Funding the energy transition: India’s G20 presidency must follow lessons from COP27

Subject: Environment

The V20 group:

The Vulnerable Twenty (V20) Group was established with the inaugural meeting of the V20 Ministers of Finance of the Climate Vulnerable Forum chaired by the Philippines, on 08 October 2015 in Lima, Peru in conjunction with the 2015 Annual Meetings of the World Bank Group and International Monetary Fund.
It is a dedicated cooperation initiative of economies systemically vulnerable to climate change.
Currently, Marshall islands hold the presidency since 2018.
Background:
- The call to create the V20 (group of 58 countries) originated from the Climate Vulnerable Forum’s Costa Rica Action Plan (2013-2015) in a major effort to strengthen economic and financial responses to climate change.
- It foresaw a high-level policy dialogue pertaining to action on climate change and the promotion of climate resilient and low-emission development with full competence for addressing economic and financial issues beyond the remit of any one organization.

Green Climate Fund (GCF):

The GCF was set up in 2010 under the UNFCCC’s financial mechanism to channel funding from developed countries to developing countries to allow them to mitigate climate change and also adapt to disruptions arising from a changing climate.

How it helps?

The Green Climate Fund will support projects, programmes, policies and other activities in developing country Parties using thematic funding windows.
It is intended to be the centrepiece of efforts to raise Climate Finance of $100 billion a year by 2020.
The Fund will promote the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change.
The Fund will strive to maximize the impact of its funding for adaptation and mitigation, and seek a balance between the two, while promoting environmental, social, economic and development co-benefits and taking a gender-sensitive approach.

Who will govern the Fund?

The Fund is governed and supervised by a Board that will have full responsibility for funding decisions and that receives the guidance of the Conference of Parties (COP).
The Fund is accountable to and functions under the guidance of, the COP.

What are carbon border taxes-

The carbon border tax involves imposing an import duty on a product manufactured in a country with more lax climate rules than the one buying it.
Carbon Border Adjustment mechanism (CBAM):
- The Carbon Border Adjustment Mechanism is a plan from the European Union (EU) to tax carbon-intensive products, such as iron and steel, cement, fertiliser, aluminium and electricity generation, from 2026.
- The CBAM will equalise the price of carbon between domestic products and imports and ensure that the EU’s climate objectives are not undermined by production relocating to countries with less ambitious policies.