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This article is produced under the aegis of Climate Tracker’s Online COP26 Climate Justice Journalism Fellowship, awarded to The Bastion’s Environment Lead Vaishnavi Rathore. To read the rest of her coverage under this fellowship, click here. 

The curtains have fallen on COP26, the global climate negotiations that took place in Glasgow over the last fortnight. A conference that started off smoothly, with ambitious targets set by many countries, ended with two days of heightened tensions and frustration. As COP26 President Alok Sharma inched closer to putting down the gavel, negotiators shared photos of their children and grandchildren for whom they want to make the world better, while Greenpeace pinned a “Not for Sale” sign on the iconic globe at the COP26 venue. 

At the end of the negotiations emerged the Glasgow Climate Pact or the ‘cover decision’, the most important document coming out of COP26. Drafted by the United Kingdom’s Presidency on behalf of all the gathered Parties, it builds on the 2015 Paris Accord to present the pathway for combating climate change in the coming years. On climate adaptation finance—or money that needs to flow from developed nations to developing ones for them to adapt to the impacts of climate change—two more documents hold an important space. They are the texts on Long-term Finance and the New Collective Quantified Goal, various drafts of which were released from 10 November onwards. 

As the negotiations on the Glasgow Climate Pact moved closer towards the finishing line, reactions to its drafts evolved. Negotiators from developing nations and experts initially pointed towards the lack of urgency in a document that used terms like “requests” and “calls upon”, terming them just “polite request[s]” to developed nations to meet their climate finance and other commitments. 60 hours of late-night negotiations later, many found the revised draft of the Pact slightly more balanced, with its stronger language and demands. 

The final eight-page Pact “urged” developed countries to at least double their current levels of collective climate finance for adaptation to developing countries by 2025. But, two days earlier on 10 November, the European Union (EU), Canada, and the United States (US) proposed to delete the doubling reference, with the US further stating that such grant-based resources would be “bad for everyone.”

Hours before the Glasgow Climate Pact was finally adopted on 13 November, Diego Pacheco, Head of the Bolivian delegation, said, “there are concerning concepts [in the text] that will not [help us] move in the right direction and we refuse to get trapped in carbon colonialism.” However, he added, “in the spirit of compromise, we are able to support the texts.” 

Pacheco was speaking on behalf of the Like-Minded Developing Countries (LDMCs), which is a group of 25 developing countries, including India. This was a common sentiment apparent among the various stances of developing nations—the draft texts decided upon at COP26 are not perfect, but, we compromise and agree to them in the spirit of collaboration.

So, what transpired in the two weeks of negotiations regarding climate adaptation finance, and what are the key issues that the global community still did not reach a consensus on? Now, as the dust slowly settles on COP26, how should developing countries like India prepare to make use of international finance efficiently?   

What Happened at COP26: the Ambiguity of Climate Finance 

Even before the negotiations began, one fact was clearly established—that developed countries had failed to achieve their goal of mobilising US$100 billion a year from 2020 onwards for mitigation and adaptation strategies towards the developing world. The United Nations Environment Programme’s Adaptation Gap Report released at COP26 on 4 November made this amply clear: for both mitigation and adaptation, climate finance flows to developing countries reached only US$79.6 billion in 2019. 

In fact, evidence from the report suggests that in order for developing countries to meet their costs of adapting to the climate crisis, they need five to ten times more of the current levels of public finance transferred from developed countries. This gap, the report suggests worryingly, is widening. 

Not only have the EU and US failed to deliver the promised US$100 billion, they have also not agreed to mobilise US$600 billion worth of climate finance between 2021-25 at COP26, an estimate arrived at for developing nations during COP26. Instead, they slipped back to the previously undelivered goal of US$100 billion. 

“We must keep in mind, most of the finance that has been transferred to the developing world is in the form of loans which will have to be paid back with interest to the developed world,” says John Firth in conversation with The Bastion.  Firth is the Senior Director at the Climate and Resilience Hub at Willis Towers Watson, a British multinational insurance company. Data from the Organisation of Economic Co-operation and Development (OECD) on climate finance retrieved between 2016 and 2019 confirms this.

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Be it loans, investments, insurances, or grants, the United Nations Framework Convention on Climate Change (UNFCCC) views all these instruments of climate finance under the same lens. This is because the Convention has no clearly established accounting rules of what constitutes ‘climate finance’. Unsurprisingly, this ambiguity has led to various conflicting estimates on how much developed countries are really giving to the developing nations of the world, as an insightful paper by Roberts et. al. shows. The accounting data is as inconsistent as OECD stating that US$37.9 billion of climate finance was provided by developed nations in 2013, while for the same year, India’s Ministry of Finance insisted that the number was considerably smaller, at US$1-2.2 billion.

