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How COP29 outcomes compel countries like India to reassess their climate targets

What are the implications of inadequate climate finance on India's Nationally Determined Contributions (NDCs) and future climate action plans?

Climate financeThe shortfall in funding commitments may compel India, along with other developing nations, to reassess their climate targets and future action plans. (File)

— Abhinav Rai

(The Indian Express has launched a new series of articles for UPSC aspirants written by seasoned writers and scholars on issues and concepts spanning History, Polity, International Relations, Art, Culture and Heritage, Environment, Geography, Science and Technology, and so on. Read and reflect with subject experts and boost your chance of cracking the much-coveted UPSC CSE. In the following article, Abhinav Rai, a Doctoral researcher working on the impact of climate change on glacier dynamics in the Himalayan Region, analyses how inadequate climate finance affects India and other countries’ NDCs.)

As global climate negotiations continue to face challenges, the US administration’s decision to disengage itself from the international climate change framework – evident in its withdrawal from the Paris Agreement and recently from the board of the recently-created Loss and Damage Fund which is meant to provide financial support to countries ravaged by climate change disasters – speaks volumes about the geopolitical and economic realities of climate negotiations.

The COP29 outcomes have already disappointed developing economies, which severely undermined the objectives of the Paris Agreement by promising just $300 billion in climate finance, instead of the projected requirement of more than $1 trillion a year. 

India has consistently stressed the need for adequate financial support from developed nations to help developing countries meet their climate commitments. However, the shortfall in funding commitments may compel India, along with other developing nations, to reassess their climate targets and future action plans. 

It is reflected in the recent delay by India and other countries in meeting the February 10 deadline to submit their Nationally Determined Contributions (NDCs) for the period up to 2035. Earlier in December 2024, India also failed to submit its first Biennial Transparency Report (BTR) – the new format in which a country has to report its detailed inventory of emissions. This report is expected to be submitted around the middle of the year. 

Additionally, a recent report by the Reserve Bank of India estimated that the country will need to spend at least 2.5% of its GDP annually until 2030 on climate finance to fulfil its green transition requirements. All these developments highlight the significance of understanding what climate finance means for India, its climate commitments, and its plan to achieve them. 

What climate finance means

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To fulfil their climate commitments, countries like India need to build green infrastructure, which requires substantial financial resources. Large-scale investments in climate finance are needed to build adaptation and mitigation capabilities and significantly reduce emissions. 

The United Nations Framework Convention on Climate Change (UNFCCC) defines climate finance as “local, national or transnational financing — drawn from public, private and alternative sources of financing that seeks to support mitigation and adaptation actions that will address climate change.”

India’s climate commitments

At COP26, held in 2021 in Glasgow, UK, India presented its short-term and long-term climate targets as the Panchamrit climate action plan (Five Nectar). These targets aimed at –

— Achieving 500 GW of renewable energy capacity by 2030

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— Meeting at least 50% of the energy requirements from renewable sources by 2030

— Reducing CO2 emissions by 1 billion tons by 2030,

— Reducing carbon intensity below 45% by 2030 (compared to 2005 levels)

— Achieving Net-Zero emissions target by 2070

Marking progress towards these goals, India’s total renewable energy installed capacity crossed the 200 GW milestone by October 2024, which now constitutes more than 46.3% of total capacity. This achievement aligns with India’s target of producing 500 GW of energy from non-fossil sources by 2030. Various sources contributing to this milestone are –  

— Solar power (92.12 GW)

— Wind power (47.72 GW) 

— Large hydro projects (46.93 GW)

— Small hydropower (5.07 GW)

— Bioenergy (11.32 GW)

— Nuclear capacity (8,180 MW)

India plans to achieve 20 GW of nuclear power generation by 2030 and aims to raise it to 9% of its total electricity needs by the year 2047. The Union Budget 2025-26 has a proposal to amend the Atomic Energy Act to enable private players to build small nuclear reactors, accelerating the green transition.

