The pledge of $100 billion annually by developed nations to support developing world in its climate action endeavours falls short of addressing climate challenges
As the world confronts the pressing reality of the climate crisis, the need for robust climate financing has never been more urgent. With the 28th Conference of the Parties (COP) under the auspices of the United Nations Climate Change Conference on the horizon, India stands ready to take a resolute stance, advocating for adaptation, equity, and financial assistance in the battle against climate change.
At this pivotal moment in history, the timeless words of Mahatma Gandhi resound powerfully, reminding us that the future hinges on the actions we take in the present. India's unwavering participation at COP28 underscores the paramount importance of climate financing in shaping a sustainable future for all.
India's Emphasis on Adaptation and Equity
Central to India's proposed approach at COP28 is the profound recognition that adaptation and equity are cornerstones in the fight against climate change. While global efforts to mitigate greenhouse gas emissions are vital, equal weight must be placed on bolstering resilience and adapting to the challenges that arise from a changing climate.
Climate justice mandates that vulnerable countries receive the financial support and robust infrastructure needed to combat the far-reaching impacts of climate change.
The Financial Challenge:
Yet, the road ahead is not without its formidable financial challenges. The task of addressing the climate crisis demands massive financial commitments. Estimates reveal that the global transition to a low-carbon economy will require an annual investment of USD 4-6 trillion until 2050. To achieve net-zero emissions targets by 2030, the renewable energy sector alone necessitates a yearly investment of at least USD 4 trillion. Moreover, developing countries will require approximately USD 6 trillion between 2022 and 2030 to successfully implement their climate action plans. To meet these staggering challenges, at least 5% of the global Gross Domestic Product (GDP) must be channeled towards climate action each year.
The celebrated goal of developed countries pledging USD 100 billion annually by 2020 to support developing nations in their climate action endeavours, though commendable, falls short of addressing the full scope of the climate challenge.
As we approach 2030, reports indicate that external climate finance of USD 1 trillion per year will be required, significantly exceeding the current mobilised amount of USD 50-80 billion annually. Furthermore, in 2020, only USD 83.3 billion was provided to developing and emerging economies, often in the form of concessional and non-concessional loans.
India's Initiatives and the Path Ahead:
India, cognizant of the urgency surrounding climate financing, has embarked on significant initiatives to address the issue. Notably, the establishment of the National Adaptation Fund for Climate Change (NAFCC) and the National Clean Energy Fund serve as shining examples of India's commitment to promoting clean energy and supporting climate-resilient infrastructure. However, despite these commendable efforts, significant funding gaps persist.
The Climate Finance Working Group's estimation that 118 trillion rupees will be needed to address climate change, with only 64 trillion rupees currently available and 54 trillion rupees unrestricted, necessitates innovative financing solutions. In this regard, India's Development Financial Institutions (DFIs) and commercial banks must play a pivotal role in raising domestic funds and channeling resources from abroad to effectively bridge this gap. Moreover, it is essential for Indian corporates to take a stride forward in bolstering the carbon market, consequently prompting the need for greater innovation.
Even within the bounds of the Paris Agreement, it remains crucial for India to implement and strengthen actions prescribed under Article 6.4. This involves establishing a Clean Development Mechanism, which was previously formed under the Kyoto Protocol. By doing so, India can benefit from carbon credits obtained through the cap-and-trade system.
As the curtain rises on COP28, the imperative for global collaboration on climate financing is clearer than ever before. India's proactive engagement, collaborative efforts with developed and emerging economies, and unwavering dedication to confronting climate challenges position the nation as an exemplary advocate for climate financing.
India's partnership with the United Arab Emirates (UAE), the host of COP28, holds significant promise for achieving success at the conference. As the G20 presidency, India's influential role can contribute to delivering a clear political framework and shaping the outcomes expected at COP28. With G20 countries responsible for over 80% of global emissions, their policy decisions will undoubtedly play a pivotal role in driving the necessary transformation.
At COP28, the key areas of focus will revolve around mitigation, adaptation, loss and damages, and finance. Stronger emission reduction commitments are urgently required to combat the alarming trajectory of global warming.
India, alongside other developing nations, is championing a new global climate finance target, acknowledging the mounting costs of addressing and adapting to climate change. India, in this context, should also take lead in carbon pricing by setting a base price (reflective of the external costs of GHG emissions), as an effort towards mitigation and reduction of GHG emissions. The G20's leadership in driving change and scaling up climate finance is pivotal for achieving the progress needed by COP28.
(Dr. Anil Agrawal, Member of Parliament, Rajya Sabha and Dr. Kaviraj Singh, Founder and Managing Director, Earthood)