climate mitigation fund. I think that is something that a sensible government does."
The money will come over four years from Canberra's foreign aid budget.
- Australia to review emissions targets -
Abbott, who since coming to power a year ago has dismantled a carbon tax designed to combat climate change, said the cash would bring total international contributions above the fund's initial target of US$10 billion by the end of the year.
"The pledge to the Green Climate Fund will facilitate private sector led economic growth in the Indo-Pacific region with a particular focus on investment in infrastructure, energy, forestry and emissions reduction programmes," he added.
The GCF is a mechanism designed as a way for wealthy countries to help poorer ones to become greener and to bolster their defences against the effects of climate change.
Before heading to the climate conference in Peru, Bishop said despite Australia being one of the worst per capita polluters, Australia's emissions amount to only about 1.5 percent of those globally.
She argued that "those countries that are emitting the most have the greatest responsibility in terms of the totality".
Australia has committed to reducing its carbon emissions by five percent below 2000 levels by 2020, and has announced a Aus$2.55 billion (US$2.12 billion) Emissions Reduction Fund to give polluters financial incentives to cut back.
Environmentalists say it ought to target 15 percent.
Abbott, who has spoken repeatedly about the importance of the coal industry to Australia's prosperity, said the government would review its international emissions reduction targets in the lead-up to the Paris climate conference next year.
"Australia will continue to take effective action against climate change which is consistent with continued strong economic growth, jobs growth and development," he said.