UN COP27: What is Climate Financing that India demands from rich nations for developing countries annually - Explainer

Pixabay

New Delhi: The 27th session of the Conference of Parties (COP) of UNFCCC is going to be held at Sharm El-Sheikh in Egypt from November 6 to 18. It’s a United-Nation backed platform where global heads and leaders meet and discuss political steps and strategies together to combat the rising threat of climate challenge and to create a sustainable world.

India called on rich countries on Friday to live up to their promise of providing $100 billion in annual climate finance to developing nations and urged them to increase the amount for future years at next week's U.N. climate conference.

This year’s COP27 summit will be even more crucial in the backdrop of several extreme weather events – typhoons in Bangladesh, unprecedented floods in Pakistan, heatwaves in Europe, wildfires in North America, dry rivers in China, and droughts in Africa.

Let’s try to understand what is climate financing and how it will work in the global scenario.

What is Climate Financing?

Climate finance refers to local, national, or transnational financing, which may be drawn from public, private and alternative sources of financing. It’s a major and quintessential tool to combat climate change because countries need to make large-infrastructural investments for addressing carbon emission and pollution.

Countries especially less developed ones don’t have enough fund to investment in large-scale projects such as solar panels, electronic vehicles, etc. Therefore, Climate financing helps to pool enough wealth to invest in better technologies and resources.

Climate finance is equally important for adaptation, for which significant financial resources will be similarly required to allow societies and economies to adapt to the adverse effects and reduce the impacts of climate change.

Why do we need it?

According to the New Climate Economy Report, which was issued in 2018, the bold climate action could yield a direct economic gains of US $26 trillion through to 2030 compared with business-as-usual- a conservative estimate.

This becomes important when the issue of development and climate change is in a conflict state. Governments and leaders want to focus more on development at economic and societal level for a better society. However, in normal cases, it happens at a cost of environment desolation. Laying down roads, constructing dams and ports, and producing large amount of products would definitely harm the environment.

Less developed countries can’t afford to sidetrack their funds for reducing poverty, malnourishment, illiteracy, etc. for the projects that might don’t have direct impact.

(With Agencies Inputs)