The global climate regime and climate finance

Detail

1. Why a global regime is needed

• Climate change is a global problem. Greenhouse gases (GHGs) mix in the whole atmosphere. A tonne of CO2 from any country warms every country.
• So no single country can fix it alone. Countries need shared rules. This set of treaties, bodies and meetings is the global climate regime.
• Sustainable development (Brundtland, 1987) means meeting today's needs without harming the ability of future generations to meet theirs. Climate treaties apply this idea to the atmosphere.

2. UNFCCC, 1992 (in force 1994)

• UNFCCC (United Nations Framework Convention on Climate Change) is the "parent" treaty. It was adopted at the Rio Earth Summit in 1992 and came into force in 1994.
• It is a framework: it sets goals and principles but has no binding emission cuts. Later protocols and agreements add the details.
• Annex I vs non-Annex I:
• Annex I = developed (industrialised) countries plus economies in transition. They must lead.

• Non-Annex I = developing countries, including India and China.

• CBDR-RC (Common But Differentiated Responsibilities and Respective Capabilities), Art. 3.1:

• Common: every country has a duty to protect the climate.

• Differentiated: developed countries must do more. They caused most historical emissions (all the gas released since the Industrial Revolution). They also have more money and technology (capability).

• COP (Conference of the Parties) is the yearly meeting of all member countries. It is the top decision-making body.

3. Kyoto Protocol, 1997 (in force 2005)

• Binding targets for Annex I only. Developing countries had no cut targets.
• Target: Annex I emissions to average 5.2% below 1990 levels over the first commitment period, 2008-12.

• Worked example: a group emitted 1,000 Mt CO2e in 1990. Its average yearly limit for 2008-12 = 1,000 × (1 − 0.052) = 948 Mt.

• Three flexible "market mechanisms". These let countries meet targets more cheaply:

• CDM (Clean Development Mechanism): a developed country pays for a clean project in a developing country, such as a wind farm in India. It earns CERs (Certified Emission Reductions, which are credits) and counts them towards its own target. India was a major host of CDM projects.
• JI (Joint Implementation): the same idea, but the project is in another Annex I country.

• Emissions trading: Annex I countries buy and sell unused emission allowances.

• Doha Amendment (2012): added a second commitment period, 2013-20.

• Weakness: the USA never ratified. Big emerging emitters had no targets. So coverage shrank over time.

4. Paris Agreement, 2015 (in force 2016)

• Temperature goal: keep warming well below 2°C above pre-industrial levels, and pursue 1.5°C.
• Bottom-up model: there are no targets set from the top. Each country writes its own pledge.
• NDC (Nationally Determined Contribution): a country's own climate pledge. It is updated every 5 years, and each new NDC should be more ambitious than the last. This rule is called the "ratchet".
• Global Stocktake (GST): a review every 5 years of the world's total progress. The first was concluded at COP28 (Dubai, 2023). India says its 2031-35 NDC took the first GST's outcome, CBDR-RC and equity into account [3].
• Key articles:

Article	Subject	Simple meaning
Art. 6	Carbon markets	Countries can trade emission cuts (6.2 is country-to-country; 6.4 is a UN-run market that replaces the CDM)
Art. 8	Loss and damage	Recognises harm that adaptation cannot prevent
Art. 9	Finance	Developed countries shall provide finance to developing countries

• Big shift from Kyoto: all countries now submit NDCs, not only Annex I. This is why people ask whether CBDR still has force (see §9).

5. Key target concepts

• Carbon intensity (emissions intensity of GDP) = total GHG emissions ÷ GDP. It measures how much pollution the economy creates for each rupee of output.

• Worked example: in 2005, emissions = 100 units and GDP = 50 units, so intensity = 2.0.

  • A 45% cut means intensity in 2030 = 2.0 × 0.55 = 1.1.
  • If GDP grows to 200 units by 2030, allowed emissions = 1.1 × 200 = 220 units.
  • So total emissions can still rise while intensity falls. This is why intensity targets suit growing economies.

• Net zero: all GHG emissions are balanced by removals (forests, carbon capture). India's target year is 2070.

• Carbon neutrality: net CO2 only is zero. Net zero is wider because it covers all GHGs.
• Carbon negative: removals are more than emissions. Bhutan and Suriname are examples, thanks to their large forest cover.

