Large climate fund, just transition for developing nations, key priorities for India at COP29: experts

A large climate fund and a just transition away from fossil fuels is expected to be among key priorities for India at the UN Climate Change Conference (COP29) in Azerbaijan in November, as the $100 billion/year climate fund initiated at COP15 comes up for replacement next year, industry experts said Oct. 18.

World leaders are under pressure to build a new global climate finance framework, known as the New Collective Quantified Goal on Climate Finance, at COP29 in Baku amid divergence in opinions between developed and developing countries.

India is expected to steer the debate toward “the scale of finance… and the quantum of contribution to be made by the donor countries which have the largest contribution in terms of cumulative emissions,” RR Rashmi, distinguished fellow at The Energy and Resources Institute, or TERI, told S&P Global Commodity Insights.

The country, the world's third-largest emitter of CO2, will push for “creating a global fund” initiated by greater participation from governments, focused on “mobilization from every possible source, including public and private sector,” Rashmi said.

India has repeatedly called for developed countries to provide $1 trillion/year in climate finance with others echoing it -- a group of African countries asked for $1.3 trillion/year at the recent African Ministerial Conference on the Environment and independent experts appointed by the G20 suggested $1.8 trillion/year.

“The big game now is finance flows,” Gauri Singh, Deputy Director-General of International Renewable Energy Agency told Commodity Insights at a recent summit, adding “India can't assume itself as the leader of the global south without really taking on a strong position.”

Both Rashmi and Singh said another discussion point will be adaptation finance, crucial for projects such as infrastructure resilience and agricultural adaptation for communities as it has drawn limited funds so far compared to mitigation finance and India could ask for it to be beefed up.

In addition, COP29 is expected to set the guidelines, methodology and distribution of the loss and damage fund, where India may ask for an equal footing in the assessment, while resisting the demand by some nations for large emerging economies to also contribute to the fund, according to Rashmi.

Fossil phase down

India played a significant role in changing the text at COP26 in Glasgow by advocating the phase down of all fossil fuels, not just coal. This year it is seen continuing to uphold its stance, emphasizing developing countries should have the autonomy to determine their own pace of energy transition.

At COP28 in Dubai, India was among the nations that agreed on a final text of the global stock take, which included "transitioning away" from fossil fuels and working "toward the phasedown" of unabated coal.

“The legacy of last year is that all fossil fuels are expected to be brought under the mitigation work program,” Rashmi said. “And India's effort or push would naturally be to ensure that this is just, equitable and also ensures sustainable development.”

As such, India is unlikely to agree to any targets on the phase-down of fossil fuels as its dependence on coal is crucial for its rapidly growing economy where more coal is needed for electricity demand and more liquid fossil fuels for the transport sector.

“I hope that the text will actually make that push maybe towards carbon tax or maybe towards some kind of a funding that would enable more grants and concessional funds going into developing countries,” Singh added as the likely points for discussion for phasing down fossil fuels.

India’s emissions (excluding CCUS) is seen rising from 3.97 billion mt GHG in 2023 to 5.13 billion mt GHG by 2040, data from Commodity Insights shows. Emissions from India are expected to keep rising well into the 2050s, according to estimates by experts.

Relook at commitments

Azerbaijan faced much criticism for being a major oil and gas producer right after the last COP at the UAE, and observers said the needle may not tilt much in favor of calls for cutting down new additions of fossil fuels in several nations including India, especially in the wake of greater geopolitical conflicts.

“The political situation is fragile… there has been enough proof for us to see that people have been dawdling a little bit [with] conventional fuels and renewables,” Vaishali Nigam Sinha, co-founder and chairperson, sustainability of renewable energy company ReNew told Commodity Insights.

The participants at the COP would therefore have to be mindful “the conversation doesn't shift in a way where we are oil and gas heavy, and renewables becomes tokenism.”

India will also expect resolutions to the issues surrounding carbon market regulations which will enable it to sign a Joint Crediting Mechanism with Japan, as indicated by government officials.

"Article 6 discussions have been grinding and contentious," said Mohd. Sahil Ali, Associate Director, Commodity Insights. "Meanwhile, India has taken major strides towards its domestic carbon market through a transparent, deliberative and inclusive process."

Platts recently heard Article 6.2 certified Household Device credits indicatively valued at $25-$30/mtCO2e, between an African country (host country) and Switzerland (buyer country) of forward vintage and forward delivery.