Global Climate Finance
- February 1, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Global Climate Finance
Subject : Environment
Section: Climate Change
Concept :
- For India to meet its international “obligations” on curtailing greenhouse gas emissions, it must have access to “ontime” climate finance, technology, and access to critical minerals.
- Advanced economies ought to set examples of policy and “behavioural changes” that work in their countries and only then could they be emulated in developing countries, the Economic Survey said on Tuesday in a dedicated chapter on climate change.
Global Climate Finance
- It refers to local, national, or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change.
- The UNFCCC, Kyoto Protocol, and the Paris Agreement call for financial assistance from Parties with more financial resources (Developed Countries) to those that are less endowed and more vulnerable (Developing Countries).
- This is in accordance with the principle of “Common but Differentiated Responsibility and Respective Capabilities” (CBDR).
- In COP26, new financial pledges to support developing countries in achieving the global goal for adapting to the effects of climate change were made.
- New rules for the international carbon trading mechanisms agreed at COP26 will support adaptation funding.
USD 100 Billion Target – Climate finance
- In 2009, at the UNFCCC COP15 (held in Copenhagen), the developed country parties, to achieve meaningful mitigation actions and transparency on implementation, jointly set a target of USD 100 billion a year by 2020 to address the needs of developing countries.
- The climate finance goal was then formally recognized by the UNFCCC Conference of the Parties at COP16 in Cancun.
- At COP21 in Paris, Parties extended the $100 billion goals through 2025.
- After COP26 there was a consensus that developed nations will double their collective provision of adaptation finance from 2019 levels by 2025, in order to achieve this balance between adaptation and mitigation.
Financial Framework
- To assist the provision of climate financing, UNFCCC established a financial framework to give financial resources to developing nation Parties.
- The finance structure also supports the Kyoto Protocol and the Paris Agreement.
- It specifies that the financial mechanism’s operation can be entrusted to one or more existing international entities, since the Convention’s entrance into force in 1994, the Global Environment Facility (GEF) has acted as the financial mechanism’s operating institution.
- Parties established the Green Climate Fund (GCF) at COP 16 in 2010 and designated it as an operating entity of the financial mechanism in 2011.
- The financial mechanism reports to the COP, which determines its policies, programme priorities, and financing eligibility criteria.
- Other Funds:
- In addition to providing guidance to the GEF and the GCF, Parties have established two special funds—
- Special Climate Change Fund (SCCF)
- Least Developed Countries Fund (LDCF),
- Both are managed by the GEF—and the Adaptation Fund (AF) established under the Kyoto Protocol in 2001.
- At the Paris Climate Change Conference in 2015, the Parties agreed that the operating entities of the financial mechanisms – GCD, GEF, SCCF and the LDCF, shall serve the Paris Agreement.