The COP29 climate summit starts today at Baku, Azerbaijan. Garima Sadhwani explains why the world isn’t able to agree on how to find the money to undo the damage done to the planet, what’s in store for India, and why this edition is focusing so much on climate finance.
Financing the climate action
This year, climate finance is the buzzword at the UN Climate Change Conference (COP) since mobilising support for the New Collective Quantified Goal (NCQG) on climate finance is a top priority. The NCQG will be a replacement for the $100 billion that the developed countries were supposed to annually contribute to the climate fund.
Baku, the host, also announced a new fund called the Climate Finance Action Fund (CFAF) in July, which aims to raise money from countries producing fossil fuels and give them to developing countries and their green projects. Kavin Kumar Kandasamy, CEO of ProClime, a unified service provider in the climate space, says the fund could provide vital resources for developing countries like India. He says, “While the exact fundraising target remains uncertain, an initial goal of around $1 billion would be essential for launching impactful initiatives.”
However, Abinash Mohanty, head of climate change and sustainability at IPE Global, and expert reviewer of IPCC-AR(6), says while there are multiple instruments panning around climate action, implementation is where we are lacking.
From COP28 to COP29
At COP28 in Dubai in 2023, a new fund was launched — the loss and damage fund — to aid the developing countries which have historically been the climate victims. That fund is yet to be made operational, and its finer details will be looked into at the summit. Philippines is hosting the board of the fund this year.
Mohanty tells FE, “Even though the fund was operationalised last year and around $700 million were pledged to it, the fund is far from reality. We need to focus on making it functional soon.”
COP28 also called upon all to transition away from fossil fuels in its document. But this year, with Azerbaijan as the host, there has been some hesitancy in bringing up the phasing out of fossil fuels. Mohanty says while the reason for this could be that Baku is also the world’s first oil town, the subject still demands urgent attention.
What is the carbon tax that some countries are mulling?
Some developed countries, which already have the backing of the European Union and the United Nations, are mulling whether to impose a 25% tariff or carbon tax on “energy-intensive” goods that are exported to Europe.
If the tax is brought into place, experts have said this would have the potential to “disrupt over $8 billion worth of Indian metal exports to the EU.” Mohanty strongly feels that such proposals often fail to realise that the needs of each nation, especially the developing ones, are different. He adds, “The developing world still needs to rely on these resources for growth. Through the 29 editions of COP, we have lacked trust between the developed world and the developing countries. This year it should build the bridge than burning it further.”
The carbon credits market
Ahead of COP in November, an agreement was reached in pre-COP meetings about “crucial standards to operationalise a new UN crediting mechanism.” A supervisory body came up with recommendations on “facilitating international collaboration in reducing greenhouse gas emissions and combating climate change,” that will be reviewed at COP29.
In simple terms, carbon markets are trading systems where a company/ individual can buy/ sell carbon credits – those who work towards removing greenhouse gas emissions can sell their carbon credits; the others can buy them to compensate for polluting the environment. It’s expected that COP29 will address a standard protocol for engaging in carbon trading.
Kandasamy says, “Well-designed carbon markets can mobilise substantial private and public investment, particularly in developing countries, creating pathways for companies to take responsibility for their emissions while fostering innovation in low-carbon technologies.”
What should India focus on?
Even as climate finance is an important agenda at COP29 and the UN summit wants to prioritise the developed countries doubling their adaptation funding by 2025, Dr Dhruba Purkayastha, director of growth and institutional advancement at the Council on Energy, Environment and Water (CEEW), says it’s important to remember that climate finance is an issue of the entire global south, not just India. However, Mohanty says, “We need to establish thought leadership for climate financing diplomacy. What we need to closely look at is tech and finances backed people-centric climate action. We need to make climate tech available, affordable, and accessible.”
Kandasamy agrees, adding that in the past few years, India has worked towards enhancing its efficiency measures, but still needs to pay immediate attention to many pressing concerns — water scarcity, extreme weather events, and climate change-induced disasters.
