Evaluate the Global North’s efforts to fulfill the annual $100 billion climate finance promise to the Global South. How far can private climate finance help here?

Prior to the 27th Conference of the Parties (COP) of the UN Framework Convention on Climate Change (UNFCCC), the UNFCCC Standing Committee on Finance (SCF) recently published a report on the advancements made by developed nations towards the achievement of the target of mobilizing $100 billion annually.

Climate finance:

• Local, national, or international money that comes from public, private, or other sources of funding is referred to as “climate finance.” 
• By subsidizing renewable energy sources like wind or solar, it supports nations in reducing their greenhouse gas emissions and helps local people prepare for the effects of climate change.

Stand of developed countries:

• Developed nations have emphasised on two principles regarding climate money in recent years. 
• First, they assert that they are on track to meet their pledge to provide $100 billion in climate funding to developing nations every year, as stated in 2009. 
• Second, they consider private money mobilisation to be the crucial element of climate financing moving forward.

Issues related to climate finance goals:

• According to a report from the UNFCCC Standing Committee on Finance (SCF), the $100 billion target was not met in 2020. Efforts by affluent countries to raise private funding have largely failed. 
• According to the most current Oxfam research, the net worth of the OECD’s $83.3 billion in climate aid is between $21 and $24.5 billion. 
• Criticism has also been raised about the OECD studies’ lack of data transparency regarding mobilized private funding. 
• Following the disappointing failure to reach the $100 billion objective, developed nations postponed the deadline for doing so from 2020 to 2025. 
• Developed countries presented a Climate Finance Delivery Plan (CFDP) at COP26 (Glasgow), claiming that the goal would be met by 2023.

Challenges:

• Requirement of public funding. Developing nations have always argued that public funds should account for a sizable share of climate finance since private funding will not take into account their needs and objectives. 
• Climate finance is less profitable. 
• Focus on mitigation rather than adaptation. Private funders are unlikely to find chances in adaptation that are financially beneficial. 
• Targets being pushed. 
• Raising private climate financing is difficult. 
• Developing nations have lower credit ratings. 
• Reduction in private finance.

Way forward:

Developed countries cannot rely solely on private climate funding to meet the demands of poor nations. To meet the demands of developing nations, grant-based and affordable international public climate funding is required.

Topics: GS-II: Developed Versus Developing Countries Indias Interests • GS-II: Important International Institutions Agencies and Fora • GS-III: Conservation Environmental Pollution Degradation