India’s climate finance contributions surpass many developed nations

India emerged as a significant contributor to global climate finance in 2022, providing US$1.28 billion through multilateral development banks (MDBs), surpassing several developed countries, according to a new analysis by the UK-based think tank ODI and the Zurich Climate Resilience Alliance. This report comes amid calls by some developed nations to broaden the donor base for climate finance to include emerging economies like China and Saudi Arabia.

The study highlights that only 12 developed countries met their fair share of international climate finance commitments in 2022. These nations include Norway, France, Luxembourg, Germany, Sweden, Denmark, Switzerland, Japan, the Netherlands, Austria, Belgium, and Finland. Meanwhile, a significant contribution gap was noted, primarily due to the United States not meeting its obligations, with Australia, Spain, Canada, and the United Kingdom also falling short.

The report identifies the top 30 non-Annex II countries that substantially contributed to climate finance for developing countries in 2022. This group includes former transition economies like Poland and Russia, high-income nations like Chile, Kuwait, Saudi Arabia, and South Korea, and populous middle-income countries like Brazil, China, India, Indonesia, Mexico, Nigeria, the Philippines, and Pakistan.

India’s contribution of US$1.287 billion in climate finance was higher than that of developed countries like Greece, Portugal, Ireland, and New Zealand. In contrast, China provided US$2.52 billion, Brazil gave US$1.135 billion, South Korea US$1.13 billion, and Argentina US$1.01 billion through MDBs in 2022.

Under the United Nations Framework Convention on Climate Change (UNFCCC) adopted in 1992, high-income, industrialised countries, referred to as Annex-II countries, are mandated to provide finance and technology to help developing nations mitigate and adapt to climate change. These countries, which include the US, Canada, Japan, Australia, New Zealand, and EU member states, have historically benefited the most from industrialisation and have contributed significantly to greenhouse gas emissions.

In 2009, during COP15 in Copenhagen, developed countries pledged to jointly provide US$100 billion annually by 2020 to support climate action in developing nations. However, this target has not been fully achieved, creating a substantial financial gap that has eroded trust and hindered climate efforts in developing countries.

The Organisation for Economic Cooperation and Development (OECD) reported in May that developed countries had met the US$100 billion-a-year target in 2022, providing nearly US$116 billion, of which about 70% was in the form of loans. The ODI researchers, however, noted that if climate finance were accounted for on grant-equivalent terms, many developed countries would need more progress towards meeting their fair share.

The report calls for introducing a “burden-sharing mechanism” in the New Collective Quantified Goal (NCQG) to clarify each country’s obligations and ensure accountability. The NCQG, to be finalised at this year’s UN climate conference (COP29) in Baku, Azerbaijan, will determine the new, larger amount that developed nations must mobilise annually from 2025 to support climate action in developing countries.

The US$100 billion annual climate-finance goal is a collective commitment by developed countries, which has led to a lack of individual accountability and potentially reduced the total amount of finance provided. A burden-sharing arrangement could strengthen the NCQG by fostering greater accountability and trust among all parties.

Several developing countries, including India, have recently called for such an arrangement to enhance accountability among developed nations and meet climate finance commitments.

Source: Business Insider