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The changing face of climate finance

, December 15, 2021, 0 Comments

One of the most pressing challenges that lies ahead for countries heading into the post-covid world is the erratic changes in the climate occurring across the globe. The impacts associated with the climate emergency are severe and increasing. Around the world, people are experiencing adversities of climate change in one form or the other be it floods, heat waves, droughts in some parts or wildfires, storms among others.destiny-climate-finance-change-india-marketexpress-jn

Developing and vulnerable countries are indeed the most affected by the misfortunes of the climate change. Global temperatures are currently at least 1.1 degrees Celsius warmer than pre-industrial levels. According to the Global Climate risk index, Mozambique, Zimbabwe and Bahamas were the most affected by the impacts of extreme weather in 2019. “India” lies on the seventh spot of being most impacted by extreme weather.

What developing and vulnerable countries need is the help and support from the developed world to sustain in the ever changing facets of climate and to adapt and mitigate adversities emanating from it.

The global action on climate change is subject to the delivery of timely and adequate finance. Here rises the concept of Climate Finance which plays a critical role in supporting developing countries to address climate change.

In 2015, developed countries pledged to mobilize jointly US$100 billion a year by 2020 and through 2025, to address the needs of developing countries in the context of meaningful mitigation actions and adaptation actions. This led to the adoption of the cult Paris Agreement.

In this regard, developed countries specified that the finance would come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. The climate finance goal was then formally recognized by the UNFCCC Conference of the Parties at COP16 in Cancun. The Green Climate Fund (GCF) is a key channel for climate finance delivery and supporting mitigation and adaptation actions in furtherance of the goals of the Paris Agreement.

However, there are persistent inadequacies in the fulfillment of this commitment by the developed countries. These include postponement of the target date per year from 2020 to 2025, lack of transparency in reporting, lack of clarity on finance from public sources that is new and additional, the preponderance of loans over grants, lack of finance data, and the skewed emphasis on mitigation in contrast to adaptation.
There is no well-defined definition of what actually climate finance stands for. While developed countries want to factor in private finance too, developing countries strongly believe that the core parameters of climate finance as per the UNFCCC have to be New and Additional, climate specific finance with emphasis on grant elements and public finance.

Developing countries like India have myriad development challenges and Government of India has been steadfast in its attempts to achieve economic and social development objectives. Inadequate flow of climate finance is also one of the challenges that India has constantly flagged in international conferences.

India’s need in climate finance stems from both mitigation and adaptation. However, as the developed countries have been delaying climate actions to reduce GHG emissions and constantly increase the impact of global warming and thus the need for climate adaptation. This, in turn, is constantly adding to India’s adaptation burden that is already considerable. Also internationally available climate finance to India remains skewed towards mitigation rather than adaptation.

India is doing its bit in meeting the promised adaptation and mitigation actions. However, finance still remains the critical issue as India is stepping up its targets majorly by relying on domestic budgetary resources.

Recently at COP 26, India announced to go carbon neutral by 2070. According to a study by “CEEW”, India would need total investments of more than USD 10.1 trillion to achieve net-zero emissions by 2070. The bulk of this amount would be needed to fade out the power sector from its dependence on coal. These investments would help decarbonize India’s power, industrial, and transport sectors.

Also in one of the big announcements at COP 26, the African Group of Negotiators and a group of 24 developing nations, including China, India, Indonesia, Pakistan, Saudi Arabia and Vietnam, have called on donor nations to mobilize at least $1.3 trillion per year by 2030. However, this demand has not gone down well with the developed countries so far which have shown their resistance towards the new finance goal.

In a nutshell, climate change is a global common and is everyone’s responsibility. Most Countries Aren’t Contributing their Fair Share of Climate Finance. Countries need to improve the quality and the speed with which they provide climate finance. Developing countries need more finance in the form of grants and for adaptation and not loans which in effect will be returned that too with interest.

Clearly, we are very far from reaching the climate finance goals as promised. For ambitions to be set high; finance should be an integral part of it. Only then can climate justice be delivered to the vulnerable countries.