Paris Global Climate Financing Summit

July 1, 2023

GS Paper III Environment and Ecology

Context:

Recently, the Summit for a New Global Financing Pact concluded in Paris in June 2023. The Summit was announced at the 27th Conference of Parties (COP27) of the UNFCCC.

Announcements made in the Summit:

Lending Capacity: An additional lending capacity of $200 billion would be unlocked for emerging economies.
- The World Bank announced disaster clauses for debt deals, that would suspend debt payment in the case of extreme weather events.
Private Sector Investment Lab: World Bank unveiled a ‘Private Sector Investment Lab’ with the aim to “develop and rapidly scale solutions that address the barriers that are preventing the private sector from investing — at scale — in emerging markets and developing countries.
Just Energy Transition Partnership: A new 2.5 billion Euro JETP deal was announced for Senegal, with a consortium of countries comprising Germany, France, Canada, the European Union, the United Kingdom, with the goal of increasing the share of renewable energy in installed capacity to 40 per cent of Senegal’s electricity mix by 2030.
Carbon markets: The EU unveiled a call to action on ‘Paris Aligned Carbon Markets’ with the goal of covering at least 60 percent of global emissions with carbon pricing mechanisms and allocating a proportion of the revenues to climate finance
Climate Finance Goal: It was suggested that the long overdue $100 billion climate finance goal will be delivered in 2023.

Additional Information

Climate finance

Climate finance is a broad term that can refer either to the role of finance in facilitating efforts to address climate change or to the obligations owed by richer nations to poorer ones.
Climate finance is used to incentivize investment and development in renewable energy infrastructure, sustainable agriculture, or other adaptations to climate change.

Global Initiatives:

Green Climate Fund (GCF): In 2010, member countries of the United Nations Framework Convention on Climate Change (UNFCCC) agreed to establish the Green Climate Fund (GCF) during the COP 16 summit.
- The GCF supports developing countries in their transition to low-emission and climate-resilient development.
- Headquarters: Incheon, Republic of Korea.
Loss and Damages Fund: At the COP27 summit, delegates from the United Nations agreed to create a ‘Loss and Damages’ fund, which aims to compensate the most vulnerable countries for their losses resulting from climate-related disasters.

Initiatives in India:

National Adaptation Fund for Climate Change (NAFCC): It was established in 2015 to provide financial support for climate change adaptation in Indian states and union territories that are particularly vulnerable to its adverse effects.
National Clean Energy Fund: It was created in 2010 through the Finance Bill 2010-11. It is funded through a carbon tax on coal use by industries and is aimed at promoting clean energy.
- The fund supports research and development of clean energy technologies in both fossil fuel-based and non-fossil fuel-based sectors.
The National Adaptation Fund: Established in 2014 with an initial corpus of Rs. 100 crores.
- It operates under the Ministry of Environment, Forests, and Climate Change (MoEF&CC) and aims to bridge the gap between the financial needs for adaptation and the available funds.