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The G20 Delhi Declaration Set the Climate Finance Agenda For COP28

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The Pulse | Environment | South Asia

The G20 Delhi Declaration Set the Climate Finance Agenda For COP28

India’s G-20 presidency succeeded in pushing the climate funding envelope from the billions into the trillions.

The G20 Delhi Declaration Set the Climate Finance Agenda For COP28
Credit: Official White House photo

If there’s one thing India’s G-20 presidency should be remembered for, it is putting record – and finally realistic – numbers on the funds that developing nations should receive to fight mounting climate change challenges.

The New Delhi Leaders’ Declaration acknowledges that the developing world will need $5.9 trillion till 2030 for its Nationally Determined Contributions, and an additional $4 trillion each year for clean energy technologies to meet zero emission goals. That’s a whopping $34 trillion by 2030 – more than the GDP of $25.46 trillion reported by the world’s largest economy, the United States, last year. On an annualized basis, the sum is about 5 percent of global GDP.

It makes for a clear-eyed ask compared to the mere billions being discussed so far in global climate conversations. This would in effect mean raising funds worth 5 percent of annual global trade, which is currently estimated to be about $25 trillion.

The figures also bowl over earlier estimates like the $1.3 trillion annual number put forth by the World Economic Forum and are more in line with the $5 trillion figure put forth by researchers last year. Notably, with the latest G-20 declaration developed nations have signed off on trying to raise these finances at a time of an ongoing war in Ukraine and nightmare-inducing global inflation figures.

This clearly raises the stakes for when these same national players meet again to negotiate at the COP28 in Dubai. Going by the G-20 declaration, finance will be the key issue.

The question of who will foot the bill for worsening climate change consequences has always been a significant one. But as the national costs of protecting people from worsening heat waves, floods, and drier monsoons become steeper, the cracks caused by the unmet financial promises of richer nations and rising inequalities in the poorer ones are widening. This was evident this June at Bonn in Germany, where climate talks almost broke down and ended without a satisfying outcome.

For years now, organizations like the World Bank have talked of a  “billions to trillions” agenda. Yet, developed nations have failed to meet even their modest promise to help climate efforts in developing nations by making available $100 billion.

It isn’t difficult to conclude that it will be tough to raise the kind of funds the G-20 declaration has agreed upon.

Already, developing nations have been pushing for acknowledgment of common but differentiated responsibilities, which seeks to have developed countries acknowledge their historical actions that have brought world temperatures to a boiling point. Meanwhile, climate change denial and anti-ESG campaigns are gaining steam, especially in the United States, the world’s largest historical emitter.

The G-20 declaration’s numbers would require developed countries to commit to actions this decade. It also calls for reforms to the working of multilateral development banks, a commitment to setting up a loss and damage fund, and ensuring developed nations make good on their $100 billion promise. All these developments will also help shape COP debates.

The G-20’s proposal to restructure the workings of the World Bank, International Monetary Fund, etc. to ease funding flows for poorer nations battling high debt and lack of resources for their populations also dovetails with the June discussions of the Bridgetown Initiative put forth by Barbados.

The Bridgetown Initiative’s proposal has sought to tweak the lending rules of multilateral lenders to give developing nations access to cheaper funds, provide currency exchange guarantees, and ensure disaster clauses are included in debt repayment deals. These, in addition to other proposals, such as imposing a levy on emissions from the shipping industry or a fee on oil exports, could realistically ease flow of funds for vulnerable nations with limited resources.

Despite these advances, the Delhi meeting may well be faulted for not pushing its members on commitments to cut use of fossil fuels and end construction of new coal power plants. The G-20 accounts for 93 percent of the world’s operating coal plants and 88 percent of new proposed unabated coal power plants. This is expected to continue to remain a major topic of discussion at the COP.

Yet, the Green Development Pact, which has pledges covering a wide range of issues – from sustainable lifestyles to implementing just energy transitions, delivering financial support, reducing disaster risks, and tripling renewable energy capacities – is a strong statement coming from nations that collectively contribute 80 percent of the world’s carbon emissions.

While it may not be easy to rewrite the rules of global capitalism, the commitment to change the way the multinational development banks operate will be a step toward making more money available to meet climate challenges in poorer nations. The G-20 are the major shareholders in these banks, and the group itself is the largest part of the global economy – and consequently the biggest contributor of both emissions and funds.

Ahead of COP28, the G-20’s Delhi Declaration has asked for $34 trillion to fight this war against climate change. As with all negotiations, the starting figure may drop in practice – but the hope is that developing nations will at least receive a fraction of that sum to protect their vulnerable populations.