Policy Update
Ilma Ahmad Samir
Introduction
India has renewed its call for increased and reliable climate finance from the developed nations in the lead-up to COP30 (Brazil, 2025), framing it as essential for meeting domestic and global climate goals. While the Loss and Damage Fund, operationalized at COP28, was a diplomatic breakthrough, actual contributions remain far below requirements. For India, which is balancing rapid economic growth with ambitious climate targets, such as achieving 500GW of non-fossil fuel capacity by 2030, adequate financial flows are critical. This renewed push underscores the political dimension of climate negotiations, where equity, responsibility, and development needs to collide.
Background
Climate finance has been the cornerstone of global climate negotiations since the Copenhagen Accord (COP15, 2009), where nations pledged to mobilize USD 100 billion annually by 2020 to support mitigation and adaptation efforts in developing countries. This commitment, reiterated in the Paris Agreement in 2015, recognized the principle of Common But Differentiated Responsibilities (CBDR).
However, the target remains largely unmet, with fragmented and inconsistent flows. For India, a country highly vulnerable to climate impacts yet committed to ambitious goals like achieving net-zero emission by 2070 and enhancing renewable energy capacity, access to affordable and adequate climate finance is vital. Platforms such as the G20, BASIC Group, and South-South cooperation forums have become key arenas for India to advocate for greater equity and accountability in climate funding.
Functioning
Climate Finance operates through a complex mix of multilateral, bilateral, and market-based mechanisms, designed to channel resources from developed to developing nations. The Green Climate Fund (GCF), established under the United Nations Framework Convention on Climate Change (UNFCCC), remains the largest dedicated climate finance mechanism, supporting mitigation and adaptation projects in developing countries.
Alongside, the Loss and Damage Fund, operationalized in COP28, is designed to support countries facing irreversible climate impacts, though with only USD 700 million pledged initially, it remains undercapitalized.
In addition to this, channels like Global Environment Facility (GEF) programs also play a role, concessional loans from multilateral development banks, and bilateral arrangements that blend grants with technical assistance. India has engaged these mechanisms to fund key initiatives such as the National Adaptation Fund on Climate Change, the National Green Hydrogen Mission, and the solar energy projects through the International Solar Alliance (ISA). However, this system is often criticized for its slow disbursements, lack of transparency, and a preference for loans over grants, making access difficult for developing economies.
This highlights the need for streamlined, predictable, and need-based funding mechanisms to meet India’s climate and development goals.
Performance
Looking at the performance, the delivery of climate finance has not met expectations, both worldwide and in India. The USD 100 billion annual target, pledged by the developing countries to be delivered by 2020, remains unmet. According to the Organisation for Economic Cooperation and Development OECD (2023), total flow reached only USD 89.6 billion in 2021, with a significant portion comprising repackaged development assistance and loans rather than new and additional funding.
For India, inflows from the Green Climate Fund (GCF) have totaled around USD 165 million across mitigation and adaptation projects, supporting renewable energy deployment and coastal resilience. However, disbursement remains slow and project specific, limiting their broader impact. The Loss and Damage Fund of COP28, saw its initial pledges of roughly USD 700 million, far below the tens of billions annually experts estimate as necessary. These shortfalls carry strong political implications.
India, positioning itself as a leader of the Global South, continues to frame climate finance as an issue of equity and climate justice, arguing that loan-driven finance undermines the principle of common but differentiated responsibilities (CBDR). This persistent underperformance erodes trust in multilateral processes and is shaping India’s negotiation strategy at COP30 and G20 platforms, where it is advocating for predictable, grant-based finance and stronger accountability mechanisms from developed nations.
Impact
The inadequacy of climate finance has direct implications for India’s development and climate commitments. According to the International Energy Agency (IEA, 2022), India will require USD 223 billion by 2030 to meet its clean energy targets, including 500GW of non-fossil fuel capacity. Yet, the current international flows fall far short, slowing progress in areas such as renewable energy expansion, coastal adaptation, and climate-resilient agriculture. Insufficient and loan-heavy financing adds to India’s public debt burden, constraining fiscal space for social and infrastructure investments.