Budgetary allocations and schemes for climate action 

Keeping its commitment to renewable energy transition, the budget allocated Rs 26,549.38 crore to the Ministry of New and Renewable Energy – an increase of 53.48% against the Revised Estimates of Rs 17,298.44 crore a year ago. The ministry has witnessed a 904% increase in fund allocations since FY21.

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The budget also provided 20,000 crore for the Nuclear Energy Mission this year. Funding for e-mobility initiatives has increased from Rs 4,435 crore in FY25 (Revised Estimates) to Rs 5,322 crore in FY26.

India’s budget for its adaptation strategies increased from 3.7% to 5.6% of GDP between FY16 and FY22. Further, to mobilise financial resources for building green infrastructure, the central government is issuing sovereign green bonds (SGrBs) for varying maturities of 5, 10 and 30 years. According to the Economic Survey 2024-25, the government issued bonds worth Rs 16,000 crore in FY23, Rs 20,000 crores in FY24 and ₹11,697.40 crores to date in FY25. 

There are many schemes that complement these financial initiatives and give impetus to India’s green energy transition efforts, including   

— PM Surya Ghar Muft Bijli Yojana

— Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM)

— Initiatives for electric vehicles (EVs) and charging infrastructure

— Solar power adoption programmes such as Solar Rooftop Phase II

— Promotion of energy-efficient appliances

— Increased allocations for the National Green Hydrogen Mission

Climate financing and India’s focus on adaptation strategies 

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However, financing remains a major hurdle. The outcomes of COP29 have been a huge disappointment for developing nations, including India, where developed countries promised just $300 billion in climate finance, starting from 2035, against the requirement of $1 trillion a year. The Economic Survey 2024-25 described it as a significant misalignment with the mandate of the Paris Agreement. 

As per the Paris Agreement, countries are required to update their NDCs every five years. This year, countries were expected to submit their NDCs for the period up to 2035 by February 10, 2025. However, many countries, including India, failed to meet this deadline. The delay in submitting NDCs could be due to various factors.

But in the case of India, its plan to host the COP33 climate conference in 2028 could be one of the reasons. Host countries usually announce new climate initiatives ahead of the conference to demonstrate their leadership and create momentum for a more meaningful outcome. India is likely to achieve its 2030 climate commitments ahead of schedule.

Moreover, after assessing the current global realities, India is now trying to reorient its strategy towards prioritising adaptation over emissions reduction. While global climate action is more focused on mitigation efforts, India, as a developing country with limited resources, recognises the need to build adaptive capacities. Adaptation here means enhancing community resilience against adverse impacts of climate change.   

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Need for Climate finance taxonomy

Aligning with this shift, Finance Minister Nirmala Sitharaman, in her July 2024 budget speech, said, “We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country’s climate commitments and green transition.”

Climate finance taxonomies are standardised regulations and guidelines that define environmentally sustainable economic activities. It helps companies and investors to make climate-friendly ‘green’ investments. However, it is still in process, and the final document is yet to be released.

Till April 2024, there were 47 sustainable finance taxonomies, with the EU and China being frontrunners in developing sustainable finance taxonomies, later Singapore, Thailand, South Korea, Mexico, South Africa, and other countries have either developed or are developing their own taxonomies.

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Given the unprecedented scale and pace of climate change, India’s adaptation and mitigation efforts have significant implications for the financial stability of the Indian economy. However, by setting ambitious targets, New Delhi has made a decision on where it wants to spend its resources. 

Post Read Questions

India and other countries failed to meet the February 10 deadline for submitting their Nationally Determined Contributions (NDCs) for the period up to 2035. Comment.

What are the implications of inadequate climate finance for India and other developing nations in meeting their climate goals?

What is the climate finance taxonomy? What role would this play in supporting India’s green transition efforts in the long-run?

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How does India’s focus on adaptation strategies differ from its mitigation efforts, and why is this shift important?

What are the potential benefits and challenges of involving private players in India’s nuclear energy sector through amendments to the Atomic Energy Act?

(Abhinav Rai is a Doctoral candidate at the Department of Geography, Delhi School of Economics, University of Delhi.)

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