COP27: Indias agenda, prospects, $100-B climate financing issue

COP27: India's agenda, prospects, $100-B climate financing issue

On the eve of COP27, India urged the UN to define “climate finance” and clarify the role of developed nations in compensating for climate disaster; here's a quick recap of the issue

Union Minister of Environment, Forest, and Climate Change, Bhupender Yadav, will lead the Indian delegation to the 27th Conference of Parties (COP27) of the UN Climate Change Conference  from November 6 to 18. The event is scheduled to be held at Sharm El-Sheikh in Egypt.

Over the week, sessions are planned on Summit Plenary, Just Transition, Food Security, Innovative Finance for Climate and Development, Investing in the Future of Energy, Water Security, and Climate Change and the Sustainability of Vulnerable Communities. India’s focus at COP27 will be to push for better climate financing for G20 countries, especially the $100 billion pledged per year by developed countries in the Paris Agreement.

What is COP27?

Under the aegis of the United Nations Framework Convention on Climate Change (UNFCCC), around 200 countries are joining the meet to deliberate global warming and other climate issues.

On the eve of the inauguration of COP27, India urged the UN to define “climate finance” and clarify the role of developed nations in compensating for climate disaster and share the technology with developing countries.

Also read: COP27: Three things a climate scientist wants world leaders to know

In doing so, India has shared the views of Like-Minded Developing Countries (LMDCs), which is a group of 24 developing countries. These nations—including China, Indonesia, Malaysia, Iran, Bangladesh, Sri Lanka, and the Philippines, apart from India—represent about 50 per cent of the world’s population.

In a recent virtual meeting, the LMDCs resolved to seek financial support worth $100 billion every year from developed countries, which was agreed upon in the 2015 Paris Agreement.

The $100-billion issue

Under the Paris Agreement, developed countries pledged $100 billion per year for developing countries from 2020 to 2025 before increasing the amount further. However, the actual amount has been nowhere near the target.

The climate finance provided and mobilised by developed countries for climate action in developing countries reached $83.3 billion in 2020, says the latest Organisation for Economic Co-operation and Development (OECD) analysis.

That figure was a 4 per cent increase from 2019, which was a 1 per cent rise from 2018. Even the 2020 climate finance primarily increased because of a rise in public flows.

Also read: India on path to meet renewable energy target in 2030, but hurdles remain

Power and New and Renewable Energy Minister RK Singh said the International Solar Alliance (ISA) would “take up the cause” of the $100 billion per-year climate financing pledge. India is among the 121 countries in the ISA, which was founded in 2015 as the voice of developing nations.

Nature of financing

The unavailability of the promised $100 billion is not the only issue. There is also an ambiguity over the nature of climate finance, that is, whether it is a grant, a subsidy, or a loan, Yadav explained on the eve of his departure.

“The target of $100 billion has not been achieved, and there is no clarity on who has received how much money,” he said. India will also seek equal distribution of aid along with renewing the demand for loss and damage (L&D) funds for developing nations.

Also on India’s agenda will be technology transfer and capacity building. “This year, it is a ‘COP for Action,’” Yadav added. India will also seek clarity on credit mechanisms, loan availability, and insurance requirements for adaptation finance.

“Once the definition of climate finance gets drafted, the developing countries would be able to accurately assess the extent of finance flows for climate action,” Yadav explained.

Also read: India unlikely to meet 175 GW renewable energy target by year-end

“While the Standing Committee on Finance will submit a report on the various definitions, we hope to have good deliberations on this issue to arrive at a common understanding. The interpretation of the term must be in line with the commitments made by the countries on climate finance in the Convention and its Paris Agreement,” he added.

India’s performance 

India submitted its latest Nationally Determined Contributions (NDCs) under the Paris Agreement to the UNFCCC in August. These NDCs span up to 2030, and the target is net zero goals by 2070, as pledged by Prime Minister Narendra Modi at the COP26 climate summit in Glasgow, Scotland.

India has submitted eight key NDCs, of which two are updates on existing targets. It has committed to reduce carbon emissions intensity by 45 per cent from 2005 by 2030. The previous target was 30 per cent.

Another target is drawing 50 per cent cumulative electric-power installed capacity from non-fossil fuel-based energy resources by 2030. That would be 500 GW of non-fossil installed capacity by 2030.

Among India’s new targets is creating a “carbon sink” of 2.5 to 3 billion tonnes of carbon dioxide equivalent through additional forest and tree cover by 2030.

Also read: In climate change fight, here’s how India can exceed Paris accord targets

To meet these targets, India needs to adopt future technologies, including green hydrogen, offshore wind, off-grid, and decentralised renewable energy applications. A BloombergNEF (BNEF) report states that India will need investments worth $223 billion to meet its wind and solar power capacity goals by 2030. That would be impossible without private finance.

However, climate negotiators say the recent slew of policies show India is serious about meeting its 2030 targets.

An uphill task

Despite the decision to strengthen NDCs taken at COP26, progress has been abysmal, says the UN Environment Programme’s (UNEP) Emissions Gap Report 2022-The Closing Window.

The NDCs submitted this year take only 0.5 gigatonnes of CO2 equivalent, which is less than 1 per cent of the projected global emissions in 2030. “Current policies alone would lead to a 2.8°C hike, highlighting the temperature implications of the gap between promises and action,” the report warns.

UN Secretary-General António Guterres, who was in India last month, had flagged the issue of the nation’s vulnerability to climate change and leadership role at COP27. “COP27 in Cairo will demand strong leadership from India, as we accelerate implementation of the Paris Agreement. I count on India to participate at the highest level, to deliver a balanced outcome that recognises the importance of adaptation, mitigation, and finance,” he had said.

Also read: Nearly 5 million people in India internally displaced due to climate change, disasters in 2021: UN

Guterres had also focused on the issue of finance. “…I have asked emerging economies to take an extra step to close the mitigation gap. But they can only do this with the financial and technical support of developed countries. Those developed countries must do more,” he added.

S&P Global Commodity Insights’ Global Integrated Energy Model has predicted India’s carbon emissions to rise from 2.44 billion tonnes a year in 2022 to 3.02 billion tonnes a year in 2030. It is forecast to peak at 3.56 billion tonnes a year by 2044-45.

The need for climate finance

Industrialisation catapulted developed nations to their “developed” status but at the cost of global warming, which eventually affects the entire world. The result is climate change, including frequent or untimely droughts, storms, floods, tsunamis, and landslides, among others.

While developed countries enjoy the benefits of industrialisation, the entire world is bearing the cost of environmental damage. In fact, many developing nations complain that with interventions to protect the environment, developed nations are now creating hurdles in their industrialization and economic progress.

Also read: Over 9 crore Indians at risk of hunger due to climate change: Report

Hence, developed countries are committed to compensate for the cost of industrialisation. The UNFCCC defines climate finance as “local, national, or transnational financing, drawn from public, private and alternative sources of financing, that seeks to support mitigation and adaptation actions that will address climate change.”

Climate finance is necessary because large-scale investments are needed to significantly reduce emissions, adapt to the adverse effects of climate change, and reduce its impacts. The Green Climate Fund (GCF) is supposed to play a major role in supporting India to make this transition. But much more is needed to meet the targets, not only for India but the world.

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