this year, but COP27 in EgyptA dizzying array of topics were on the table for discussion – from the more familiar emissions reductions to more detailed rules governing carbon markets. But for developing countries, including India, the stories related to climate finance are important. As developing countries have rising energy needs and vulnerable populations, they need financial support for low-carbon transitions, building resilience to inevitable climate impacts, and other serious challenges, key among these Loss and damage (L and D) from climate-induced impacts., Perhaps one of the biggest headlines after COP27 was the establishment of a new L&D fund.
The main L&D agenda for developing countries since the Paris Agreement (2015) is to address the damage already done to the existing narrative of deferring L&D and holding developed countries morally responsible and financially accountable for the same Start making. ,
Widespread drought in Africa, floods in Pakistan, and wildfires globally were the prelude to this COP. Given these climate events, developing countries are trying to separate L and D from adaptation. They argue that the damage caused by these events cannot be optimized away. And as scientists today are able to attribute these events to climate change, and by implication, greenhouse gas emissions, developing countries say that developed countries must inherit the resulting responsibility and liability.
L and D in the ratified UN lessons are mostly involved in prevention and pre-disaster preparedness, thus linking L and D with adaptation. This is in the interest of the developed countries who do not want any new responsibility. Obligations and compensation for L&D were also taken off the table in the decision text that came with the Paris Agreement – and developing countries were only able to get L&D on the COP27 agenda by leaving negotiations about liability once again were capable
l and d burden and responsibility
Against this backdrop, the new L and D Fund introduced at COP27 appears to be a narrative failure, adapting and shielding the gap between L and D. Following the G77+China recommendation, the text finally frames L and D as post-event “rehabilitation”. , recovery and reconstruction”. But it does not include the mention of the principle of historical responsibility and common but differentiated responsibility (CBDR). What’s more, there is no clear indication that the fund will be paid for by developed countries. This decision explores a “mosaic” of solutions, encouraging different actors to contribute, which may mean a slow shift of the L&D burden to the private sector, and perhaps to richer developing countries such as China. Even for
The ambiguity about responsibility is actually designed to undermine the notion that in the case of L and D there are separate victims and perpetrators. Once liability and CBDR are removed from L and D – in short, a counterfactual assumption to hold developed nations morally and fiscally accountable – it risks becoming toothless: more voluntary than compensated. the prize.
on climate finance
COP27 also focused on ways to increase finance flows to support positive climate action in developing countries.
In 2009, developed countries pledged $100 billion in annual climate finance to developing countries by 2020, which has still not been met. Developing countries expected this amount to come from public sources, although the sources were never clearly defined. And although this is only a fraction of what developing countries need, it is an important symbol of trust. Much discussion about finance has focused on assessing progress towards this goal, which developed countries now aim to meet by 2023. Lessons learned from this progress should also inform ongoing discussions about a new, advanced developed country goal to replace this $100 billion commitment. By 2025. Fulfilling the current pledge and developing a meaningful new pledge – based on the needs of developing countries – would be an important confidence-building exercise in encouraging greater cooperation towards climate action.
Editorial | Incremental victory: on ‘loss and damage’ fund commitment at COP27
With this track record, developing countries have been keen to focus on developed country obligations. As a result, there was no discussion on Article 2.1c of the Paris Agreement, which seeks to make all finance flows compatible with low-carbon development. Developing countries fear a diminished focus on developed country obligations, while developed countries argue that this article could play a transformative role in mobilizing the trillions actually needed to respond to climate change. As a result, this element of the finance agenda was postponed, but is likely to be taken up next year. With growing indications that developed country public finances will, in fact, fall far short of meeting the needs of developing countries, COP27 also saw momentum towards stimulating finance through other channels.
The multilateral system and the carbon market
For the first time, the COP27 decision text included a call to reform the global financial system, particularly multilateral development banks (MDBs), to make them more supportive of climate action. It also, crucially, urged the MDB to reduce borrowing costs for climate projects, increase finance for adaptation, and better align its operations with the Paris Agreement. In parallel, carbon markets emerged as more prominent vehicles for channeling private finance. In carbon markets, some entities sell credits by reducing their emissions by a threshold, while others buy these credits to offset emissions they are unable to reduce. Under Article 6 of the Paris Agreement, two types of markets will allow countries and companies to trade emissions reductions. While many questions about the design of these markets were addressed at COP26, discussions on unresolved issues raised concerns about whether these markets would be transparent, deliver real emissions reductions, and double-count risk reduction – By buyers and sellers of credit. Such lack of transparency and double counting can open the door to greenwashing.
Carbon markets are also increasingly becoming involved in the Only Energy Transition Partnership (JETP), which is emerging as a way for developed countries to rapidly finance the move towards clean energy systems in developing countries. As India searches for such partnerships for its own energy transition, plans to use carbon credits to enable private investment raise similar risks regarding the adequacy and predictability of finance; Can it reach areas that need more support, and is it an attempt by developed countries to shirk responsibility.
While developing countries at COP27 wanted to focus on public finance that developed countries should provide, finance conversations are becoming multi-stranded and spreading outside formal negotiating channels. India will need to watch these trends carefully, and what they may indicate for amounts, sources, predictability, impacts and equity.
With the new L&D Fund, the line between victim and perpetrator has blurred. But given that all of the Fund’s practical mechanisms are yet to be decided, it will be interesting to see whether developing countries can redefine the lines of responsibility, and perhaps even liability, in future negotiations.
Anirudh Sridhar is Associate Fellow at the Center for Policy Research, New Delhi. Aman Srivastava is a Fellow at the Center for Policy Research, New Delhi