6. India's commitments

a) Panchamrit ("five nectar elements"), COP26, Glasgow 2021

1. 500 GW non-fossil capacity by 2030
2. 50% of energy requirements from renewables by 2030
3. Cut 1 billion tonnes of projected emissions by 2030
4. 45% cut in carbon intensity (vs 2005) by 2030
5. Net zero by 2070

b) First NDC (2015) and its results

• Targets for 2030: a 33-35% cut in emissions intensity, and 40% of installed power capacity from non-fossil sources [2].
• Both were met early: the intensity target 11 years ahead of time and the capacity target 9 years ahead [2].

c) Updated NDC (August 2022), for 2021-30

• Cut emissions intensity 45% below 2005 levels by 2030.
• Reach ~50% of installed power capacity from non-fossil sources by 2030. This depends on technology transfer and low-cost international finance, including the GCF.

• Trap: this is capacity (GW that can be installed), not actual electricity generation.

• Create an extra carbon sink of 2.5-3 GtCO2e through forest and tree cover.

• Promote LiFE (Lifestyle for Environment): a mass movement for mindful use of resources instead of wasteful consumption.

d) LT-LEDS (November 2022)

• Long-Term Low Emission Development Strategy: India's plan for how to reach net zero by 2070.

e) Progress

• Non-fossil share of installed capacity: 52.57% as of 28 February 2026. So the 2030 goal was reached five years early [2][3]. (NCERT: crossed ~50% in 2025.)
• Emissions intensity fell 36% between 2005 and 2020. This was reported in the first BTR (Biennial Transparency Report, the progress report required under Paris), 2024 [3].
• Per capita emissions are about one-third of the world average [3].
• Growth vs emissions: from 2005 to 2019, India's GDP grew at a CAGR (average yearly growth) of nearly 7% [3].

f) NDC for 2031-2035 (submitted April 2026)

• Status: this NDC was approved by the Union Cabinet and submitted to the UNFCCC in April 2026 [2][3]. (NCERT: "2035 NDC status is pending".)
• Its targets, with 2005 as the base year and 1 January 2031 to 31 December 2035 as the period [3]:
• Cut emissions intensity of GDP by 47% by 2035, from 2005 levels [2][3]
• Reach about 60% of cumulative installed power capacity from non-fossil sources by 2035, with technology transfer and low-cost international finance [3]
• Create a carbon sink of 3.5-4.0 billion tonnes CO2e through forest and tree cover by 2035, against 2005 [3]

• Continue LiFE, invest more in adaptation (agriculture, water, Himalaya, coasts, health, disasters), and mobilise "new and additional" finance from developed countries [3]

• The NDC sets no sector-wise cut obligations, including none for agriculture. It targets only economy-wide intensity [3].

• It is framed around Viksit Bharat 2047 [3].

g) Domestic architecture

• NAPCC (National Action Plan on Climate Change), 2008 has 8 national missions: 1. Solar 2. Enhanced energy efficiency 3. Sustainable habitat 4. Water 5. Sustaining the Himalayan ecosystem 6. Green India 7. Sustainable agriculture 8. Strategic knowledge for climate change

• SAPCCs: State Action Plans on Climate Change apply the national plan at state level.

7. Climate finance

• Definition: money from public, private and alternative sources used for mitigation (cutting emissions) and adaptation (coping with climate impacts).
• $100 bn/yr goal:
• Set at Copenhagen (COP15, 2009). The target year was 2020, later extended to 2025 [5].
• The OECD says it was first met in 2022, two years late [5].
• Totals then rose to $132.8 bn (2023) and $136.7 bn (2024), so the goal was exceeded in both years [5].

• Data for 2025 will not be available before 2027 [5].

• Loans dominate:

• In 2023, public climate finance was 73% loans ($75.6 bn) and 24% grants [5].
• In 2024, it was 67% loans ($68.5 bn) and 29% grants ($29.7 bn) [5].

• About three-quarters of total climate finance is public money [5].

• NCQG (New Collective Quantified Goal), adopted at COP29, Baku, November 2024, for 2026-2035 [4][5]:

• At least $300 bn/yr by 2035, with developed countries taking the lead. This roughly triples the old $100 bn goal [4].
• It sits inside a wider call to scale up finance from all sources to at least $1.3 trillion/yr by 2035. This is called the "Baku to Belém Roadmap to 1.3T" [4][5].
• The UNFCCC's Standing Committee on Finance will report on progress every two years, starting in 2028 [5].

• India called it inadequate and objected to its adoption.

