[Answered] Critically analyze the global challenge of climate finance mobilization. Justify India’s demand for developed nations to achieve the $1 trillion annual target and track it alongside mitigation efforts.

Introduction

Despite the Paris Agreement’s commitment to mobilise USD 100 billion annually, OECD data shows consistent under-delivery. Climate needs now exceed USD 7 trillion yearly, exposing widening finance gaps, inequities, and accountability failures jeopardising global mitigation-adaptation goals.

The Global Climate Finance Challenge: Structural and Operational Deficits

1. Chronic under-delivery and ambiguity: OECD (2023) reported only USD 89.6 billion delivered—far from the promised USD 100 billion, let alone the required trillions. Lack of clarity on what qualifies as climate finance (grant, concessional loan, or relabeled development aid) creates inflated accounting and erodes trust.
2. Rising needs, stagnant flows: IPCC AR6 estimates USD 3.5 trillion annually is needed for global energy transition. UNEP’s 2024 Adaptation Gap Report shows adaptation needs at USD 215–387 billion/year, but current flows are only one-tenth of this. Loss and Damage needs could exceed USD 400 billion/year by 2030.
3. Skewed distribution and prohibitive access: 82% of tracked climate finance flows towards mitigation, leaving adaptation underfunded. Highly vulnerable LDCs and SIDS face:

4. 1. High borrowing costs
   2. Complex Multilateral Development Bank (MDB) procedures
   3. Long approval timelines (average 18–24 months for GCF projects)
5. Governance disparities: Bretton Woods institutions remain governed by developed countries. Developing nations face limited voting power, reinforcing a system that prioritizes creditors over climate justice.

Why India’s Call for USD 1 Trillion and Tracking is Justified

1. India’s demand aligns with equity and Common But Differentiated Responsibilities (CBDR-RC): Developed nations have contributed 92% of historical emissions. India, with per capita emissions at 1.9 tCO₂, argues that climate ambition requires proportionate financial responsibility from high emitters.
2. Massive investment requirements justify higher targets: Global requirement: USD 7–9 trillion annually (IEA, IMF, IPCC). India alone requires USD 467 billion by 2030 for hard-to-abate sectors and USD 10 trillion to achieve net-zero by 2070. Thus USD 100 billion is “symbolic, inadequate, and outdated”.
3. Tracking climate finance ensures transparency and prevents greenwashing: PM’s statement at COP26—“as we track mitigation, we must also track climate finance”—addresses: Opaque reporting, Double counting of loans, Misclassification of development aid as climate finance and Lack of verifiable, comparable metrics. A global Climate Finance Registry would enhance credibility, similar to the Global Stocktake (GST) for mitigation.
4. India demonstrates domestic leadership, strengthening its global case: Two-thirds of India’s climate finance is domestic. India’s Climate Finance Taxonomy ensures scientific, standardised classification of green assets. Sovereign Green Bonds, the National Green Hydrogen Mission, and massive renewable scale-up show that India is not merely demanding but also delivering.
5. India pushes for MDB reforms: India’s G20 Presidency advocated: Using blended finance and guarantees to de-risk private capital, Democratizing MDB governance and prioritizing adaptation, resilience, and Loss & Damage. This aligns with the Bridgetown Initiative and UN Secretary-General’s calls for systemic reform.

Conclusion

A sustainable climate regime requires transparent, adequate, and just finance frameworks. As Nobel laureate Joseph Stiglitz notes, reforming global financial architecture is essential for equitable climate action and credible multilateralism.