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EDITORIAL ANALYSIS: Raising money for green transitions

Source: Indian Express


  • Prelims: Current events of international importance, COP, IPCC, G20, GCF etc
  • Mains GS Paper II: Bilateral, regional and global grouping and agreements involving India or affecting India’s interests, Important international institutions etc



  • The United Nations Climate Change Conference 2022 — COP27 — opened in Sharm el-Sheikh(Egypt) with the aim of ensuring full implementation of the Paris Agreement adopted in 2015.
  • The world is shifting to clean energy.
    • Renewables are becoming competitively cheaper.




Renewable energy:

  • They are natural and self-replenishing, and usually have a low- or zero-carbon footprint.
  • Examples of renewable energy sources:
    • Wind power
    • Solar power
    • Bioenergy (organic matter burned as a fuel)
    • Hydroelectric including tidal energy.


Climate Financing:


  • The Adaptation Fund under Kyoto Protocol: It aims to finance concrete projects and programmes that help vulnerable communities in developing countries that are Parties to the Kyoto Protocol to adapt to climate change.
  • Green Climate Fund: It is the financial mechanism of the UNFCCC, established in 2010.
    • Paris Accord climate finance commitment of USD 100 billion per year.
    • It was established to limit or reduce greenhouse gas (GHG) emissions in developing countries and to help vulnerable societies adapt to the unavoidable impacts of climate change.
  • Global Environment Fund (GEF): GEF has served as an operating entity of the financial mechanism since the Convention came into force in 1994.
    • It is a private equity fund focused on seeking long term financial returns by investments in clean energy under climate change.
    • GEF also maintains two additional funds, the Special Climate Change Fund (SCCF) and the Least Developed Countries Fund (LDCF


Climate financing in India:


Targets and financing set by major emitters:

  • US: The Inflation Reduction Act will pump $370 billion into climate and clean energy investments.
  • China: By 2025, a third of its energy needs will come from renewables.
  • India: 50% energy requirements will come from renewable energy by 2030.


Concerns with financing:

  • Case of South Africa: At COP26 in Glasgow, South Africa convened investment worth $ 5(eight point five)billion into its plans for energy transitions
    • Very little of this materialized as almost all of this finance is loans.
  • International finance institutions such as the MDBs: The inflexible governance structures (voice and vote, leadership selection, etc) which undermines the legitimacy of these institutions in the eyes of the emerging market countries.


Paris Agreement:

●    It is a legally binding international treaty on climate change.

●    Adoption: It was adopted by 196 countries at Conference of the Parties COP 21 in Paris, 2015.

●    Goal: To limit global warming to well below 2° Celsius, and preferably limit it to 1.5°(one point five)Celsius, compared to pre-industrial levels.

●    Objective: To achieve the long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate-neutral world by mid-century.



Way Forward

  • The negative impacts on workers and communities should be reduced, and the benefits should be fairly distributed.
  • Green climate fund(GCF): At COP27 in Egypt, developing countries are expected to push to meet the commitment for $100 billion annually,
    • Emphasizing a channel like the GCF could reduce dependence on the policies and concessionality imposed by MDBs.
  • GCF: GCF is the only institution which combines a very large scale with legitimacy and ownership.
  • Lower tax rates: A rapid transition can be promoted by having lower tax rates for goods whose production has low to zero carbon emissions.



  1. Explain the purpose of the Green Grid Initiative launched at the World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November, 2021. When was this idea first floated in the International Solar Alliance (ISA)?(UPSC 2021)

(200 WORDS, 10 MARKS)