‘The sixth assessment report of the Intergovernmental Panel on Climate Change has described finance, capacity-building and a transfer of technology as critical enablers of climate action in developing countries’
| Photo Credit: Getty Images/iStockphoto
Finance has been a major point of climate change negotiation since the launching of the United Nations-led climate change negotiations in 1991, producing the United Nations Framework Convention on Climate Change (UNFCCC) 1992. Article 4 (7) of the UNFCCC clearly says “that the extent to which the developing country Party will be fulfilling their climate action commitments is contingent on how much finance and technology they get from developed country Parties”.
The Paris Agreement retains, in Article 9(1), the provision relating to finance, binding the developed countries to mobilise finance for the developing countries. The sixth assessment report of the Intergovernmental Panel on Climate Change (IPCC) has described finance, capacity-building and a transfer of technology as critical enablers of climate action in developing countries in the backdrop of anthropogenic greenhouse gas emissions responsible for 1.1° Celsius of warming (above what it was in 1850-1900) in 2011-20.
Falling short
In pursuance of their responsibility, the developed countries agreed in 2009 that they would collectively mobilise $100 billion a year by 2020. The $100 billion mark, met by the developed countries only in 2022, does not match the growing needs of climate finance corresponding to the developing countries’ nationally determined contributions (NDCs).
Second, the mark has been considered in many reports to be well-short of estimated finance to fund the actions needed across different sectors to keep the average global temperature rise within 1.5° Celsius by the end of this century. The 29th Conference of the Parties (COP 29) meeting at Baku, Azerbaijan, in November 2024, was meant for the Parties to the Paris Agreement to have a New Collective Quantified Goal on Climate Finance (NCQG), replacing a $100 billion floor and laying a new floor taking into account the needs and the priorities of developing countries to tackle the climate crisis.
In response to persistent demand by all the major negotiating groups belonging to the developing south that the developed north mobilise $1.3 trillion by 2030, the developed north agreed to release only $300 billion per year by 2035.The $300 billion mark ignores the estimation by the UNFCCC’s Standing Committee on Finance (SFC) relating to the annual financial needs of developing countries, which it derived from their NDCs. As in the SFC’s estimation, the financial needs stand at between $455 billion-$584 billion. Even these figures cover around half of the 5,760 costed and non-costed needs identified by 98 developing countries in their NDCs (Third Report of the Independent High-level Expert Group on Climate Finance, November, 2024).
The decision on the NCQG makes reference to the financial needs of those particularly vulnerable to the adverse effects of climate change such as the least developed countries (LDC) and small island developing states (SIDS). But the NCQG does not make minimum allocation floors for the LDCs and SIDS.
During the meeting, the Alliance of Small Island States demanded the allocation of $39 billion for SIDS while the LDC demanded at least $220 billion for them. It appears that the first-ever Global Stocktake (GST) in consonance with the Paris Agreement in 2023 also failed in influencing the cause of loss and damage concern in the NCQG. In the GST estimation, economic costs are estimated to reach $447 billion-$894 billion per year by 2030.
India and the NCQG
India’s perspective on the delivery of climate finance from the developed north to the developing south is derived from equity frame expressed in the principle of common but differentiated responsibility and respective capability. It is notable that India joined the Montreal Protocol to protect the ozone layer from further depletion, which led to setting up of a multilateral fund of $240 million, including an additional $80 million for use in India, China and other eligible low-income Parties. During COP29, India specified that the new floor should mobilise $1.3 trillion by 2030, of which at least $600 billion should come in the form of grants and concessional resources. On other major agenda items, mitigation work programme, just transition work programme and GST, India’s representative called for an adequate provisioning of finance and other means of implementation to fulfil them. India’s submission of NDC next year is contingent on a decision relating to finance (Earth Negotiations Bulletin—, November 22, 2024).
India has expressed its extreme disappointment on the adoption of the NCQG in its present form, shape — which was without its consultation. It made serious objections against the COP29 presidency and the Secretariat in the way it was finalised — which is at the expense of trust, collaboration and in contravention of the UNFCCC’s norm, on an issue which is a creation of the developed north but which affects developing countries more. India outrightly rejected the NCQG. It also added that this NCQG expects the developing world to mobilise resources. In India’s view, the paltry sum will influence the ambition and the implementation of its NDC.
What the developed north must do
The pith and substance of the Paris Agreement are the NDCs. In expecting the developing south to bring out more ambitious NDCs relating to the mitigation of greenhouse gases and implementing the same effectively, it is equally important on the part of the developed north to raise their scale and quality of climate finance and also make sincere efforts in putting in place a coherent climate finance architecture.
This will ensure adequate, directly accessible and affordable climate finance to the developing countries.
Anwar Sadat teaches international environmental law at the Indian Society of International Law
Published – January 01, 2025 12:08 am IST
