Re-imagining Climate Finance
The worldwide refugee crisis triggered by climate change has arrived far sooner than expected, and money will be needed to provide humanitarian aid in emerging nations with sizable susceptible populations.
The discomfort India experienced as a result of recent events in geopolitical space, including covid-19 crisis and the Ukraine war are testimonies of the overarching dependence India has on carbon-intensive energy. It is urging a more immediate conversion to renewable energy options.
Now more than ever, the necessity for developed countries to fulfil their climate financing pledges is becoming more and more important in the wake of COP26 and other findings. To make sure developing countries are on pace to fulfil their promises, this has become a crucial prerequisite. But it’s not as simple as that. Various nations dispute the definition of what “climate financing” actually is. This makes “climate finance” as the most loosely used terms when referring to initiatives that can catalyze decarbonization.
The terrible truth is that notwithstanding the promises made at Paris to the Fund and for climate finance more generally, the US$100 billion objective for mobilizing public and private money by 2020 has not yet been met. To add on to misery, According to data gathered by Oxfam and OECD, nearly 70 percent of all climate finance between 2016 and 2018 went to middle-income countries. The least developed countries (LDCs) group received 14 percent of the total funding and small island developing states (SIDS) received 2 percent.
In actuality, the understanding of climate funding is more procedural than substantive, and it is now up to India to carry the torch in inspiring a community to rethink and define climate finance. For which India must-
- Build financial resilience
- Use monetary policy to incentivize green investments
- Explore bilateral over multilateral channels
- Incentivize effective private sector
- Institutionalize climate finance domestically
It is a call to India to re-imagine not only the idea of climate finance but also the mechanisms of raising funds and the channels for disbursing them. The aim should be to ensure that India builds financial resilience to serve its development needs, enabling the country to be a frontrunner in global efforts to decarbonize.
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