• Institutions:

Body	Role
GCF (Green Climate Fund)	Largest dedicated climate fund; set up under the UNFCCC in 2010
GEF (Global Environment Facility)	Older fund (1991); serves several environment treaties, including the UNFCCC
Adaptation Fund	Created under Kyoto; pays for adaptation projects in developing countries
NAFCC (National Adaptation Fund for Climate Change), India, 2015	Domestic fund for state-level adaptation projects

8. Adaptation finance, and loss and damage

• Adaptation finance pays to build resilience (the ability to cope with and recover from climate shocks), such as flood defences and drought-tolerant crops.
• Glasgow pledge (2021): double adaptation finance by 2025 from 2019 levels.

• Actual adaptation finance was $33.6 bn (2023) and $34.7 bn (2024). Growth was only about $1 bn a year from 2022 to 2024. The OECD says doubling "requires strong growth in 2025" [5].

• Loss and damage means harm beyond what adaptation can prevent. Examples are a submerged island or a lost harvest.

• Warsaw International Mechanism (2013): the first formal UNFCCC body on loss and damage.
• COP27 (Sharm el-Sheikh, 2022): countries agreed to create a fund.
• COP28 (Dubai, 2023): 198 countries agreed to make the fund work [6].
• Hosting: the World Bank is the interim host. The fund is a World Bank-hosted Financial Intermediary Fund (FIF) for 4 years. The Bank runs the fund's secretariat and acts as its trustee (the body that holds and manages its money) [6][7].
• The Philippines is the host country of the fund's Board. The first Executive Director started on 1 November 2024 [6].
• Scale gap: pledges of a few hundred million dollars are tiny compared with needs.

9. Key debates

• Grants vs loans: loans add to poor countries' debt. Loans still make up 67-73% of public climate finance (2023-24) [5].
• Private mobilisation: the NCQG leans on "all sources". Critics say this lets rich-country governments shift the burden to markets.
• Widening the donor base: rich countries push China and the Gulf states to pay. Under the UNFCCC these are still non-Annex I (developing) countries.
• Does CBDR survive Paris? Paris asks everyone to submit NDCs. India argues that fairness still needs differentiation. It points to its low per capita emissions (about one-third of the world average) and a "mitigation ambition gap" left by developed countries [3].

Prelims Hooks

• CBDR-RC is in Art. 3.1 of the UNFCCC (1992), not in the Kyoto Protocol.
• The Kyoto target of 5.2% below 1990 (2008-12) applied only to Annex I. The Doha Amendment added a second period, 2013-20.
• CDM projects are in developing countries. JI projects are in other Annex I countries.
• Paris articles: Art. 6 = markets; Art. 8 = loss and damage; Art. 9 = finance. The first Global Stocktake was at COP28 (2023).
• India's 2022 NDC target of ~50% non-fossil refers to installed capacity, not generation. It reached 52.57% on 28 Feb 2026 [2].
• India's 2031-35 NDC: 47% intensity cut, ~60% non-fossil capacity, 3.5-4.0 GtCO2e sink by 2035 [3].
• NCQG (COP29, Baku 2024): ≥$300 bn/yr by 2035, within a $1.3 trillion call [4].
• The $100 bn goal was set at Copenhagen 2009 and first met in 2022 (OECD) [5].
• The Loss and Damage Fund is hosted by the World Bank as a FIF for an interim period of 4 years. Its Board host country is the Philippines [6][7].
• Carbon negative examples: Bhutan, Suriname. Carbon neutrality covers CO2 only; net zero covers all GHGs.

Mains Points

• Growth with lower emissions: India's intensity-based targets allow growth while breaking the link between GDP and emissions.
• Intensity fell 36% (2005-20) while GDP grew ~7% a year (2005-19) [3].
• Both first-NDC targets were met 9-11 years early [2].

• This makes India's case that development and climate action can go together.

• Quality of finance, not just quantity: flows passed $100 bn only in 2022, and loans still dominate (67% in 2024) [5].

• Loans → more debt for climate-vulnerable countries → less fiscal space for health and education.

• So India's objection to the $300 bn NCQG is about both scale and grant content.

• The CBDR vs universality tension: Paris's "everyone pledges" model blurs the Annex I split.

• India defends equity through per capita emissions, historical responsibility and conditional targets (technology transfer and low-cost finance) [3].

• Adaptation and loss and damage as justice issues: adaptation finance is stuck around $34-35 bn (2023-24) [5], and the loss and damage fund is small.

• This hurts India's farmers, coasts and Himalayan states.
• It links to NAPCC missions, NAFCC and disaster-management financing.