India Beats Developed Nations In Climate Finance Amid Calls For Broader Donor Base

India contributed an impressive $1.28 billion in climate finance through multilateral development banks (MDBs) in 2022, surpassing the contributions of several developed nations, according to a recent analysis by the UK-based think tank ODI and the Zurich Climate Resilience Alliance. 

The report highlights a growing push by some developed nations to expand the donor base for climate finance to include major developing countries like China and Saudi Arabia. 

Despite the 2009 COP15 pledge by developed nations to jointly provide $100 billion annually by 2020 to help developing countries combat and adapt to climate change, this target has yet to be fully met, leading to a substantial shortfall. The report revealed that only 12 developed nations contributed their fair share in 2022, including Norway, France, Germany, and Japan. Major economies such as the United States, Australia, Spain, and the United Kingdom fell short in their contributions, creating a significant gap in climate finance. 

The analysis also identified 30 non-Annex II countries, including India, China, Brazil, and South Korea, that made significant contributions to climate finance. India’s $1.28 billion contribution outstripped those of several developed nations, such as Greece ($0.23 billion) and New Zealand ($0.27 billion). China led the developing countries, contributing $2.52 billion in 2022. 

The UN Framework Convention on Climate Change (UNFCCC), adopted in 1992, requires high-income, industrialised nations, known as Annex-II countries, to provide financial and technological support to developing nations in their climate efforts. Despite their responsibility, many of these countries have failed to meet their commitments. 

A recent claim by the Organisation for Economic Cooperation and Development (OECD) suggested that developed nations met the $100 billion target in 2022, providing nearly $116 billion in climate finance.

However, nearly 70 percent of these funds were distributed as loans, raising questions about their true fiscal impact. 

ODI researchers stressed the need for more transparency, noting that many developed nations would fall short of their fair share if their contributions were assessed based on grant-equivalence terms, which account for actual fiscal effort. They called for the inclusion of a “burden-sharing mechanism” in the New Collective Quantified Goal (NCQG), set to be finalised at COP29 in Baku, Azerbaijan, this November. This mechanism would hold developed nations more accountable for their individual climate finance obligations. 

As the world looks ahead to COP29, developing nations, including India, are advocating for this new arrangement to enhance transparency and accountability, ensuring that developed countries meet their climate finance commitments and build trust in global climate action efforts.