The newest budget in climate town

India has been vociferous in its concerns on climate (in)action, and has been speaking on behalf of the global south. As one of the populous nations, and a developing one at that, it faces a huge climate challenge

Srinath SridharanUpdated: Tuesday, November 29, 2022, 10:34 PM IST
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For the unsuspecting audience that most of us are, the phrase ‘L&D’ has meant Learning & Development. Of course many corporates who have this fancy term in their budgeting exercise, have used this as a HR compliance or placating tool.

There is now another L&D, but in the world of climate finance. Hopefully it won’t be of the usual placating type or the tick-box variety. The recent COP27, the UN-led climate conference, announced ‘Loss and Damages’ fund for climate reparations. This fund is set to compensate the most vulnerable countries for damages from climate-linked disasters. Developed nations had opposed this new fund over worries that it would hold them legally liable for massive damages caused by climate change. Financing to deal with climate induced loss and damage — for example, funds needed to rehabilitate people displaced by famine or floods — was a long standing demand of poor and developing countries, including India.

The important aspects of who will manage this proposed fund, who all will contribute to this fund, what would be the fair share of contributions of developed nations, etc have been left open-ended. A “transitional committee” will meet and make recommendations to enable the actual adoption of this fund idea — now at the next year’s Conference of the Parties (COP) of the UN’s Framework Convention for Climate Change, to be held in the United Arab Emirates. Hopefully it won’t end up being a delaying tactic.

Of course the COP27 otherwise was a washout, for all its run up. The conference saw nearly 45,000 participants, including indigenous peoples, local communities, cities and civil society, youth and children. To what end will these annual jamborees continue? Despite the grave climate crisis, we continue to delay decisions, and use diplomatic cover called ‘discussions & negotiations’. The nations seem to spend more time in drafting English statements of outcome that meet each others’ acceptance, rather than any other urgent actions.

Prior to COP27, the COP26 & COP27 hosts — UK & Egypt — had commissioned a research report on climate change finance. The report has only reiterated that urgent funding is required to cut emissions, boost resilience, deal with damage from climate change and restore nature and land. It has also detailed that the developing countries needed to work with investors, nations and development banks to secure $1 trillion every year, in external financing for climate action by the end of the decade and to match that with their own funds.

It may be recalled that developed nations have been breaking their promise made at COP15, to contribute $100 billion annually to help developing countries decarbonise and to deal with the impacts of climate change.

India has been vociferous in its concerns on climate (in)action, and has been speaking on behalf of the global south. As one of the populous nations, and a developing one at that, it faces a huge climate challenge. The last report by the Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, released a few months ago has estimated that India faces multiple climate change-induced disasters in the next two decades. India’s view has been presented by Environment Minister Bhupender Yadav: “Environmental negotiations are not about give and take — they are about saving the world. Developed nations must take historical responsibility and consider what they have done in the past”.

Developed nations have built all the necessary civic and social infrastructure, which their citizens are enjoying. Developed nations take for granted the creature comforts that come with this; in fact they are now seeking upgraded versions of these infrastructural comforts, but with a difference — they need to support the clean energy base at the same time. Whereas other (developing and poor) nations don’t have such infrastructure, either in total or — for many — even in part. These nations have the right to support their economic development, for it serves to improve the quality of living for their citizens. This growth aspiration cannot be met by currently available zero-carbon ideas. They would need conventional emissions-based growth in the short term, before aspiring to replacing fossil fuels with zero carbon. Unfortunately, the push toward zero has been interpreted as a full ban on fossil fuel energy. This is economically unviable, and unfair to expect for developing and poor nations.

A progressive step at COP27 was the agreement to transition out all fossil fuels and not just coal, which was lacking in the earlier COP26. This was proposed by India, and supported by nearly 80 countries including the US and EU, but faced opposition to the inclusion of oil and gas from a few developed countries. The agreement however fell short and did not include a wider target on all fossil fuels, as proposed by India and several other nations.

Hopefully the world has learnt enough on climate finance to develop genuine empathy for other nations’ effort in climate action. This L&D fund can lead by example and develop into an all-nations fund. It would depend on the character demonstrated by the nations in the run-up to the next COP28 event.

Posturing by wealthier nations in the past decade of climate conversations is already worrisome. This time around, it has been further disappointing. It looks to have been yet another COP event. Importantly, the slow paced climate action commitments is proving that the global communities have become mere climate event managers — having regular conversations and meetings, dispensing research reports.

Are developed nations using these events and delays to create a lucrative climate finance industry for their private sector? And as climate risks loom, will financing pricing negotiations fall into line in favour of developed nation financiers quickly? Or will those nations which need cheaper finance live with the consequences of climate change, unable to afford climate financing?

Was COP27 a copout? Oops, sorry, washout?

Dr Srinath Sridharan is a corporate advisor and independent markets commentator. He tweets at @ssmumbai

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