Australia had previously come under heavy scrutiny for failing to acknowledge the fund. Prime Minister Tony Abbott even went as far as saying it should be abolished at the recently concluded G20 summit in Brisbane.
"We are (already) doing a very great deal and I suppose given what we are doing, we don't intend, at this time, to do more," he said earlier. Australia had also refused to attend a Green Climate Fund Conference in Berlin in November.
However, following pressure from the US, Japan and several leading environmentalists, Australia's foreign minister Julie Bishop announced the funding Wednesday at the UN's Climate Change Conference in Peru.
"Our pledge to the Green Climate Fund will facilitate private sector-led economic growth in our region...with a particular focus on investment, infrastructure, energy, forestry and emissions reductions," Bishop told the conference.
In a statement released Wednesday, Abbott revealed that Australia's reversal in its stance against the Green Climate Fund was down to changing circumstances.
"We've seen things develop over the last few months," Abbott said. "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."