Context
India came out as a vocal leader among developing nations, refuelling the debate over climate finance responsibility, at the ongoing climate talks in Bonn, Germany. As financing developing countries is the only potent way to fulfill the climate commitments.
About Climate Finance
(a) It refers to regional, national, or international fiscal aid obtained from public, private, and alternative sources. It supports mitigation and adaptation actions to arrest climate change.
(b) It is mentioned in the principle of Common But Differentiated Responsibilities (CBDR). These developed countries must provide fiscal aid to those with inadequate resources and higher vulnerability.
(c) At COP29 in Baku, the international community adopted the Baku to Belém Roadmap (B2B Roadmap) as part of the New Collective Quantified Goal (NCQG) on climate finance.
(d) Its goal is to provide climate finance of $1.3 trillion every year by 2035. It is a massive jump from the unmet hundred billion dollar annual pledge made in 2009. The Rio Declaration (1992) formally introduced the polluter-pays principle.
Why is Climate Finance necessary?
(i) Bridging the Adaptation Gap: Adaptation remains underfunded against mitigation. Developing countries require fiscal support to build climate-resistant infrastructure, climate-smart agriculture, and efficient early warning systems.
(ii) Enabling Mitigation at Scale: Shift to renewable energy, ameliorating energy efficiency, and reducing emissions in heavy sectors like transport and industry need huge investments. Without climate finance, most developing countries will not be able to meet their climate commitments.
(iii) Addressing Equity and Justice: Developed nations, historically responsible for the huge emissions. So, it is their responsibility to support those who contributed least but suffer most.
Key Concerns
(i) For Developing Nations:
(a) Sovereignty and Conditionality: Developing countries, including India, have raised voices against the imposition of various conditions on finance delivery. The G77 and China bloc asked to respect national priorities in climate financing.
(b) Shift from Provision to Mobilization: India, raising voices on behalf of the Like-Minded Developing Countries (LMDCs), repeatedly said that climate finance is a legal obligation, not an investment favour.
(c) Adaptation vs. Mitigation Imbalance: As mitigation projects — like renewable energy — receive more funding, adaptation efforts remain underfunded. It affects vulnerable communities in the Global South, who become the victims of the aftereffects of climate change.
(ii) For Developed Nations:
(a) Expanding Donor Base: Some developed countries put this onus on emerging economies like China and Gulf nations for climate finance. As they are economically strong.
(b) Private Sector Reliance: Developed nations consistently advocate for private-sector-led finance, giving space to intransparency, inequity, and non-alignment with public interest.
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India’s Climate Finance Landscape
(i) India’s Global Advocacy: India has persistently asked the developed nations under Article 9.1 of the Paris Agreement to provide climate finance.
(ii) India has received around USD 1.16 billion in climate finance through UN mechanisms. It consists of funds from the Green Climate Fund, Global Environment Facility, and Adaptation Fund.
(iii) Most of India’s climate action, including large-scale renewable energy deployment and adaptation programs, is financially sourced through domestic resources.
(iv) India & Adaptation: The Economic Survey of the previous year highlights the development of a National Adaptation Plan (NAP). Also, the submission of an Initial Adaptation Communication (IAC) to the UNFCCC. These include:
(a) Climate-resilient agriculture through better and healthier seeds as well as soil health.
(b) Urban adaptation via the National Mission on Sustainable Habitat (NMSH).
(c) Water body rejuvenation under AMRUT, with over 3,000 projects approved.
Conclusion
India has a crucial role to play because of its economic size and its unique capacity to build bridges within the international community. India’s Vasudhaiva Kutumbakam must guide our efforts to make the global financial system more efficient and more just. In order to curb the overlapping challenges of poverty reduction, climate change, and biodiversity protection, we need a huge transition from billions to trillions in international fiscal assistance.