As COP28 (28th Conference of the Parties) plays out in Dubai, one of the areas of focus is the key role of climate financing in the global warming war. This important event signifies a noteworthy moment for India since it has attracted attention as a crucial climate action player.
India has an excellent opportunity to address the multidimensional hurdles of climate finance, simultaneously highlighting its progress and strategies in this critical area. The approach and contributions of India will be closely monitored by the global community at this conference because the country has major climate goals as a leading developing economy.
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Funding Gap and Potential Solutions
The climate change battle requires massive financial commitments. As per various estimates, the worldwide transition to net zero needs about $275 Trillion over 27 years at about $10 Trillion/year (which is over 10% of global GDP/year). Besides scale, the challenge is that this requires accelerated deployment across multiple fronts in order to address this gigaton challenge.
India will be at a crossroads at COP28. The country has already highlighted its commitment to sustainable development through noteworthy initiatives such as the National Clean Energy Fund and the National Adaptation Fund for Climate Change.
India’s laudable efforts now face a formidable financial reality due to a huge funding gap in its climate change campaign. Given the resources currently available, the stupendous estimate of INR 118 trillion by the Climate Finance Working Group emphasises the tremendous shortfall that exists in undertaking comprehensive climate action. The shortfall underscores the sheer scale of the funding challenge and the urgent need for novel financing solutions backed by global cooperation in bridging this immense gap.
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For this, India needs to tap several financial options. Accordingly, commercial banks and development financial institutions are vital for raising funds locally and channelling overseas resources. Besides, corporations in India should innovate to boost the carbon market. The measures may include a cap-and-trade system for carbon credits that has been found to be effective in a few other regions in the past. This would need to be carefully executed with the ability to closely monitor and refine the framework to ensure the desired overall outcome.
India’s Decisive Options and Opportunity
Meanwhile, as the 2023 G20 Summit host, India holds a distinct opportunity to influence global climate finance measures. As G20 nations contribute to more than 80% of worldwide emissions, the country’s leadership can be influential in shaping climate finance strategies. Cognisant of the soaring costs of combating and adapting to climate change, India may need to advocate a revised global climate change finance target.
For India and the world at large, COP28 is a pivotal platform for global climate financing collaboration. To combat climate challenges, proactive engagement and collaboration across developed and emerging economies is crucial. These efforts would require the developed countries fulfil their financial pledges and explore changes in the international financial ecosystem.
Some of the areas in which more work can be done are –
Carbon pricing
Mobilizing development banks and private finance for better climate action support
Aligning goals across nations – especially the developing nations
Access and equitable distribution of funds - especially in the case of vulnerable groups.
Simplified access to finance so developing nations are not left behind during the global transition.
Increased focus on supporting technology and innovation to address climate finance hurdles.
Initiatives to encourage energy efficiency, investments in renewables, and promoting sustainable practices across industries.
Building a supportive ambience for climate finance measures via public awareness and engagement.
Campaigns to inform people about their role in supporting mitigation efforts.
India’s participation in COP28 offers the country an opportunity to share its unique challenges and strategies which can help shape global policies. Discussions at the COP28 could help define climate finance initiatives, which will be instrumental in fulfilling the Paris Agreement objectives. Considering its overall experience and steadfast commitment to climate action, India could emerge as the driving force in these global efforts.
