Climate finance at market rates not ideal, says India

NEW DELHI: India, speaking on behalf of developing countries, has said access to climate finance at market rates will lead to further financial stress on developing countries.

“Going ahead, if ambitious climate targets have to be achieved, these need to be backed by intentions reflected by ambitious, appropriate, and reasonable access to financial resources by developing countries,” Union environment minister Bhupender Yadav said on behalf of the Like Minded Developing Countries at a high level ministerial dialogue on a new collective quantified goal (NCQG) from a floor of $ 100 billion per year on Wednesday.

The Standing Committee on Finance under the United Nations Framework Convention on Climate Change has estimated that resources in the range of $6 trillion to $11 trillion are required till 2030 to meet the targets set by developing countries in their Nationally Determined Contributions (NDCs), Yadav said. “Climate actions to meet the NDC targets require financial, technological, and capacity-building support from developed countries. The ambitious goal set down by the developing countries requires substantive enhancement in climate finance from the floor of $100 billion per year,” he said.

“The mobilisation needs to be led by developed countries and should be long-term ... . The commitment of $100 billion made in 2009 by developed countries, was not only minuscule given the scale of needs, but has also not been achieved yet,” he added.

LMDC said the extent of resources that developed countries bring to the table will play a critical role in determining climate flows.

“While the previous Technical Expert Dialogues on the New Collective Quantified Goal under the Ad Hoc Work Programme have presented an opportunity for the exchange of ideas, a more structured and targeted approach needs to be adopted to enable the successful fulfilment of the mandate ahead of 2024. Discussions within the Technical Expert Dialogues in 2023 should focus mainly on the quantum, recognizing the urgency of such discussions for developing countries. That said, a discussion on quality and other elements such as access and transparency is incredibly important,” a statement from LMDC said, adding that a structure must be set in place to ensure decisions on all these elements can be taken by 2024.

“It is also important to highlight in this context that access to finance at the market rate for climate action will lead to considerable stress on the finances of developing countries... Going ahead, if ambitious climate targets have to be achieved, these need to be backed by intentions reflected by ambitious, appropriate, and reasonable access to financial resources by developing countries,” the statement added.

“Finance for climate action by developing countries is a critical key in meeting global climate objectives. With the goals set out in Copenhagen (2009) not having been met, it is imperative that new and, this time firm, climate financing goals are set and committed to by the developed countries,” said Manjeev Singh Puri, former climate negotiator and ambassador, responding to the statement. The issue of loans as climate finance burdening developing countries has already been raised at COP27.

Bhupender Yadav