- Recently, the Prime Minister of India COP26 climate summit announced that India will attain net zero emissions by 2070.
- In order to meet these climate targets, countries like India will need approximately USD 1 trillion in additional financing over the next ten years.
- Green financing is to increase the level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities.
- A key part of this is to better manage environmental and social risks, take up opportunities that bring both a decent rate of return and environmental benefit and deliver greater accountability.
Status of Climate Financing:
- Expected Contributions from Developed Countries: Required climate finance from developed countries is to transfer USD 1 trillion annually to developing countries to meet their climate targets.
- Actual Contributions by Developed countries: Through the Cancun Agreements in 2010 developed countries committed to a goal of mobilising jointly USD 100 billion per year by 2020 to address the needs of developing countries.
- However, the Glasgow Climate Pact (COP26) noted that the goal of developed country parties has not yet been met.
- In this regard, the COP26 has requested the Standing Committee on Finance to the United Nations Framework Convention on Climate Change (UNFCCC) to prepare a report in 2022 on progress towards achieving the goal of mobilising USD 100 billion per year to address the needs of developing countries.
Climate Financing in India
- India’s climate actions have so far been largely financed by domestic resources.
- According to India’s Third Biennial Update Report 2021 to the UNFCCC between 2014 and 2019, while the Global Environment Facility and Green Climate Fund has provided grants to a total of only US USD 165.25 million, the corresponding domestic mobilisation amounts to USD1.374 billion.
- Funds for Green Financing: Green financing related to climate change is majorly mobilised from National Clean Energy Fund (NCEF) and National Adaptation Fund (NAF).
- The Government of India also provides funding through eight missions established under the National Action Plan for Climate Change.
- It has established a Climate Change Finance Unit (CCFU) in the Ministry of Finance, which is the nodal agency for all climate change financing matters.
Expanding Scope of Collaboration: Multi-stakeholder partnerships should be promoted to include major actors in financial markets, banks, investors, micro-credit entities, insurance companies along with the public sector.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT