Climate Finance 

Source: This post on Climate Finance has been created based on the article “At CoP29, Global South and North should shed adversarial position on climate finance”, published in The Indian express on 8th Nov 2024. 

Syllabus Topic: GS Paper 3 – Environment Conservation 

News: Securing better climate finances for the Global South has emerged as the pre-eminent goal for CoP29. This is a necessary pursuit as the developing world houses the majority of the worst-affected regions. However, the Global South and the Global North should not come to the table as adversaries. 

What are the financing needs and realities? 

Global South’s finance needs have shot up to over $1 trillion a year today. It was $100 billion a year back in 2009.  

However, it was only in 2022 that the financing went past $100 billion for the first time. More than half of it is reported to be in the form of loans to already struggling nations. 

What are the issues faced by developing countries? 

1. The cost of capital for investing in essential infrastructure (like utility-scale solar) in the Global South is three to four times higher than in developed nations like Germany. 
2. There is lack of access to concessional finance, making it more challenging for the developing world to channel funds into clean-energy capacities and climate-resilient infrastructure.
3. Revised draft of UN’s New Collective Quantified Goal has faced immediate opposition from China and India, as both are major economies that cannot be expected to throttle their growth to undo the wrongs of the past. The rest of the BRICS bloc is also voicing similar reservations.

What should be the Way Forward? 

1. Global South countries should facilitate higher returns for private investors. This could involve aggressive tax breaks, innovative revenue-sharing mechanisms, or aggregating demand for capital-intensive sectors like green hydrogen and electrified public transit.
2. Unlocking more concessional financing for renewable energy projects in the Global South.