Finance deadlock pushes COP29 to the brink of failure

  • November 24, 2024
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Finance deadlock pushes COP29 to the brink of failure

Sub: Env

Sec : Int convention

Context:

  • COP29 Finalizes the New Collective Quantified Goal (NCQG) on climate finance, replacing the $100 billion per year target under the Paris Agreement.
  • Progress:
    • The proposed NCQG increased from $250 billion to $300 billion annually (by 2035).
    • Developing countries demand $1.3 trillion annually by 2035, citing historical emissions and per capita GDP disparities.
    • A sharp divide persists between developed and developing nations.

Major Agreements Reached

  • Carbon Markets:
    • UN-supervised global carbon trading market under Article 6 of the Paris Agreement.
    • Carbon credits to be traded bilaterally (Art. 6.2) or globally (Art. 6.4).
    • India sees this as an opportunity to strengthen its domestic carbon-trading market.

Key Developments in Climate Finance

  • Finance Mobilization:
    • Commitment to triple climate finance through Adaptation Fund, Special Climate Fund, and LDC Fund.
    • Plan to channel $300 billion via bilateral and multilateral institutions to mobilize the $1.3 trillion target.
  • Focus Areas:
    • Increasing grant financing and improving accessibility for eligible countries.
    • Periodic reviews of fund allocations and utilization.

Controversial Trade Measures

  • China’s Petition:
    • Proposed discussion on “unilateral restrictive trade measures” like the EU’s Carbon Border Adjustment Mechanism (CBAM).
    • CBAM imposes taxes on non-compliant imports and is set to fully implement by 2026.

Key Takeaways from COP29

  • Developing countries remain firm on equitable finance contributions and grant-based funding.
  • Developed countries emphasize shared responsibilities and leveraging diverse funding sources.
  • Agreements on carbon markets and partial commitments to climate finance signal incremental progress.

Adaptation Fund:

  • The Adaptation Fund was established in 2001 to finance concrete adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change.
  • The Adaptation Fund is financed with a share of proceeds from the clean development mechanism (CDM) project activities and other sources of funding. The share of proceeds amounts to 2 per cent of certified emission reductions (CERs) issued for a CDM project activity.
  • The Adaptation Fund is supervised and managed by the Adaptation Fund Board (AFB). The AFB is composed of 16 members and 16 alternates and meets at least twice a year (Membership of the AFB).

Special Climate Change Fund (SCCF):

  • The Special Climate Change Fund, one of the world’s first multilateral climate adaptation finance instruments, was created at the 2001 Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) to help vulnerable nations in addressing these negative impacts of climate change.
  • The SCCF is managed by the GEF and operates in parallel with the Least Developed Countries Fund (LDCF). Both funds have a mandate to serve the Paris Agreement.

Special Climate Change Fund – Objectives

  • The primary objective of SCCF’s funding is to help developing nations take adaptation measures.
  • Additionally, though to a much lesser extent, SCCF also supports technology transfer and mitigation in particular industries.
  • The three strategic goals for the SCCF are as follows in accordance with the GEF Programming Strategy:
  1. By using innovation and technology transfer to adapt to climate change, decrease vulnerability and boost resilience.
  2. To mainstream resilience to climate change and adaptation for systemic impact.
  3. To encourage the creation of favorable conditions for coordinated and efficient climate change adaptation.

Least Developed Countries Fund (LDCF):

  • Came in 2001.
  • The LDCF, along with the Special Climate Change Fund (SCCF), is mandated to serve the Paris Agreement.
  • The Least Developed Countries Fund (LDCF) is a critical mechanism under the UN Framework Convention on Climate Change (UNFCCC) to support climate resilience in Least Developed Countries (LDCs).
  • It is operated by the Global Enivornment Facility (GEF).

Objectives of LDCF

  • Strengthening resilience: Helps LDCs prepare for a more resilient future by addressing short-, medium-, and long-term climate change vulnerabilities.
  • Reducing climate vulnerability: Focuses on priority sectors and ecosystems most affected by climate change.

Key Functions of LDCF

  • Support for National Plans:
    • Implements National Adaptation Programs of Action (NAPAs): Country-specific strategies to address urgent adaptation needs.
    • Supports National Adaptation Plans (NAPs): Comprehensive plans to address long-term adaptation goals.
    • Aligns with the LDC work program under UNFCCC.
  • Building capacity and enabling policies:
    • Bolsters technical and institutional capacity at national and local levels.
    • Creates a policy environment conducive to adaptation investments.
    • Reduces systemic barriers and promotes innovation and private sector engagement.

Source: TH

Environment Finance deadlock pushes COP29 to the brink of failure