OECD REPORT ON CLIMATE CHANGE
1. Context
The Organisation for Economic Cooperation and Development (OECD) recently released a report highlighting the shortcomings of economically developed countries in meeting their commitment to mobilize $100 billion annually for climate mitigation and adaptation in developing countries. The report, coming ahead of the COP 28 climate talks, sheds light on the financial contributions of major economies, revealing a gap between promises and actions.
2. About OECD
- The Organisation for Economic Co-operation and Development, often abbreviated as OECD, is an international organization that was established in 1961.
- The OECD is comprised of 38 member countries, primarily from Europe and North America, which cooperate to promote economic growth, improve living standards, and address global challenges.
- The organization serves as a forum for member countries to discuss and coordinate policies, share information, and collaborate on a wide range of economic and social issues.
- The OECD is known for its comprehensive reports, including the OECD Economic Outlook, which provides economic analysis and projections for member countries, and the OECD Better Life Index, which assesses the well-being and quality of life in various countries.
- While the OECD primarily consists of high-income countries, it also collaborates with non-member countries and international organizations to achieve its goals. The organization plays a significant role in shaping international economic and social policies and promoting cooperation among nations.
2.1. Objectives of OECD
- The OECD conducts research and analysis on various economic topics and provides policy recommendations to member countries to support sustainable economic growth
- The organization works to reduce trade barriers and promote trade liberalization among its member countries, contributing to economic integration and cooperation.
- The OECD collects and analyzes data on economic and social trends, allowing member countries to compare their performance and learn from one another.
- The OECD produces reports, recommendations, and guidelines on various policy areas, such as taxation, education, health, environment, and more
- The OECD addresses pressing global challenges, such as climate change, income inequality, and social issues, by providing a platform for cooperation and policy development
3. Significance of the OECD Report
- The OECD comprises primarily rich nations, offering insights into their climate finance approach.
- The report gains prominence as it precedes the COP 28 talks, where climate finance is anticipated to be a crucial point of discussion.
- It also follows the commitment made at COP 26 in 2020, where developed nations pledged to double adaptation finance, acknowledging their failure to meet the $100 billion goal by 2020.
- The OECD report discloses that developed countries, including the U.S., the U.K., Germany, France, Switzerland, and Canada, mobilized $89.6 billion in 2021, falling short of the promised $100 billion.
- Moreover, finance for adaptation efforts experienced a 14% decline compared to the previous year.
4. Challenges in Climate Finance Accounting
- The report reveals that of the $73.1 billion mobilized in 2021 by the public sector, $49.6 billion was provided as loans.
- However, concerns arise as the report does not distinguish between concessional and commercial rates for these loans.
- Critics argue that the report's consideration of loans at face value, without the grant equivalent, may exacerbate debt stress in developing countries.
- A crucial aspect highlighted in the report is the concept of additionality. Developed countries are expected to provide "new and additional" financial resources for climate needs, without diverting funds from existing overseas development assistance (ODA).
- However, instances of double-counting, where countries categorize funding as both ODA and climate finance, raise questions about the adherence to the "new and additional" criterion.
5. Ambiguity in Defining Climate Finance
- The lack of a commonly agreed-upon definition for 'climate finance' allows developed countries to maintain vagueness.
- Efforts to define climate finance at COP 27 and COP 26 faced resistance from developed nations, leading to situations where funding for unrelated projects, such as chocolate stores and hotel expansions, could be labelled as climate finance.
- While the OECD report suggests that the $100 billion goal might have been met in 2022, scepticism arises due to the lack of finalized and published data.
- The figure of $100 billion, set at COP 15, lacks a comprehensive assessment of developing countries' actual climate investment needs.
- The report estimates that, by 2025, developing countries will require around $1 trillion annually in climate investments, emphasizing the shortfall in meeting these requirements.
