Experts fear climate finance hit to developing nations

India had last year proposed a loss and damage fund but the COP26 final text steered clear of it

- SHREYA JAI & NITIN KUMAR

The contentious issue of climate financing of developing nations by the Global North could catch more heat during the upcoming Conference of Parties summit (COP27) in Egypt next month. Key climate aid provider countries are likely to divert their development budgets towards soaring energy prices and the impending cost of Russia-Ukraine war refugees. This would lead to climate funding constraints for countries such as India.

India, in its nationally determined contributions (NDCs), has expressed the need of low-cost global finance for meeting its own climate targets. It had also promoted a "loss and damage" fund during the last COP26, which could also face fiscal pressure.

Ian Mitchell, senior policy fellow and co-director, development cooperation, at the Center for Global Development, Europe, says that first Covid-19 and now energy price rise have fiscally affected a lot of provider countries. "Rather than the promised increases, it is possible that there are cuts in the development budget of European nations towards climate aid: the UK has already cut some funds for climate," Mitchell says.

Another challenge that has also emerged is Ukraine, which is eligible for global aid but would cut into the development budgets for other programmes including climate. "Aid rules also allow hosting refugees to be counted as aid, and those countries treating their 'aid' budgets as fixed will need to make cuts elsewhere. The cost of hosting refugees will be very high for the UK and other European countries," Mitchell says.