By Shravani Survase (MPA candidate, School of International and Public Affairs, Columbia University) and Ritesh Deokar (MPP candidate, Harvard Kennedy School, Harvard University)
The entire world had their eyes set on the happenings in the recently held Conference Of Parties (COP) 29 at Baku, Azerbaijan. Also dubbed as the Finance COP, it was looked at as an opportunity to finalize a new goal on finance under the Paris Agreement, called the New Cumulative Quantitative Goal (NCQG). While this UN Climate Conference did triple the finance to developing countries from the previous goal of USD 100 billion annually, to USD 300 billion annually by 2035, it was far from the expected and estimated requirement of USD 1.3 trillion. With the devastating impacts of climate change disproportionately affecting the vulnerable population of the developing countries and the Small Island Developing states (SIDS), this posed a severe blow to the hopes and aspirations of the Global South. As a champion of climate justice, India has expressed a strong opposition to this finance deal and has rejected it for its financial inadequacy and its intent in disproportionately placing the burden for supporting the adaptation and mitigation of the effects of Climate Change on the Global South.
Climate Crisis Unveiled: As the world has seen, more so in recent times, climate change has had an unusually large impact on India and the Global South. This is rightly highlighted in the World Bank report of 2023 that even though the 74 lowest income countries emit merely 1/10th of the world’s greenhouse gases, they experienced 8 times as many natural disasters in the past decade compared to other countries. From the rising sea level and increasing frequency and intensity of extreme climate events (like droughts and cyclones) to forced displacements, widening inequalities and GDP losses, the effects are manifold and even more magnified in the SIDS. According to a World Bank review, climate change will push an additional 50 million people into poverty by 2055 compared to 2005 levels. These devastating effects thus make it sine qua non for immediate, inclusive and large-scale interventions to combat climate change. Climate Finance is a fundamental and important enabler for these solutions, and recent betrayal by the developed countries despite having a moral responsibility for the historical emissions has left the Global South bereft of the tools and capabilities to deal not just with the environmental issues but support the very survival and protection of their vulnerable population. In these challenging times, there is a need for collaboration amongst nations to look within and support each other.
The India Way: India has been spearheading innovations to cruise through the challenge of the hour. As a testament, India has achieved its emissions intensity-related target for 2030 in 2019, 11 years in advance. The National Adaptation Plan on Climate Change (NAPCC) has planned and implemented climate change mitigation efforts on a mission-mode. Along with the promotion of green bonds, the nation has decentralized mitigation measures by making citizens a part of the solution, through Mission LIFE : a mass movement towards a sustainable lifestyle. To bolster this Mission, the government has been incentivising climate-friendly actions of individuals, private companies, and communities using green credits as rewards. Moreover, missions spearheaded by India like Startup India and International Solar Alliance have mobilised and encouraged innovation and action-oriented climate initiatives in the past. This proves credibility and capability of India to form and lead initiatives while being at the forefront. Taking insights and learnings from these missions, collaborations with Like Minded Developing Countries (LMDCs) should be formulated to support startups in the green technology sector. India has achieved commendable strides in renewables and Indian technology has the potential to provide not just efficient but affordable clean energy to all the other developing nations.
Need for innovative finance mechanisms: A major hurdle for the national efforts for most of these countries is inadequate access to finance and cutting-edge technologies that can accelerate the mitigation efforts. The financing from developed countries through the COP agreement was supposed to overcome this hurdle, but with a weaker commitment deal at the COP29, the Global South should look for alternate avenues for climate finance. One of the potential solutions being talked about is blended finance through a collaboration among multilateral development banks (MDBs), government and private sector investment. Although in its root stage, this participatory approach of financing, if adequately reinforced, has the potential to bridge the climate finance gap. Secondly, by integrating ESG principles into existing capital flows, countries can effectively redirect the capital for climate related initiatives. ESG-focused investments have proven to yield not just financial returns but also align with environmental and social ethics, which is the need of the hour. The private sector can contribute to this by encouraging ESG reporting of businesses, issuing use of proceeds green bonds, or sustainability-linked bonds. The consensus reached at COP29 on standards for a centralised carbon market will accelerate the accessibility and availability of climate-financing mechanisms for the developing and the Least Developed Countries (LDCs).
Reforming the COP: The successive failure of COP to achieve the necessary agreement highlights the need for a renewed vigour, trust and necessary change of perspective. The UNFCCC can learn through cross-sectoral comparison with successful conventions like the Montreal Protocol. The Montreal Protocol has been one of the most successful treaties to be negotiated and implemented. It was ratified by all UN members with an aim to phase out harmful ozone-depleting substances, and entered into force in 1989. Most of the countries were able to meet the phase-out mark for different substances by their respective deadlines, and the ozone layer is thus expected to return to its adequate 1980 levels sometime between 2045 and 2060.
Taking lessons from Montreal Protocol, the UNFCCC can reform its structure and culture by a series of changes. Firstly, there is a need for inclusion of binding trade provisions in the agreement. For example, limiting the trade of carbon credit amongst businesses and countries to only the NDC-compliant signatories will increase ratification. Secondly, there is a need to build trust amongst parties through transparency and confidence-building measures. The focus on transparent climate reporting and #Together4Transparency initiative at COP29 is a step in the right direction. Lastly, use of incentives to collaborate and deterrence to impediment can help reduce friction amongst conflicting parties. Negotiations are successful when the Best Alternative to a Negotiated Agreement (BATNA) is weak and the stakes to walk out are high. Thus, use of incentives helps increase the legitimacy and necessity of the current negotiation process.
Way Forward: While it is evident that the needs of the Global South remain unfulfilled, the annual COP mechanism has provided a platform to the nations to voice their concerns and demands. It has allowed the nations to innovate and work closely with each other. By rejecting the deal, India has given a voice to the Global South and has strongly advocated for fairer climate agreements. Sustainable and Green initiatives by India in the form of International Solar Alliance (ISA) and Coalition for Disaster Resilient Infrastructure (CDRI) have time and again proven India’s leadership and action-oriented capabilities at the global stage. The current apprehension of the deal at the apparent Finance COP (COP 29) is a step further in this direction where along with advocating green diplomacy, India is emphasizing the need for equitable climate action that balances development priorities with sustainability goals. With no one else but the nations fending for themselves and their citizens, COP 29 is a strong indication to reduce financial dependency on the Global North and leverage various innovative financial mechanisms to make their way through this climatic catastrophe. While COP 30 ‘looks’ promising, Global South must be ready to take it with a pinch of salt and look beyond!
