India to pitch for grants and concessional loans, instead of investments, at COP29

“Our position is grant-based and concessional finance in terms of NCQG (new collective quantified goal, or climate funding target for developing nations). India’s stance would be to get as much of grant and concessional loan," the first of the two people quoted above said on condition of anonymity. “We don’t want big figures as investment in NCQG, but they (developed nations) want to push for investment."

The Indian team, led by Union minister of state for environment, forest and climate change Kirti Vardhan Singh, will also push for finalizing the rules for transfer of carbon credits to meet climate targets under Article 6 of the Paris Agreement, the people said on the condition of anonymity.

The UN Framework Convention on Climate Change (UNFCCC) in Azerbaijan’s capital city will see negotiations ahead of the 29th Conference of the Parties (COP29) to be held from 11 to 22 November.

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The first person cited above said that India is not against mobilizing investments for climate change. “Suppose $1 trillion will be required in the form of investment. Who is going to invest? Businesses. Are they (the developed nations) going to ensure that multinationals will invest here? No, they say companies are independent, autonomous. They don’t have control over them."

India would like the NCQG to be finalized as a firm commitment by the developed countries, which will help decide the next round of India’s climate pledges under the nationally determined contributions (NDCs). “We are supposed to submit it next year before COP30, although there is a decision to do so nine months before the next COP."

Under the Paris Agreement, countries should agree to the NCQG for financial support for developing countries to mitigate and adapt to climate change before 2025. This is a key task for COP29 in Azerbaijan.

Developing countries require up to $1.5 trillion a year for their unique climate needs and net zero transition, according to various estimates. But the loss and damage fund negotiated at COP27 has failed to take off after being operationalised at COP28.

According to UNFCCC, as of September, a total of $702 million has been pledged to the fund by 23 contributors against at least $100 billion by all developed nations. As of January, there are 37 countries that are considered developed economies by the United Nations Department of Economic and Social Affairs.

Vaibhav Pratap Singh, executive director at Climate & Sustainability Initiative (CSI), said that the climate finance target for developed nations to provide $100 billion annually to developing countries by 2020, set during the 15th edition of this annual event, has yet to be met.

“These targets, and the associated delivery mechanisms, are crucial," he said. "If not properly structured, the costs could become exorbitant, and make projects like renewable energy, which require high initial investments, prohibitive to be built in many parts of the developing world."

Queries emailed to spokespeople and the secretary of MoEFCC on Thursday remained unanswered at press time.

New conditions from developed countries

To be sure, the actual climate action funding requirement, however, could be several times higher than the estimates of $1-1.5 trillion. The UNFCCC Standing Committee on Finance, based on its assessment of NDCs, estimates that a total of $5.8-5.9 trillion will be needed by 2030 to cover the needs of 153 developing countries.

Even this is likely to be an underestimation given that only a small proportion of requirements were accounted for across the documents provided. Regionally, around $2.5 trillion of global need comes from African states, around $3.2 trillion from Asia-Pacific and around $168 billion from Latin American and Caribbean nations, according to the Asian Development Bank.

Because of the scale of the financing required, some experts and countries, including Switzerland, Canada and the US, have suggested expanding the list of countries mandated to contribute, also called the contributor base, to include emerging countries with high emissions and high incomes.

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“The developed countries are proposing things that are not covered under UNFCCC or the Paris Agreement such as broadening of the contributor base. Along with developing countries, India is sticking to the Paris Agreement," the second person quoted earlier said. “The Paris Agreement says developed countries shall provide finance to developing countries. We’d not like to go beyond principles and processes of the Paris agreement. If you want to talk more, come outside, else change the Paris agreement."

The person said that the developed nations are neither taking climate mitigating actions nor providing financial support but are asking developing countries to stop development so that they can maintain their standard of living.

“We are going to develop and need energy; we have a low per capita energy consumption and emission. It is going to increase but we haven’t yet peaked," the person said. “Countries (in regions) like Europe have already peaked, and they are targeting net zero by 2050. They are asking us to do so by then. How is this possible?"

India aims to achieve net zero targets by 2070.

Carbon credits

India is also expected to push for Article 6 of the Paris Agreement. Article 6 allows countries to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more nations meet climate targets.

Article 6 should be finalized as there is no major dispute about it, the first person said. The developed world like the US and EU have a dispute among themselves on how the system should be oriented—whether it should be centralized or decentralized. "Others don't have a problem."

It is estimated that trading in carbon credits could reduce the cost of implementing NDCs by more than half ($250 billion) in 2030, facilitating the removal of 50% more emissions (about 5 gigatons of carbon dioxide a year by 2030) at no additional cost. Over time, the markets are expected to become redundant as every country gets to net zero.

There has been a dialogue on just transition work program, aimed at ensuring no country is left behind as the world moves to cleaner energy. “We will have to see how a decision is going to be taken on that. But then just transition is not something we can look at it only as a project," the second person said.

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On other issues like food security, Carbon Border Adjustment Mechanism or unilateral trade measures, specific targets are unlikely since these can’t be mitigation measures, one of the two people said when asked about how Donald Trump’s re-election is going to impact trade globally.

Prime minister Narendra Modi and minister for environment, forest and climate change Bhupendra Singh Yadav will skip COP29. An Indian delegation of 15-18 official led by Kirti Vardhan Singh left for Baku on Friday morning.

“The proposed reforms of multilateral banks aim to tackle climate financing challenges by offering more guarantees against defaults and increasing their lending to climate initiatives through greater leverage of their balance sheets," Singh of CSI said. “At this COP29, we hope concrete action will be taken to help address some of the financing challenges."