CLIMATE FINANCE (Syllabus: GS Paper 3 – Environment)

Context: The New Delhi declaration of G20 countries released in September 2023, captured the importance of providing climate finance to developing countries, Union environment minister recently said at the Environment Minister’s Session during the second edition of Voice of Global South Summit.

Climate Finance

• Definition: It describes the financial resources produced to support initiatives that diminish the effects of global warming and help people adapt to them. This involves public climate finance pledges made by industrialised nations under the UNFCCC, corporate sector investment, and regional resources.

Global Climate Financial Mechanisms

• Global Environmental Facility: The GEF, established on the eve of the 1992 Rio Earth Summit, is a catalyst for action on the environment. Through its strategic investments, the GEF works with partners to tackle the planet's biggest environmental issues.
• Least Developed Countries Fund (LDCF): The Least Developed Countries Fund (LDCF) was established in 2001 to support a work programme to assist Least Developed Country Parties (LDCs) carry out, inter alia, the preparation and implementation of national adaptation programmes of action (NAPAs).
• The SCCF, or Special Climate Change Fund: It was created in 2001 to address the specific needs of developing countries under the UNFCCC to adapt to the impact of climate change and increase resilience. 
• The Adaptation Fund (AF): The Adaptation Fund (AF) was established in 2001 to finance concrete adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change.
• Clean development mechanism: The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries.
• The Green Climate Fund (GCF): It was set up in 2010 under the UNFCCC’s financial mechanism with aim to expand collective human action to respond to climate change. 
• The Climate Investment Funds (CIFs): It is a multilateral fund established in 2008 to finance and scale climate pilot projects in developing countries.