Climate Financing

By: Staff Reporter
Financing climate change is an effort to help countries especially the developing ones to cope with the challenges of global warming. Developed countries have the onerous responsibility to provide sufficient funds in order to equip the poorer nations to mitigate climate change.
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Climate change is the single greatest threat to development – making the battle to overcome poverty ever harder and more expensive. Finance is urgently needed to assist vulnerable communities adapt to a changing climate. Significant financial resources will be needed to help developing countries deal adequately with warming trends, both to reduce greenhouse gas emissions and to adapt to the consequences of climate change. At the climate conferences in Copenhagen (2009) and Cancún (2010), the European Union and other developed countries pledged jointly to provide nearly 30 billion USD in fast start finance over the years 2010-2012, and for the longer term, to mobilise USD 100 billion a year by 2020.

A beginning was made towards climate financing through the Copenhagen Accord and there was progress, even if limited. The Accord proposed the establishment of a ‘Copenhagen Green Climate Fund’ and included a loose pledge from rich countries to ‘mobilise’ the requisite fund. The UN Secretary General convened a High Level Advisory Group on Climate Financing (AGF) to recommend – ahead of the UN climate meeting in Mexico in December 2010 – how the money could be raised.

Last year the World Bank estimated the costs of adaptation in poor countries which were 75–100 billion USD per year if global warming was kept to a reasonable limit. The non-binding pledges from rich countries to cut emissions offered since Copenhagen would steer a course towards a catastrophic rise in temperature. Mitigating climate change is not only about how much rich countries cut their emissions, but also how they help developing countries curb theirs. Emerging economies and poorer countries must now pursue more expensive development paths than the ones rich countries followed. More money will be needed to meet the extra costs of clean development in developing countries.

Climate finance is about more than compensating developing countries for the costs imposed on them by a problem they did not create. It is an investment between rich and poor countries for a common future. Rich countries cannot only fight climate change at home and win. In the current economic climate the sums required appear daunting, but they are well within the realms of possibility. It is entirely feasible for rich countries to raise hundreds of billions of dollars in public finance each year, through innovative mechanisms i.e. to bring a package of climate finance sources on-stream by 2013, worth at least 100 billion USD a year, to help poor people cope with climate change.

 

Expectations from India

India being a developing country is categorised as a non-Annex 1 in the international climate negotiations which means that presently India is not expected to take up any legally binding commitments for countering climate change. However, India has voluntarily committed itself to reducing its emissions intensity by 20-25 percent of its 2005 levels by 2020.

Endnote

Lack of funding is a large impediment to implementing adaptation plans. The scale and magnitude of the financial support required by the developing countries to enhance their domestic mitigation and adaptation actions are a matter of intense debate in the multilateral negotiations under the United Nations Framework Convention for Combating Climate Change (UNFCCC). The Convention squarely puts the responsibility for the provision of financial support on the developed countries taking into account their contribution to the stock of greenhouse gases (GHGs) in the atmosphere.

Countries like India that are on the path of development would need access to finance and technology if the world is to achieve emission standards in line with stabilisation and sustainable goals. The UNFCCC has estimated a requirement of 200-210 billion USD in additional annual investment in 2030 to return GHG emissions to current levels. India on behalf of the developing countries have been arguing that a global mechanism for generating and accounting for additional resources, mainly from public sources is essential in order to meet the long term finance requirements for adaptation and mitigation. India strongly feels that there should be a multilateral financial mechanism under the Convention that should be set up with resources provided by developed countries on the basis of assessed contributions.

Inputs from European Commission: Climate Action; www. oxfam.org; www.unfccc.int; Economic Survey 2011-12

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