COP28 and the missing links

The challenge is not necessarily in raising additional finance for climate change mitigation and adaptation but how to align the entire world’s capital towards climate action. Therefore, the COP28 deliberations should focus to discuss to remove the barriers to redirecting the capital to climate action on a priority basis

The three environmental crises that the entire world is experiencing-climate change, biodiversity loss and pollution- have become unbearable and need immediate attention by one and all. In fact the situation is worsening in terms of temperatures in atmosphere, untimely rains and cyclones that we are experiencing now besides drought and other natural calamities in different parts of the country.

Successive meetings like the Conference of Parties (COP) have not produced any breakthrough results as they are ending on a less than satisfactory note. The ongoing COP 28 in Dubai is focusing on four themes of which the issue of finance needs to be discussed thoroughly. Besides there is a need to bring in pressure on developed countries to contribute resources for the cause so as to save the vulnerable population spread across the globe.

The four themes include; Technology and innovation, Inclusion, Frontline communities and Finance.

Interestingly, climate finance was discussed on the first day itself with a focus on loss and damage fund while some countries announced their contributions to the fund.

Making The World Bank the host or custodian for loss and damage fund for four years was opposed by many sections due to the nature of business that the bank carries. The World Bank is a multilateral development bank that is shareholder and contributor-driven. A majority of shareholding is by developed countries with a hosting fee of 17 per cent, its business model is driven by loans which are against climate justice or action. Some developing country partners opined that standalone, independent fund directly under UNFCCC following the ‘principles of equitable climate action’ is appropriate. In fact, climate finance needs to be made available to countries and communities who are vulnerable to climate change. There should be full autonomy to the fund managers to extend financial support to the countries in their hour of need.

Mitigation and Adaptation: Climate finance is needed for mitigation, because large-scale investments are required to significantly reduce emissions. Climate finance is equally important for adaptation, as many financial resources are needed for adapting to the adverse effects and reduce impact of a changing climate. Therefore, we require huge amount of resources for undertaking mitigation and adaptation for which public and private funding is critical in leading the way in terms of their contribution of resources and commitment.

Besides, we should also explore the possibility of mobilizing funding from other sources like corporates, innovative mechanisms and utilisation of resources with a fee, among other. In fact, the financing for adaptation by private parties is only two per cent, which reflects their least concern for going full-throttle with their climate action. Further, the richest country USA which is emitting the maximum carbon announced $ 5 billion to climate finance. Looking at the larger picture, it is a negligible amount. Moreover it comes with a rider-it depends on availability of funds.

The Intergovernmental Panel on Climate Change (IPCC) says that there is no dearth of resources for undertaking climate change mitigation and adaptation but aligning the capital towards climate action is a pertinent issue. As a matter of fact, IPCC mentioned that “there is sufficient global capital to close the global investment gaps….but there are barriers to redirecting capital to climate action”. The challenge is not necessarily in raising additional finance for climate change mitigation and adaptation but how to align the entire world’s capital towards climate action. Therefore, the COP28 deliberations should focus on discussing measures to remove the barriers to redirecting the capital to climate action on a priority basis.

Loss and damage fund: As regards the loss and damage, to date there is no official definition yet. However they are using in flexible terms while its implications are many and heavy.

UN climate negotiations use the term ‘loss and damage’ referring to the consequences of climate change that go beyond what people can adapt to, or when options exist but a community does not have the resources to access or utilize them.

Loss and damage can result from both extreme weather events like cyclones, droughts and heat waves as well as slow onset changes such as sea level rise, desertification, glacial retreat, land degradation, ocean acidification and salinization. The loss and damage can be divided into two, economic and non-economic losses with some overlap between the two. Further, the developed countries ensured that the language of loss and damage does not involve or provide a basis for any liability or compensation instead they call it as cooperation and facilitation.

As regards the sources of funding for the loss and damage, the developed countries stated that of the three-humanitarian aid, disaster risk management and insurance-the latter two were not effective. Climate campaigners have argued that insurance does not work when natural calamities wreak havoc. During COP 27, many countries agreed to the establishment of a separate dedicated loss and damage fund under UNFCCC.

Agenda for discussion: Whatever resources are globally announced they need to be credited to the loss and damage fund immediately so as to benefit the poorer communities. No loans or concessional loans are allowed to be called as ‘climate finance’ as it has a negative impact and poorer countries will be pushed into a debt-trap, which we already witnessing in some regions.

Therefore, UN’s first Global Stocktake Report should be discussed in terms of mitigation, adaptation and means of implementation among others in ascertaining the responsibilities fulfilled by each signatory of Paris Agreement.

As regards mitigation, evaluating global efforts to reduce greenhouse gas emissions and keeping global temperature rise below 2 degrees C (3.6 degrees F) and ideally 1.5 degrees C (2.7 degrees F) and identifying opportunities for additional emissions cuts is need of the hour. As for adaptation, a measuring progress in countries’ abilities to enhance their resilience and reduce vulnerability to climate impacts is critical in understanding the climate action taken up so far.

Means of implementation: This should include finance, technology transfer and capacity-building. Assessing progress on aligning financial flows with emissions-reduction goals and climate-resilient development and providing support to developing nations to address the urgent needs arising from climate crisis is paramount.

Finally, the best way to raise resources internally in our country is to invoke “Polluter pays principle” and introduce ‘Carbon tax’ or ‘Fossil fuel tax’ for all enterprises that release GHGs, using fossil fuels and contributing to CO2 in the environment.

More importantly, emissions of methane, which is a greenhouse gas 80 times more powerful than carbon dioxide, have risen despite more than 120 countries signing up to a pledge to reduce the gas.

(The writer is a noted economist and CEO, SDS- Hyderabad)