Raising the Bar: India’s Push to Increase Ambition on Climate Finance

For India, availability and access to affordable finance remains a continuing challenge in its progress towards its climate commitments. The latest Economic Survey of India estimates financing to the tune of USD 2.5 trillion is necessary to meet India's Nationally Determined Contributions (NDC) targets till 2030. In addition, India's first Adaptation Communication submitted to United Nations Framework Convention on Climate Change (UNFCCC) outlines the cumulative need for adaptation financing of approximately USD 673 billion by 2030. India argues that progress on its climate outcomes has been achieved primarily through domestic resources until now, thus making a strong case for developed countries to provide finance and technology to developing countries at reasonable cost.

UNFCCC's 29^th Conference of Parties (COP29) to be held from 11-22 November 2024 in Baku, Azerbaijan is likely to pave the way for the most significant outcome on climate finance in recent years. Over the course of the two weeks, countries are likely to deliver the New Collective Quantified Goal (NCQG) on climate finance. In 2009, at the 15th Conference of Parties (COP15) in Copenhagen, developed countries agreed that they would mobilize USD 100 billion per year by 2020 to support developing countries' climate action. In 2015, NCQG emerged as one of the key elements of the Paris Agreement and parties agreed to set, prior to 2025, a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries. This November, parties to the UNFCCC will gather in Baku to set a new global climate finance goal, and India will be a central player, along with other developing countries, in demanding greater ambition and more transparency in the new targets.

Negotiating the NCQG: Where is the divide?

In 2021, at the 26^th Conference of Parties (COP26) in Glasgow, parties launched the UNFCCC's Ad-Hoc Work Programme on the NCQG to facilitate technical discussions between 2022 and 2024. The landscape of issues reveals a deep divide between the developed and developing country Parties to the UNFCCC. Several elements of the new goal need to be resolved: quantity, structure, quality, contributors, time frame and revisions, tracking and reviewing progress, and the relationship to the Paris Agreement's long-term goal on climate finance.

Heading into Baku, the stated quantum of the new goal will be key to ascertaining India's position on the negotiated outcome. Developing countries, including groupings such as the Group of 77 (G77) plus China and Like-Minded Developing Countries (LMDC), have consistently called for discussion on the quantum of the NCQG based on their priorities and evolving needs. Developed countries, including the United States (US) and the European Union (EU), have not specified a target goal except that it will be from a floor of USD 100 billion per year. Instead, they have focused on the issue of who the contributors and recipients should be. They call for the contributor base to be expanded to include developing countries based on responsibility, economic capability and ability to contribute. On the question of who should receive the money, they make the case for the recipient base to include the most vulnerable and those with the greatest need.

India's most recent submission to the ad-hoc working group states that the quantum of the NCQG must be public finance of at least USD 1 trillion per year, primarily in the form of grants and concessional finance. India also strongly opposes both expanding the contributor base and creating differentiation between beneficiaries - it has long maintained that developed countries must provide financing to support developing countries' climate actions, as envisaged under Article 4.3 of the UNFCCC and Article 9.1 of the Paris Agreement. A recent analysis highlights an erosion of trust in the multilateral process given past non-delivery of climate finance commitments and calls the NCQG an opportune window for the developed world to demonstrate leadership on paying its fair share to help developing countries address climate change. Therefore, India is likely to stand firm on raising the quantum of the new goal in a bid to hold developed countries more accountable for their climate finance obligations.

Developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention.

Article 9.1 Paris Agreement

New Finance is Critical for More Ambitious NDCs 3.0

A deal on the next climate finance target will be an important signal as the world heads into 2025 when countries submit their updated NDCs, or NDCs 3.0. It will create the much-needed momentum towards progressive and more ambitious national climate plans. India underscores the importance of selecting an appropriate time frame for the finance mobilization targets. Instead of long-term targets up to 2050, it urges parties to be in sync with the process of NDC submissions. It argues that since 2025 marks the beginning of new NDC commitments, it is critical that the new finance goal is consistent with the resources required for meeting the NDC commitments.

India's position during the climate finance negotiations rests heavily on the principle of equity and differentiation calling on the developed countries to provide financial resources and access to technologies to enable their climate actions, including mitigation and adaptation. The Environment ministers of Brazil, South Africa, India, and China (BASIC) recently issued a joint statement expressing "deep concerns around attempts by developed countries to dilute their climate finance legal obligations under international law through suggestions of broadening the contributor base." and indicated "their expectation that the quantum of the NCQG should shift from billions to trillions of USD per year."

NRDC's latest analysis provides illustrative scenarios for how climate finance could be scaled up while considering developing country needs. Current flows of climate finance are unlikely to achieve the scale of funding laid out and needed by developing countries. The model developed allows the user to explore various pathways to scaling up international climate finance from a floor of USD 100 billion up to USD 1 trillion. A high target is possible given a combination of factors such as raising new and innovative sources of finance, reforming multilateral development banks and international financial institutions, changing domestic perspectives around international funding in contributor countries, and better mobilization of private finance.

In Baku, India will remain one of the pillars within the developing country bloc to argue for the NCQG to include: an ambitious mobilization goal, grant-based or concessional public finance, and a balance between financing of mitigation and adaptation actions. Without the assurance of available and affordable finance, it will be an onerous task for developing countries to meet their climate commitments until 2030 and ratchet up their climate actions over the next decade. Ultimately, the form and ambition of India's NDC 3.0 hinges greatly on the willingness of the developed world to support the clean energy transition in the developing world and the success of the Baku climate talks in delivering the NCQG on climate finance.

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