DECODING COP28 FOR INDIA: Finance and Investment for Climate Risk Management
KAKALI DAS
A Webinar jointly hosted by CANSA and Sphere India on December 20th delved into COP28’s implications for India and its climate discourse. The distinguished panel, featuring Mr. Sanjay Vashist, Dr. Aditi Kapoor, Ms. Pallavi Das, Mr. Vikrant Mahajan, Mr. Rituraj Phukan, and other eminent figures, tackled crucial topics.
In this article, we would about Finance and Investment for Climate Risk Management by one of the panellists, Ms. Pallavi Das, Program Lead for Low Carbon Economy Team at Centre for Energy Environment and Water.
And prior to that, lets understand the key highlights of COP28.
Sanjay Vashist, Director of Climate Action Network, South Asia (CANSA), characterized this year’s Climate Change Conference as intricate, especially regarding President-designate His Excellency Al Jaber, also the CEO of an oil company. Anticipating a presence of fossil fuel lobbyists, the COP indeed hosted over 500, as reported by The Guardian.
The ongoing conflicts, such as the Russia-Ukraine war and Israel-Palestine tensions, added complexity. Despite these challenges, the Loss and Damage Fund was approved on Day 1, a significant accomplishment achieved through a year of negotiations involving five transitional committees.
The fund, currently under the interim secretariat of the World Bank, raises concerns due to the institution’s undemocratic reputation and history of funding fossil fuels. With 11 conditions attached, if accepted and rightly interpreted, the fund could parallel the Green Climate Fund, offering a positive outlook for future contributions.
A milestone was reached In addressing fossil fuels, with the term officially inserted into the outcome. The Presidency presented four options for addressing fossil fuels, marking the first-time negotiations on the root cause of climate change took center stage.
Tensions between Developed and Developing Countries emerged, echoing G20’s commitment to tripling renewable energy. India, however, refrained from endorsing this in COP28, citing concerns about the concurrent phase-out of coal. The distinction between fossil fuels and coal sparked debates, as developed countries aimed to phase out only coal, leaving oil and gas untouched. Ultimately, the term “Fossil Fuel” found its place in the outcome.
Climate finance remained a challenge, with developed countries showing reluctance. The focus on a New Climate Quantified Goal for Finance post-2025 sought to address the inadequacy of the earlier $100 billion agreement. Negotiations on criteria and figures continue, with discussions extending into the Bonn Session next year.
Another crucial issue discussed was the concept of a Just Energy Transition for developing countries, emphasizing India’s emphasis on transformation and livelihood. These four issues formed the key highlights of COP28.
Finance and Investment for Climate Risk Management
Ms. Pallavi Das, Programme Lead for the Low Carbon Economy Team at the Centre for Energy, Environment, and Water, delves into the realm of financial and investment strategies for climate risk management. While this COP prominently featured discussions on fossil fuels, there has been notable progress on the global goal of adaptation.
Developed countries have been spearheading efforts to establish consensus on this front, resulting in the agreed-upon text for the Global Goal on Adaptation (GGA). Ms. Das shared insights on India’s need to focus on adaptation, highlighting the vulnerability of 75% of Indian districts to extreme climate events.
With over 80% of India’s population residing in highly vulnerable districts, facing various climate risks such as floods, droughts, and cyclones, the imperative for prioritizing adaptation becomes apparent. Despite mitigation taking center stage in COP and other discussions, Ms. Das emphasizes the urgency of elevating adaptation and resilience efforts due to the escalating impacts of climate change.
To fortify India’s adaptation endeavors, Ms. Das underscores the significance of local action plans. While the National Action Plan on Climate Change (NAPCC) lays the foundation, numerous states now boast State Action on Climate Change (SAPCC), and cities are developing their climate action and adaptation plans. However, she urges an acceleration in these efforts to match the escalating climate risks.
Addressing why India should invest in adaptation finance, Ms. Das points out the staggering economic losses of $4.2 billion due to floods in 2022. The annual investment required for adaptation stands at $46 billion, equivalent to 1.3% of India’s GDP. Effective preparedness could have saved over $89.7 billion in the last two decades. Nature-based solutions, early warning systems (EWS), and critical infrastructure protection (CPI) emerge as key areas for investment.
Investing in nature, EWS, and CPI can yield significant returns, contributing to mitigation, biodiversity preservation, and reducing infrastructure losses. Ms. Das emphasizes the need for tripling global investments in nature by 2030 and highlights the impressive returns on investing in EWS, with potential savings ranging from $3-16 billion annually.
Despite these compelling reasons, Ms. Das outlines the abysmal gap in adaptation finance, indicating a need for $857 billion annually until 2030, far exceeding the current available funds of less than $21 billion. The COP text’s lack of ambition to close this gap is alarming, especially given the 15% reduction in last year’s finance for climate change adaptation.
India’s substantial spending on climate adaptation, projected to reach INR 57 trillion in the next seven years, underlines the magnitude of the challenge. The challenges to adaptation funding encompass the absence of specific quantitative goals, high uncertainty, and varying costs influenced by sector coverage, risk levels, and defined boundaries.
COP28 faces criticism for its shortcomings in the global finance narrative, lacking clear directions for nations and failing to establish a financial framework. The meagre $700 million raised for a required $580 billion by 2030 for the Least Developed Countries’ loss and damage fund underscores the urgency for robust climate finance mechanisms.
Recognizing climate finance as the primary catalyst for climate adaptation, Ms. Das identifies key requirements, including fiscal decentralization, public-private partnerships, and collaboration with multilateral and bilateral development banks. Emphasizing the importance of accessible and concessional finance, she underscores that the quality and delivery of funds are as crucial as their availability.
Looking ahead, Ms. Das outlines essential steps for channelling adaptation finance, including clear indicators and frameworks for assessing future climate risks, methods to estimate loss and damage finance, building local community capacities for risk assessments, and boosting funding through decentralized grant and loan initiatives.
Kakali Das is the Assistant Editor of Mahabahu and attended COP28 in Dubai
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