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Critical Topics and Their Significance for the UPSC CSE Examination on October 22, 2024

Daily Insights and Initiatives for UPSC Exam Notes: Comprehensive explanations and high-quality material provided regularly for students

On climate finance to developing nations

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS III - Environment & Ecology

Context:

The 29th Conference of the Parties (COP29) of the UNFCC to be held in Baku, Azerbaijan, from November 11 to 22 is expected to be a “finance COP” as key climate finance issues feature at the top of its agenda.

Read about:

What is Climate Financing?

Are Developing Countries at Risk?

Key takeaways:

• The upcoming 29th UNFCCC Conference (COP29), scheduled for November 11-22 in Baku, Azerbaijan, will primarily focus on financial aspects of climate action, making it a key summit for discussing monetary support for climate initiatives.
• The impact of climate change disproportionately affects developing nations, primarily due to their geographic locations and their economic dependence on climate-sensitive sectors like farming.
• These nations face a paradoxical situation - while they've historically contributed minimal greenhouse gas emissions (developed nations account for 57% of emissions since 1850 despite smaller populations), they face the greatest climate challenges.
• This reality led to the Copenhagen Accord's commitment in 2009, where developed nations promised annual climate funding of $100 billion to developing countries through 2025. At COP29, participants will discuss new funding targets for subsequent years.
• Climate finance encompasses any funding - whether local, international, public, or private - directed toward reducing emissions or adapting to climate impacts.
• While the OECD monitors and reports on climate funding flows between developed and developing nations, their methodology faces criticism. Critics argue that the reports should focus on actual money transferred rather than promises, ensure funding is truly additional rather than relabeled existing aid, and emphasize grants over commercial loans. Currently, loans make up about 69.4% of climate finance, with grants comprising 28%.
• The necessity for external climate funding in developing nations is clear. Consider that 675 million people in developing regions lacked electricity access in 2021.
• These nations also struggle with limited domestic financial resources and higher capital costs - for instance, financing solar projects typically costs twice as much in developing versus developed economies.
• Looking at India specifically, the country has established ambitious climate goals for 2030, including 500 GW of non-fossil fuel power generation, 5 million metric tonnes of annual green hydrogen production, and widespread electric vehicle adoption.
• Meeting these objectives requires substantial investment - approximately ₹16.8 lakh crore for renewable energy targets alone. The green hydrogen initiative needs ₹8 lakh crore, while electric vehicle transitions may require consumer spending of around ₹16 lakh crore. Long-term projections suggest India needs ₹850 lakh crore in investments to achieve net-zero emissions by 2070.
• Regarding the New Collective Quantified Goal (NCQG), experts emphasize it should track actual disbursements rather than pledges, ensure funding is additional to existing aid, prioritize direct public grants, and include private investments motivated by public funding initiatives. According to expert analysis, developi