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UNEP Emissions Gap Report Shows Why India Should Fight for Affordable Climate Finance at COP28

The vast contrast between the current trajectory and the Paris Agreement goals highlights the failure of rich countries to meet their climate commitments, experts say.
Representative image. Photo: Marcin Jozwiak/Pexels

Kolkata: The world is on track for temperatures to rise far beyond the agreed climate goals during this century, said the United Nations Environment Programme (UNEP)’s Emissions Gap Report (EGR) released on Monday, while calling for “immediate and deep emission cuts.”

The report acknowledged the uneven cumulative historical responsibilities in causing global warming, and the disproportionately higher risk faced by countries least responsible for the climatic changes, and called for scaling up of international financial assistance.

“Low- and lower-middle-income countries are in the greatest need of affordable finance,” said the report. India, which is listed India among lower-middle-income countries, “faces the challenge of mobilising investment to achieve its ambitious clean energy transition plans,” it pointed out.

The report says that the global greenhouse gas emissions “must be reduced” by 28-42%, compared to where they are headed under policies currently in place, to be able to limit global warming to well below 2.0°C and 1.5°C, respectively, from pre-industrial level.

“Due to the failure to stringently reduce emissions in high-income countries – which bear the greatest responsibility for past emissions – and to limit emissions growth in low- and middle-income countries, which account for the majority of current emissions, unprecedented action is now needed by all countries,” the report said.

It suggested that the situation warranted high-income countries to further accelerate domestic emissions reductions, committing to reaching net zero emissions as soon as possible, and at the same time providing financial and technical support to low- and middle-income countries.

“Countries with greater capacity and responsibility for emissions will need to take more ambitious action and provide financial and technical support to developing nations,” said the report.

For low- and middle-income countries, the situation requires that pressing development needs must be met alongside a transition away from fossil fuels.

However, the report also pointed out that low and lower-middle-income countries are already saddled with debt and receive disproportionately low clean energy investments. Besides, they are more vulnerable to volatile fossil fuel markets either as exporters or importers and may face future stranded fossil fuel assets.

“International financial assistance will have to be significantly scaled up, with new public and private sources of capital restructured through financing mechanisms that lower costs of capital. These include debt financing, long-term concessional finance, guarantees, and catalytic finance,” the EGR said.

It suggested that the coming edition of the global climate summit, known as COP28, scheduled to be held in Dubai from November 30, “should ensure that international support is provided for the development of such ambitious roadmaps.”

The EGR also acknowledged the massive challenges that India faces in the low-carbon transition due to the deep coal economy. Major coal producers like China, India, and South Africa, “face the risk of stranded assets, large-scale unemployment and energy insecurity if coal is rapidly phased down,” it warned.

Global climate financing mainly involves funding mitigation (transition to the low-emission economy) initiatives, adaptation and resilience-building measures, and covering for the loss and damages suffered by poorer countries.

According to Article 9 of the 2015 Paris Agreement, developed country parties are to provide financial resources to assist developing country parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention. The aspect of loss and damage was recognised during the 2022 edition of the climate summit, referred to as COP27.

Funding on all these aspects is scheduled to be discussed during COP28. India environment minister Bhupendra Yadav had raised the issue of lack of accessible climate finance during COP 27 and said that the commitment made by the developed countries “was a meager amount and remains unachieved.”

India is expected to raise the issue of funding during COP 28 as well.

Also Read | Urgent Need for Higher Climate Action to Limit Global Warming: UNEP Report

The funding challenge

India has a unique space in this whole discussion about cutting emissions and access to necessary funding. It is among the world’s “big emitters” currently but has a significantly low historical responsibility compared to its population and its per capita emission stands less than half the global average.

Among the G20 countries – which as a group accounts for three-quarters of current global emissions – India has the lowest per capita emission, but is also projected to record the highest increase in per capita emission till 2030. At the same time, India faces a high level of vulnerability to erratic climatic patterns, including floods, droughts, other natural disasters, and crop loss.

All these aspects make India’s requirement for international financial assistance towards adaptation and mitigation all the more just, experts told The Wire.

According to Harjeet Singh, head of global political strategy at Climate Action Network International, a global network of more than 1,900 civil society organisations, the EGR certainly strengthens India’s case for greater access to international funding for necessary adaptation and mitigation measures.

“The EGR shows again that India’s climate action funding requirement is disproportionately higher than its contribution to global warming. Data from past reports showed that about 85% of India’s green finance has been domestic. Despite showing a significant interest in taking climate-friendly measures, India has mostly been on its own in meeting its commitments,” Singh told The Wire.

The vast contrast between the current trajectory and the Paris Agreement goals – as revealed in the EGR – highlights the failure of rich countries to meet their climate commitments, he argued. Developed countries “have not only fallen short in reducing emissions but also in providing essential financial support to nations most vulnerable to climate impacts,” Singh said.

According to Dhruba Purkayastha, India-director of the US-headquartered Climate Policy Initiative, an analysis and advisory organisation with expertise in finance and policy, the EGR reiterates what has been said time and again that the world is not on track for 1.5°C.

“The same holds true for both developed and developing countries but the problem is bigger for developing countries including India. Developing countries need much more global concessional finance than what is contributed to at present,” he told The Wire.

He pointed out that with the increasing frequency and severity of climate-related events and disasters in India, adaptation is its greater priority. There are other sustainable development goals, such as poverty and hunger reduction, education, social and environmental protection and healthcare, which are not always aligned with climate goals.

According to Purkayastha, given India’s critical importance for the world to meet its climate goals, it is important for the world to get a low carbon transition in India right, as India would continue to grow and so would emissions.

“Unless there is a mechanism to pay for incremental carbon emissions mitigated, and paid for through some institutional form of bilateral ‘sovereign to sovereign’ funding as provided under Article 6.2 of the Paris Agreement, it is unlikely that absolute carbon emissions would see any reduction in the near future in India,” he said.

Singh also thinks that though the recently released draft for the loss and damage funding arrangement makes India eligible to be a recipient, India should not be at the forefront of receiving money from this fund.

“Smaller and poorer countries, contributing minimally to global warming and with limited resources to combat severe impacts, need the loss and damage finance more than India does,” Singh said.

Aarti Khosla, director at Climate Trends, a New Delhi-based research, consultancy, and capacity-building initiative, agreed. “In comparison to many other least developed countries, India’s economic range doesn’t make it the first qualifier for loss and damage fund,” she said, adding that India’s main requirement is public investments in adaptation and mitigation measures.

“India needs public funds big time. It could be multilateral banks investing in clean projects, or other instruments like sovereign wealth funds. Technology will be there if finance is available,” said Khosla.

COP28 president Sultan al Jaber. Photo: Twitter/@AtlanticCouncil

Leadership role at COP28

Purkayastha also thinks that India’s role in COP 28 should not be limited to seeking funds for itself alone but play a leadership role for the Global South – the developing countries – all of which require access to concessional funds for the clean energy transition.

“India negotiating concessional financing for the global south is important,” Purkayastha said, adding that there is a need for a global institutional system to socialise the cost of capital, availability of data and information, and transfer of climate technology for emissions reduction as a global public good.

In this process, India (the outgoing G20 presidency) and other large developing countries like Brazil (incoming G20 presidency) could play an anchor role, he said. “There should be a settlement of Article 6.2 of the Paris Agreement and it should be finalised who pays for the emission reduction that India, Indonesia, or South Africa does.”

He said that leaving the financing aspect on the carbon market is not working and it is unlikely that carbon markets would play any significant role, except for a few specific countries/projects. “It needs to be done through bilateral systems and India could push for the same,” said Purkayastha.

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