- Despite the emphasis on the private sector's role by figures like U.S. climate envoy John Kerry and World Bank president Ajay Banga, the OECD report reveals that private financing for climate action has stagnated for a decade.
- The private sector's reluctance to scale up climate investments, particularly in adaptation, poses challenges, emphasizing the primary responsibility of public funding from governments and multilateral development banks.
6. Conclusion
The OECD report serves as a critical evaluation of the commitments and challenges in climate finance, providing a reality check on the actions of developed nations. As discussions on climate finance intensify at COP 28, the report underscores the importance of transparency, clarity in definitions, and increased efforts to bridge the financial gap for effective climate mitigation and adaptation in developing countries.
|
For Prelims: OECD, COP 27, COP 26, COP28, climate finance, overseas development assistance
For Mains:
1. Evaluate the effectiveness of the current approach to climate finance, highlighting the challenges and potential solutions in ensuring that developed countries fulfil their commitments. (250 Words)
|
|
Previous Year Questions 1. Consider the following statements with reference to Organisation for Economic Co-operation and Development (OECD): (RBI Grade B 2022) 1. OECD is an official Permanent observer to the United Nations and is referred to as a think-tank or as a monitoring group.
2. India is not a member of OECD.
3. OECD is funded by its member countries.
Which of the statement given above is/ are correct? A.1 only B.1 and 2 only C.2 and 3 only D.1, 2 and 3 E.2 only Answer: D 2. Which one of the following is associated with the issue of control and phasing out of the use of ozone-depleting substance? (UPSC CSE 2015) A.Bretton woods conference
B. Montreal Protocol
C. Kyoto Protocol
D. Nagoya Protocol
Answer: B
3. Headquarters of the World Meteorological Organization is located in (NDA 2017)
A. Washington
B. Geneva
C. Moscow
D. London
Answer: B
4. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answer: B
5. A new type of El Nino called El Nino Modoki appeared in the news. In this context, consider the following statements: (UPSC 2010)
1. Normal El Nino forms in the Central Pacific ocean whereas El Nino Modoki forms in the Eastern Pacific ocean.
2. Normal El Nino results in diminished hurricanes in the Atlantic ocean but El Nino Modoki results in a greater number of hurricanes with greater frequency.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: B
6. La Nina is suspected to have caused recent floods in Australia. How is La Nina different from El Nino? (UPSC 2011)
1. La Nina is characterized by unusually cold ocean temperature in the equatorial Indian Ocean whereas El Nino is characterized by unusually warm ocean temperature in the equatorial Pacific Ocean.
2. El Nino has an adverse effect on the south-west monsoon of India, but La Nina has no effect on the monsoon climate.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: D
7. Consider the following statements: (MPSC 2017)
a. La Nina is a little girl.
b. During the time of La Nina cold water in the ocean rises to the surface.
c. La Nina strengthens the Indian monsoon.
d. During the time of El Nino, trade winds weaken, and warm water moves east in the ocean. Which of the above statements is/are correct?
A. Only a and b B. a, b and c C. Only b and c D. All of the above
Answer: D
8. Which of the following statements regarding 'Green Climate Fund' is/are correct? (UPSC 2015)
1. It is intended to assist the developing countries in adaptation and mitigation practices to counter climate change.
2. It is founded under the aegis of UNEP, OECS, Asian Development Bank and World Bank. Select the correct answer using the code given below.
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: A
9. In the context of any country, which one of the following would be considered as part of its social capital? (UPSC 2019)
A. The proportion of literature in the population
B. The stock of its buildings, other infrastructure and machines
C. The size of population in the working age group
D. The level of mutual trust and harmony in the society
Answer: D
10. The International Development Association, a lending agency, is administered by the (UPSC 2010)
A. International Bank for Reconstruction and Development
B. International Fund for Development
C. United Nations Development Programme.
D. United Nations Industrial Development Organization
Answer: A
Mains
1. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (UPSC 2021)
|
Source: The Hindu
