Reflections on the Baku COP29 NCQG Outcome

Context

The outcomes of COP29 in Baku concerning the New Collective Quantified Goal (NCQG) for climate finance have drawn criticism for falling short of addressing principles of climate justice and equitable burden-sharing.

Key Takeaways from COP29

1. Origin of NCQG:
   • Conceptualized at COP21, the NCQG builds on the $100 billion annual commitment made during the Cancun Agreements.
2. NCQG Objective:
   • To establish transparent, accountable financial frameworks with clear, ambitious targets for addressing global climate challenges.
3. Incremental Progress:
   • Public resource flows are projected to triple by 2035, yet the pace remains inadequate relative to the urgent need for climate action.
4. Shortfalls:
   • The $300 billion annual commitment falls significantly below the $5-7 trillion required by 2030, as highlighted in the UNFCCC’s Second Needs Determination Report.
   • Limited ambition and lack of transformative measures.
5. Disparity in Burden Sharing:
   • The outcome did not sufficiently address financial inequalities between developed and developing nations.

The Urgent Need for Climate Action

1. Rising Global Temperatures:
   • Current trajectories could lead to a 3.1°C temperature increase, surpassing the IPCC-recommended 1.5°C limit.
2. Visible Impacts:
   • Climate change has already triggered severe environmental and socio-economic consequences worldwide.
3. Emerging Solutions:
   • Cleaner fuels, renewable energy, and advanced technologies offer pathways to mitigation but require focused implementation.

Financing Needs of Developing Nations

1. Cost Barriers:
   • High upfront costs for renewable energy technology make adoption difficult without significant government support.
2. Technological Risks:
   • Uncertainty surrounding evolving green technologies can deter investment and deployment.
3. Competing Priorities:
   • Developing nations face financial constraints due to pressing developmental needs, limiting resources for climate mitigation and adaptation.

Challenges in Climate Finance

1. Inadequate Commitments:
   • Developed nations’ pledged $300 billion annually by 2035 is far below the developing nations’ request for $1.3 trillion annually.
2. Debt Accumulation:
   • Reliance on loans for climate finance increases fiscal debt burdens in developing nations.
3. High Cost of Capital:
   • Developing countries face significantly higher interest rates than OECD nations, hindering access to private finance.

India’s Green Energy Investments

1. Increased Budgetary Support:
   • The Ministry of New and Renewable Energy (MNRE) received its highest allocation of ₹19,100 crore for 2024–25.
2. Subsidies for Electric Mobility:
   • ₹5,790 crore allocated under FAME II to support the adoption of electric vehicles.
3. Promoting Energy Efficiency:
   • ₹40 crore allocated for energy-efficient solutions to reduce energy intensity.

Way Forward

1. Strengthened Global Cooperation:
   • Foster international collaboration while respecting Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) principles.
2. Climate Justice:
   • Prioritize equitable burden-sharing, especially focusing on the needs and challenges of the Global South.
3. Unified Advocacy by Developing Nations:
   • Leverage collective bargaining power to ensure just and fair transitions in global climate agreements.
4. Inclusive and Transformative Financing:
   • Shift from loans to grants and concessional funding mechanisms to ease the financial burden on developing nations.
   • Expand access to affordable capital for clean energy projects.