Context
India is pushing for predictable climate finance and an equitable energy transition at key UN climate negotiations. Developing countries require adequate and reliable financial support to address climate change while continuing their economic development.
Why is Climate Finance important for India?
- Rising Temperature: India’s surface temperature has increased by around 1°C since 1950, increasing the risk of heatwaves and other extreme weather events.
- Increasing Heatwaves: In 2025, India experienced 77 heatwave events spread over a cumulative 536 days across the country.
- Rising Energy Demand: India is the world’s third-largest energy and oil consumer. With economic and population growth, its energy demand is expected to increase substantially, potentially reaching 2.5 times the present level by 2047.
- Dependence on Coal: As of June 2025, India had around 495 GW of installed power capacity, including approximately 217 GW of coal-based thermal power capacity. Coal contributed around 71% of electricity generation.
- High Cost of Energy Transition: Shifting towards renewable energy, cleaner technologies and low-carbon infrastructure requires huge investments. Climate finance can help India meet its climate commitments without compromising development.
International Framework for Climate Action
Important Articles of the Paris Agreement
- Article 3: Countries must progressively strengthen their climate commitments over time.
- Article 4: Countries are required to prepare Nationally Determined Contributions (NDCs) to reduce greenhouse gas emissions and contribute towards limiting global warming.
- Article 9: Developed countries must provide financial resources to developing countries for climate action.
- Article 13: Countries must regularly report their progress on climate commitments, including NDC implementation.
- Article 14: Provides for a periodic assessment of collective global progress through the Global Stocktake every five years.
Evolution of Climate Finance Mechanisms
- UNFCCC – Article 11:
- Provides for a financial mechanism to support developing countries in implementing climate-related commitments.
- The Global Environment Facility (GEF) serves as an operating entity of this financial mechanism.
- Kyoto Protocol – Adaptation Fund:
- Established to finance adaptation projects in developing countries.
- Supports countries in dealing with the adverse impacts of climate change.
- COP16 – Green Climate Fund (GCF):
- Established to support developing countries in adopting low-emission and climate-resilient development pathways.
- Intended to mobilise climate finance from developed countries.
- COP19 – Loss and Damage Mechanism:
- The Warsaw International Mechanism for Loss and Damage was established.
- It focuses on addressing the financial and other consequences of climate-related disasters and irreversible damage.
- Paris Agreement – Article 9:
- Provides for financial support from developed countries to developing countries.
- It also forms the basis for setting collective climate finance goals.
New Collective Quantified Goal (NCQG) on Climate Finance
- Under the Paris Agreement, a new collective quantified goal on climate finance was introduced to strengthen financial support for developing countries.
- The earlier commitment was to mobilise $100 billion annually from developed countries.
- The new climate finance target agreed upon at COP29 includes:
- $300 billion annually by 2035: To be mobilised by developed countries for developing countries.
- $1.3 trillion annually by 2035: A broader ambition to scale up climate finance from all sources.
COP30: Concerns of Developing Countries
COP30 raised concerns among developing countries regarding the adequacy of international climate finance.
- Insufficient Financial Support: Developing countries demanded climate finance mobilisation of around $1.3 trillion annually by 2035, but the $300 billion target remains far below their expectations.
- Historical Responsibility: Developed countries, often referred to as the Global North, have contributed significantly to historical greenhouse gas emissions and therefore have a greater responsibility to provide financial support.
- Growing Climate Vulnerability: Developing countries face increasing costs due to heatwaves, floods, droughts and other extreme weather events.
- Unequal Energy Transition: Without adequate financial assistance, developing countries may struggle to shift towards cleaner energy while meeting their growing development and energy requirements.
Conclusion
Predictable climate finance is essential for ensuring that developing countries can address climate change without compromising their developmental priorities. India must continue advocating an equitable energy transition based on the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC).
Frequently Asked Questions (FAQs)
Q1. Why is climate finance important for India?
Climate finance helps India address rising temperatures, heatwaves and extreme weather while meeting growing energy demand. It also supports investment in renewable energy and cleaner technologies without compromising economic development.
Q2. What does Article 9 of the Paris Agreement provide?
Article 9 requires developed countries to provide financial resources to developing countries for climate action. It forms an important basis for international climate finance and collective financial commitments.
Q3. What is the New Collective Quantified Goal (NCQG) on Climate Finance?
Agreed at COP29, NCQG sets a target of mobilising $300 billion annually by 2035 from developed countries for developing countries, alongside a broader ambition of scaling finance to $1.3 trillion annually.
Q4. What are the major concerns of developing countries regarding climate finance?
Developing countries consider the $300 billion target inadequate compared to their needs. They highlight historical responsibility, increasing climate vulnerability and the difficulty of financing an equitable energy transition without adequate international support.