Moreover, delays in operationalizing funds like Loss and Damage Fund hinder India’s ability to address climate-induced disasters, which cost the country over USD 87 billion between 2000 to 2019. The UNEP Adaptation Gap Report (2022) also estimates that developing countries require USD 16-340 billion annually by 2030 for adaptation, underscoring the urgency for India. These shortfalls not only constrain fiscal space but also erode trust in multilateral processes, bolstering India’s call for equity-driven, predictable finance in line with its Global South leadership role.
Emerging Issues
Despite the progress in establishing new mechanisms, climate finance remains constrained by structural and political challenges. Some of them are discussed below:
First, the North-South divide continues to dominate negotiations. According to OECD (2023), 71% of the climate finance in 2021 was provided loans, often non-concessional, deepening debt vulnerabilities for developing nations instead of providing real relief.
Second, the transparency and credibility concerns undermine trust. Independent assessment like Oxfam’s Climate Finance Shadow Report (2023) estimate that the actual climate-specific value of reported flows could be as low as USD 24.5 billion, nearly half of the USD 89.6 billion reported by the donor countries, as much of it is relabelled development aid or over-valued loans.
Third, key mechanisms remain grossly underfunded: the Loss and Damage Fund, launched at COP28, has received just USD 700 million in pledges, far short of USD 100-580 billion needed annually by 2030. For India, these gaps are not just financial but political, reinforcing its call for grant-based, predictable, and equitable finance, greater accountability from the developed nations, and reforms to multilateral financial institutions. These unresolved issues will be central to India’s negotiating strategy at COP30 and its broader leadership role within the Global South.
Way Forward
To address persistent gaps in climate finance, India is likely to intensify its push for grant-based, predictable, and transparent funding at COP30 and through platforms like the G20, and the BASIC (Brazil, South Africa, India, and China) group. Strengthening the Loss and Damage Fund with a clear replenishment mechanism will be a key priority, alongside shaping the post-2025 collective quantified finance goal, while the experts project may need to reach trillion annually to meet the global needs.
India is also expected to call for reforms in multilateral development banks to lower transaction costs and increase concessional financing, aligning with broader Global South demands for fairer financial architecture. Expanding South-South cooperation and leveraging initiatives such as the International Solar Alliance (ISA) could further diversify financing options. Ultimately, India’s strategy will focus on ensuring that climate finance is accessible, needs-based, and equity-driven, enabling it to meet its ambitious clean energy and adaptation goals while strengthening its leadership within the Global South.
References
- OECD. (2023). Climate Finance Provided and Mobilised by Developed Countries in 2013‑2021. Organisation for Economic Co‑operation and Development. https://doi.org/10.1787/28623e2d-en
- Oxfam. (2023). Climate Finance Shadow Report 2023. Oxfam International. https://doi.org/10.21201/2023.000104
- Government of India, Ministry of Environment, Forest and Climate Change (MoEFCC). (2022). India’s Third Biennial Update Report to the UNFCCC. https://unfccc.int/documents
- International Energy Agency (IEA). (2022). World Energy Outlook 2022. IEA. https://www.iea.org/reports/world-energy-outlook-2022
- United Nations Environment Programme (UNEP). (2022). Adaptation Gap Report 2022: Too Little, Too Slow – Climate adaptation failure puts world at risk. UNEP. https://www.unep.org/resources/adaptation-gap-report-2022
- World Bank. (2021). Resilience and Recovery: South Asia Climate Roadmap. The World Bank Group. https://openknowledge.worldbank.org/handle/10986/35549
- V20 Group of Ministers of Finance. (2022). Climate Vulnerable Economies Loss and Damage Funding Needs. V20 Report. https://www.v-20.org/resources
- UNFCCC. (2015). Paris Agreement. United Nations Framework Convention on Climate Change. https://unfccc.int/sites/default/files/english_paris_agreement.pdf
About the contributor: Ilma Ahmad Samir is a postgraduate in Political Science, UGC-NET qualified, and currently working as a Policy Research Intern at IMPRI, New Delhi. Her research focuses on geopolitical dynamics, public policy formulation, digital governance, and technology-driven administrative reforms
Acknowledgement: The author extends her sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for her invaluable guidance throughout the process.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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