The climate finance lag needs attention

In a hard-hitting speech on Sunday, Union environment minister Bhupender Yadav reminded the world that the climate crisis is unlike other global issues, such as trade or finance, and so traditional responses to the challenge or the tendency to profiteer from it must be avoided. At the Raisina Dialogue 2023, Mr Yadav added that the phenomenon of greenwashing, abrogating historical responsibilities and protectionism in the name of climate action need to be stopped. For decades, India has spoken out against the developed world’s climate responsibility and its attempts to avoid paying for climate mitigation, adaptation and loss and damage. But the minister’s terse comments on protectionism appear to have been stoked by two more recent developments: A proposal of the European Commission about a tariff on imports of carbon-intensive goods; and a move by the United States to pass the Inflation Reduction Act, which will support local manufacturing by increasing production tax credits for making solar panels, wind turbines, batteries and critical mineral processing.

It remains unclear how these new decisions will affect an already unstable global economy. But it is clear that some developed countries are going to use incentives for green transition to spur a competitive economic advantage, at the possible detriment of the developing world, which is starved of funding and critical technologies. Even as India pushes for sustainable lifestyles and land and ocean climate action, Mr Yadav’s comments reminded all that the most critical challenge of all — mobilisation of climate finance for the developing world — remains unresolved. It must be addressed, and fast.