According to the United Nations Framework Convention on Climate Change (UNFCC), climate finance is the flow of funds to all activities, programmes, or projects to help address climate change for both mitigation and adaptation, in all economic sectors, anywhere in the world.
But how much global funding is required to address the complex issues involved? An independent study commissioned by the UK and Egypt put this requirement at $1 trillion a year by 2025 and around $2.4 trillion per year from 2030.
Short of funds
Money has been in short supply. Figures released in October 2022 by UNFCC found that global climate finance flows were $803 billion per year on an average in 2019–2020. But in the same period $892 billion per year was invested in fossil fuels and $ 450 billion on fossil fuel subsidies. Environmentally harmful subsidies stood at $1.89 trillion.
According to UNFCC, the sectors that received the most climate finance in 2019–2020 were renewable energy ($336 billion per year on average) and sustainable transport ($169 billion). Agriculture, forestry and other land use received only $16.5 billion—less than 2.5% of total climate finance.
At the summit for a New Global Financing which concluded in Paris last fortnight, global leaders announced that a $200-billion lending capacity would be made available for emerging and developing economies. The summit also promised to address the lack of money flowing to poor and vulnerable countries.
It is estimated that for India to achieve Nationally Determined Contributions (NDCs) under the Paris Agreement, it requires $170 billion per year till 2030. The government hopes to raise this from domestic and foreign debts as well as by involving the private sector to achieve climate mitigation goals.