The term climate finance is in news ever since the United Nations Climate Change Conference (COP27) created history on Sunday by creating a loss and damage fund to help developing countries like India and Pakistan. The money will be mainly contributed by developed countries.
In its statement, the United Nations said that climate financing would be primarily directed towards developing countries which are particularly vulnerable to the adverse effects of climate change.
But how does climate finance affect the Indian economy in a broader perspective?
The United Nations defines climate finance as local, national or international financing – derived from public, private and alternative sources of financing – that seeks to support mitigation and adaptation actions that address climate change.
As noted by the United Nations, the Convention, the Kyoto Protocol and the Paris Agreement call for financial assistance from parties with greater financial resources that are less affluent and more vulnerable.
In a way, climate finance is funding and financing, which will help reduce greenhouse gas emission projects by helping to install renewable energy systems such as wind and solar.
In addition, this local and international funding, which is likely to come from alternative private and public sources, will also help communities adapt to climate change impacts by providing simple solutions.
For example, resilient seeds could help farmers grow food even during droughts.
India has welcomed the new step announced at the conference. However, countries like the US and some other European countries have criticized the decision a bit.
“As the devastation caused by climate-induced disasters has had a tremendous impact globally, especially on developing countries, India is pleased to launch the Loss and Damage Fund,” said Satyam Vyas, Founder and CEO, Climate Asia.
The Loss and Damage Fund will first focus on the least developed countries, an important step towards addressing the climate crisis,” added Vyas, who runs an organization focusing on various projects related to climate change. Is.
According to many climate experts, India may not be the primary beneficiary of the Loss and Damage Fund, but it is certainly being seen as a victory for India, which has been the most successful in attending COP27 as well as assisting in the finals. Staying ahead draft.
Shailendra Singh Rao, Founder and MD, Credus said, “Given that India is an agricultural country and climate change affects agriculture maximum, this loss and damage fund will help in the transition.”
India has excluded agriculture transition from its NDC because it does not want to burden farmers, setting up of the fund will help farmers transition to low carbon development,” said Rao, a senior scientist working on sustainable environmental projects. run the organization.
With Prime Minister Narendra Modi’s call for Net Zero 2070, many experts believe climate finance There can be a huge boost in the upcoming budget 2023-24. (Image: Freepik)
Climate finance is expected to grow as Union Finance Minister Nirmala Sitharaman has already begun consultations with industry heads.
“From encouraging private financing to offering SOPs to big banks, the budget is expected to lay down important guidelines for climate finance. Apart from helping farmers on a large scale, offering finance and deductions to corporates that aid start-ups in the renewable energy sector, the budget may also help smaller operators looking to transition to renewable energy.
Kotak Institutional Equities noted in its report, India intends to implement carbon pricing as one of the key strategies to reduce emissions. The bill for the rollout of carbon pricing has already been approved by the lower house of the parliament and will be introduced in the upper house in the upcoming winter session. Rollout of carbon pricing will affect carbon-intensive cost dynamics and capital intensity
Sectors like power, metals and cement.