What do we mean by Climate Finance?

It pertains to funding from local, national, or transnational sources—gathered from public, private, and alternative avenues—that aids mitigation and adaptation efforts to tackle climate change.

It is based on the concept of Common But Differentiated Responsibilities (CBDR), acknowledging that wealthy nations should offer financial assistance to those with less means and higher susceptibility.

Plan for Climate Funding

During COP29 in Baku, the international community embraced the Baku to Belém Roadmap (B2B Roadmap) as an element of the New Collective Quantified Goal (NCQG) regarding climate finance.

Its goal is to increase climate finance to $1.3 trillion each year by 2035, a substantial increase from the unfulfilled $100 billion yearly commitment made in 2009.

The polluter-pays principle was formally introduced by the Rio Declaration in 1992.

Why Is Climate Finance Necessary?

Closing the Adaptation Funding Shortfall: Adaptation continues to receive less funding than mitigation efforts.

Financial backing is essential for developing nations to create resilient infrastructure, adopt climate-smart agriculture, and establish early warning systems.

Facilitating Large-Scale Mitigation: Shifting to clean energy, enhancing energy efficiency, and lowering emissions in areas such as transportation and industry require significant investments.

Many developing countries are unable to fulfill their NDCs under the Paris Agreement without climate finance.

Tackling Equity and Justice: Countries that have emitted the most historically must assist those who emitted the least but endure the greatest impacts.

Main Issues

For Emerging Countries:

Sovereignty and Conditionality: Nations like India have expressed worries regarding external conditions attached to the provision of financial support.

The G77 and China group highlighted that climate funding should align with national priorities.

Transition from Provision to Mobilization: India, representing the Like-Minded Developing Countries (LMDCs), reaffirmed that climate finance constitutes a legal duty, rather than an investment prospect.

Imbalance between Adaptation and Mitigation: Although projects focused on mitigation — such as renewable energy — receive more investment, adaptation initiatives continue to lack sufficient funding.

For Advanced Countries:

Broaden Donor Base: Certain developed nations claim that emerging economies such as China and Gulf states ought to help with climate finance, pointing to their economic power.

Dependence on the Private Sector: Wealthy countries are progressively promoting finance driven by the private sector, sparking worries regarding transparency, fairness, and adherence to public interests.

India's Climate Financing Scenario

India's Global Advocacy: India has continually highlighted the legal responsibility of developed countries as outlined in Article 9.1 of the Paris Agreement to supply climate finance.

India has obtained around USD 1.16 billion in climate financing via UN mechanisms – including resources from the Green Climate Fund, Global Environment Facility, and Adaptation Fund.

The majority of India's climate initiatives, such as extensive renewable energy implementation and adaptation projects, are funded by local resources.

India & Adaptation: The Economic Survey 2024–25 emphasizes the creation of a National Adaptation Plan (NAP) and the provision of an Initial Adaptation Communication (IAC) to the UNFCCC. These consist of:

• Agriculture that withstands climate change via better seeds and enhanced soil health.
• Urban adaptation through the National Mission on Sustainable Habitat (NMSH).
• Rejuvenation of water bodies through AMRUT, with more than 3,000 projects sanctioned.