COP27: One victory, and some big disappointments

The clear winner at COP27 was the group of climate-vulnerable developing countries that succeeded in creating a special fund to pay for climate impacts. For decades, they had testified to their helplessness against a problem they never caused. They were up against the richest nations in the world who refused to even put the topic on the summit agenda.

Two things changed very recently, which boosted their cause. First, climate scientists developed methods to attribute the likelihood of an extreme weather event specifically to global warming. Because of this new science, we now know that the heat wave that hit north India in 2022 was 30 times more likely only due to climate change. Second, two regional governments — Scotland in the UK and Wallonia in Belgium — broke away from the stance of their national governments and put forward the first sums of money for losses due to climate impacts. This created some peer pressure for other industrialised countries to also pledge funds.

What does this mean for India? India has made major advances in early warning systems and rarely seeks international help in natural disasters. For us, it is perhaps more important to stand united with other vulnerable countries. The creation of this new “loss and damage” fund is truly a victory against all odds.

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This year’s climate summit took place against a backdrop of war and energy insecurity. Renewable energy has become big business and is seeing record breaking growth. From 2019 to 2021, solar power generation grew by 47 per cent and wind by 31 per cent worldwide. But the share of renewables in the global electricity mix is stuck at around 35 per cent for the last 20 years. It needs to become about 75 per cent by 2030 to meet the growing demand for power while limiting global warming to 1.5°C.

This means that even as renewable energy scales up, fossil fuel use will need to be phased down. Last year’s COP pledged to phase down coal, and this year India challenged all countries to commit to phasing down all fossil fuels. However, the final statement from the COP only calls for a diversified energy mix, implicitly endorsing the continued expansion of gas.

For India, the transition to a net-zero emissions future may require an additional investment of nearly $3 trillion over the next three decades. We need to build infrastructure to generate renewable energy, store it, transmit it, use it to run electric vehicles, and produce green hydrogen for industry. For comparison, India’s total FDI is about $100 billion a year.

The game-changing action in the COP could be its call to reform the international financial system to unleash concessional funds for climate action.

During the pandemic, many developing countries were forced to cut back their domestic investments for building climate resilience, for instance, Fiji by 40 per cent, Indonesia by 20 per cent, and Bangladesh by 7 per cent. Other developing countries were pushed deeper into debt because the climate finance they received from rich countries was in the form of loans that had to be repaid in foreign currency. Developing countries face high costs of borrowing capital for clean energy projects. Adapting to climate risks in sectors like agriculture, water, and health currently gets only a fifth of available climate finance, and needs grants rather than loans. Last year’s COP promised to double the funding for adaptation by 2025.

The dismal track record of rich countries in delivering climate finance has caused palpable resentment. As Mia Mottley, the prime minister of Barbados, said, “We were the ones whose blood, sweat and tears financed the industrial revolution. Are we now to face double jeopardy by having to pay the cost as a result of those greenhouse gases from the industrial revolution?”

Injecting fresh funds by reforming the practices of international financial institutions may be the real legacy of COP27 – one that finances the green development aspirations of countries like India. India will take up the presidency of the Group of Twenty (G20) biggest economies covering 85 per cent of world GDP and 75 per cent of trade from December 1. As G20 president, India will have a unique platform to drive the sustainable energy transition agenda forward, forge clean technology partnerships, and spotlight where and what type of climate finance is needed the most.

(Ulka Kelkar is director of the climate programme at World Resources Institute India. Views expressed are personal.)