Environment: India provided more climate finance than many rich countries

Virendra Pandit

New Delhi: India has emerged as a better climate financer than many prosperous countries, having contributed USD 1.287 billion in 2022, the media reported on Wednesday.

India’s contribution came through multilateral development banks (MDBs), surpassing the contributions of many developed countries.

An analysis, conducted by the UK-based think tank ODI and the Zurich Climate Resilience Alliance, came amid a renewed push by some developed countries to broaden the donor base for climate finance to include developing countries like China and Saudi Arabia.

The report revealed that only 12 developed countries provided their fair share of international climate finance in 2022: Norway, France, Luxembourg, Germany, Sweden, Denmark, Switzerland, Japan, the Netherlands, Austria, Belgium and Finland.

The significant gap in climate finance is largely because of the United States failing to contribute its fair share. Australia, Spain, Canada, and the United Kingdom also performed relatively poorly in this regard.

The analysis identified the top 30 non-Annex II countries that provided substantial climate finance to developing countries in 2022 through multilateral contributions to development banks and climate funds.

This group includes former economies in transition like Poland and Russia, countries that have achieved high-income status since 1992, such as Chile, Kuwait, Saudi Arabia, and South Korea, and middle-income countries with large populations, including Brazil, China, India, Indonesia, Mexico, Nigeria, the Philippines, and Pakistan.

India provided USD 1.287 billion in climate finance to other developing countries through MDBs in 2022, an amount bigger than the contributions made by some developed countries like Greece (USD 0.23 billion), Portugal (USD 0.23 billion), Ireland (USD 0.3 billion) and New Zealand (USD 0.27 billion).

China provided USD 2.52 billion, Brazil gave USD 1.135 billion, South Korea USD 1.13 billion, and Argentina USD 1.01 billion.

According to the United Nations Framework Convention on Climate Change (UNFCCC), adopted in 1992, high-income, industrialized countries (referred to as Annex-II countries) are responsible for providing finance and technology to help developing countries combat and adapt to climate change.

These countries, including the US, Canada, Japan, Australia, New Zealand, and European Union (EU) member states, such as Germany, France, and the UK, have historically benefitted from industrialization and contributed the most to greenhouse gas emissions.

At COP15 in Copenhagen in 2009, these developed countries pledged to jointly provide USD100 billion each year by 2020 to help developing countries mitigate and adapt to climate change. However, this target has not been fully met, leading to a significant financial gap, which eroded trust, and hindered climate action in developing countries.

In May, the Organisation for Economic Cooperation and Development (OECD) claimed that developed countries had met the long-standing USD 100 billion-a-year promise by providing nearly USD 116 billion in climate finance to developing countries in 2022, with nearly 70 percent of the money given in the form of loans.

The ODI researchers found that many developed countries, despite performing well in terms of climate-finance contributions, would make “markedly less progress towards meeting their fair share if the finance provided was accounted for on grant-equivalence terms.”

The report called for the inclusion of a “burden-sharing mechanism” in the New Collective Quantified Goal (NCQG) to provide clarity on each country’s obligations and hold countries accountable.

The NCQG refers to the new, larger amount that developed nations must mobilize annually, starting in 2025, to support climate action in developing countries. Countries are expected to finalize the NCQG at this year’s UN climate conference — COP29 — in Baku, Azerbaijan, in November.

The current USD 100 billion annual climate-finance goal is a collective commitment by developed countries, meaning that individual developed countries are not accountable for specific sums of money, potentially reducing the overall amount of climate finance provided because of the lack of individual scrutiny.

The inclusion of a burden-sharing arrangement among developed countries could potentially strengthen the NCQG by fostering greater accountability and trust among parties, the ODI researchers added.

Many developing countries, including India, have recently advocated for such an arrangement to enhance accountability among developed countries.