The definitional issue remained unresolved at COP26. By 9 November, the frustration of developing nations regarding the ambiguity of climate finance negotiations elevated. 

“Mr. President, all we hear in the negotiations’ rooms, corridors and statements is ambition, ambition, ambition [for mitigation, adaptation, and means of implementation],” said the LMDCs in a statement during the Stocktaking Plenary. “However, there does not seem to be any appetite from our partners to unleash ambition when it comes to the decisions which we have seen through the first week of COP26 [like the net zero targets].” 

This is despite the issue being directly raised in the first week of COP26, where India speaking for the LMDC said that it was “high time the new collective goal reflects ambition on [the] provision and mobilization of climate finance.”

Addressing this ambiguity, the first version of the draft decision on Long Term Finance released early in the morning of 12 November drew attention to the lack of a “multilaterally agreed definition of climate finance.” In the revised draft released a day later, the chair of COP26 requested the Standing Committee on Finance to continue deliberations on the definition, with the aim of providing a draft proposal for consideration at COP27 in November of 2022. 

“With countries using their own taxonomy of climate finance, it becomes very difficult to work on adaptation and mitigation projects without clear outcomes and metrics,” Anu Jogesh, Policy and Governance Lead for Acclimatise South Asia, tells The Bastion. “It becomes murky for receiving nations to track where this money is coming from, how much, and for what purpose. This is especially the case if it is flowing into the private sector, which has no database for such information.”   

On 10 November, the first cover decision draft was released, adding to developing nations’ fury, who found that it lacked severity. “‘Urging’, ‘calling’, ‘encouraging’ and ‘inviting’ [terms which the draft decision used] is not the decisive language that this moment calls for,”  said Ambassador Aubrey Webson, from the Alliance of Small Island States (AOSIS), in a statement. The African Group and LMDC, including India, then proposed that the developing world should deliver at least US$1.3 trillion per year between 2025 and 2030. 

But, the latest draft on collective quantified goal on climate finance, released on 13 November, shied away from specifying a number. It instead called to establish an ad-hoc programme from 2022 to 2024 which would be facilitated by two co-chairs—one each from a developed and developing country. In this time frame, the committee would deliberate on setting a new collective quantified goal. The clarity on quantified climate finance that is required is now subject to further deliberations over time, which is not good news for countries facing the worst of climate change.

Yet, despite the ambiguity surrounding climate finance, not to mention the unmet targets, whatever funds that do exist have been transferred from developed countries to developing ones. So, where does India stand as a recipient of climate funds?

While the UNFCCC’s Green Climate Fund was expected to be the protagonist that directed public funds, currently, climate finance is being largely transmitted through more than 100 channels, including private banks, equity funds, and multilateral banks like the World Bank and Asian Development Bank. Between 2016 and 2019, Asia received US$30.6 billion—or of international climate finance—ranking it first amongst all recipient regions. 

India is seemingly one of the largest beneficiaries within Asia; the yearly average for climate finance flows in 2015 and 2016 was US$2.6031 billion. But, this global finance from multilateral organisations, foreign impact investors, and philanthropies constitutes only 15% of the country’s overall share of green finance, according to Akshay M, a Senior Research Associate at the Climate Finance vertical of LEAD at Krea University.

“The provision of the majority of green finance in India—around 70%—is dominated by the national government through various policies and schemes, and commercial banks,” says Akshay, speaking to The Bastion in his personal capacity. Extending this exasperation regarding unmet climate finance targets to the global arena, India set a price to its commitments at COP26: its Nationally Determined Contributions (NDCs) to climate change worldwide will not be updated till there is clarity on whether India would receive its climate finance demands. In an interview with the Hindustan Times on 10 November, an anonymous delegate stated: “We will need [US]$1 trillion till 2030 mainly for renewable energy and storage; decarbonisation of [sic] industrial sector and adaptation. Let’s be clear that India will not update its NDCs till there is clarity on climate finance. We are in no mood to submit them until these issues are resolved.” 

But, as India makes these demands, a question arises—how is the country receiving global climate finance and utilising it domestically?

Within India, most of these climate funds are being disbursed for climate mitigation—or efforts to reduce greenhouse gases—instead of adaptation measures—or efforts to adjust to the impacts of the climate crisis. This mirrors the global status quo.

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