The decision will affect dozens of projects in France's overseas territories.
The overseas minister Annick Giradin has told the National Assembly that the next budget has no provision to feed the fund which was meant to mitigate against climate change.
Ms Girardin said her ministry cannot be the only one taking care of the effects of climate change, suggesting that other ministries and agencies share the responsibility.
The cut affects dozens of projects, including some in French Polynesia worth almost $US30 million.
A French Polynesian member of the Assembly Maina Sage has expressed disappointment, saying the move goes against a promise made by the former president Francois Hollande in Tahiti.
Ms Sage said this was also inconsistent with what had been announced by President Emmanuel Macron.