G20 Summit: Big push towards achieving net zero

Subject: Environment

Section: International Conventions

In News: G20 summit held under India’s Presidency has been significant for the global fight against climate change.

Key Points:

The G20 estimated the need for $5.8-5.9 trillion before 2030 to achieve climate goals and an additional $4 trillion per annum to touch net zero by 2050.
The Delhi Summit obtained a commitment from developed countries on increasing low-cost financing and reiterated the $100-billion commitment from developed countries starting 2023 and then scaling it up.
The G20’s 2023 action plan to accelerate SDGs (Sustainable Development Goals) will spearhead the future direction.

G-20 Leader’s Declaration:

For the first time formally recognises the quantum jump in finance necessary for the world to transition to a renewable energy economy.
The Declaration recognises the need to reduce global greenhouse gas emissions by 43% by 2030 (relative to 2019 levels) and notes that global peaking must occur before 2025.
Encourages tripling of renewable energy capacity by 2030, and voluntary doubling the rate of energy efficiency improvement by 2030.
Summit underlined the need to make funds available for developing nations struggling to balance their developmental goals and climate challenges.
G-20 statement didn’t further moves to transition away from the use of coal — the main source of energy for most of the G-20 countries.
The declaration leaves it to individual countries to choose their own pathway to achieve net zero.
There has been no new commitment to phasing down coal fired thermal power plants.

Initiatives:

Green Development Pact

The global leaders also adopted a ‘green development pact’ to speed up measures to tackle the challenges of environment and climate change.
Addressed a key issue related to climate mitigation goals, namely climate finance.

Global Biofuels Alliance (GBA):

It is a grouping of over 30 countries and international institutions, launched by G20 leaders on September 9 recognised the importance of biofuels in the energy transition mix.
The GBA said it would focus on sustainable and low emission development.
GBA will serve as a central repository and a catalytic platform, fostering global collaboration for the advancement and adoption of biofuels.

Other announcements:

The UK government announced its decision to provide $2 billion to the Green Climate Fund
A joint investment fund of up to $1 billion was announced by the US and India to support India’s energy transition through green technologies.
As a part of this development, National Investment and Infrastructure Fund and US Development Finance Corporation have agreed to each provide $500 million to support a Renewable Infrastructure Investment Fund.

Green Climate Fund (GCF)

The Green Climate Fund (GCF) is a fund established within the framework of the UNFCCC as an operating entity of the Financial Mechanism to assist developing countries in adaptation and mitigation practices to counter climate change.
One of the largest vehicles for climate finance connected to the UNFCCC is GCF, which was born out of the Copenhagen Accord of 2009. It offers financing through “a flexible combination of grants, concessional debt, guarantees or equity instruments”.
And part of its mandate is “to invest 50 per cent of its resources to mitigation and 50 per cent to adaptation in grant equivalent”. At least half of its adaptation resources must be invested in the most climate vulnerable countries (small island developing states or SIDS, least developed countries or LDCs, and African States).
This makes 154 countries eligible for funding, of which 84 received $2.5 billion GCF adaptation funding between 2015 and 2019, according to the new study.
- Since 54 per cent of the funds went to countries who are LDC, SIDS and / or African countries, the GCF met its mandate.
The GCF is based in Incheon, South Korea. It is governed by a Board of 24 members and supported by a Secretariat.

National Investment and Infrastructure Fund (NIIF):

NIIF is India’s first sovereign wealth fund set up by the Government of India in 2015.
It is an investor-owned fund manager, anchored by the Government of India (GoI) in collaboration with leading global and domestic institutional investors.
NIIF’s mandate includes investing in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India.

Functioning:

It is being operationalized by establishing three Alternative Investment Funds (AIFs) under the SEBI Regulations.
The proposed corpus of NIIF is Rs. 40,000 Crores funded of 49% from Government of India.
Rest from strategic anchor partners (Overseas sovereign/quasi-sovereign/multilateral/bilateral investors).

NIIF and Three Funds:

NIIF currently manages three funds each with its distinctive investment mandate.
Master Fund: A fund focused on creating scalable sectoral platforms in core infrastructure and in collaboration with strong and reputed operating and financial partners.
Fund of Funds: A fund focused on anchoring and investing incredible and reputed third-party managers with a strong track record across diversified sectors within infrastructure services and allied sectors.
Strategic Investment Fund: A fund focused on investing in strategic assets and projects with longer-term horizon across various stages of development.