GCF to Support Vulnerable Nations

Why in the News?

Recently, the head of the Green Climate Fund (GCF) pledged to ensure that vulnerable nations receive essential financial assistance to tackle climate challenges.

What is the Green Climate Fund (GCF)?

• Overview:
  • The GCF is a climate finance initiative established within the framework of the United Nations Framework Convention on Climate Change, launched in 2010 and headquartered in South Korea.
• Governance:
  • The Fund is managed by the GCF Board and is accountable to the Conference of the Parties (COP), operating under its guidance. It supports various projects, programs, policies, and activities in developing countries through designated funding windows focused on specific priorities.
• Functions:
  • Nationally Determined Contributions (NDCs) are climate action plans that detail how countries plan to reduce greenhouse gas emissions and adapt to climate impacts. The Paris Agreement mandates all countries to formulate, communicate, and update their NDCs every five years. The GCF is tasked with helping developing nations achieve their NDC goals towards low-emission, climate-resilient pathways.

Climate Finance

• Overview:
  • Climate finance encompasses funding aimed at addressing climate change, sourced from public, private, and alternative avenues.
• Significance:
  • It is crucial for reducing emissions and adapting to climate change effects, enabling countries to transition to low-carbon economies and meet the objectives of the Paris Agreement.
• Need in India:
  • India requires climate finance to enhance renewable energy capacity, modernize infrastructure, and boost energy efficiency.
• Financial Mechanisms:
  • The UNFCCC has established several financial mechanisms to support climate finance for developing countries, including the Adaptation Fund, Green Climate Fund, and the Global Environment Fund.

Objectives and Ambitions of the GCF:

• The GCF serves as a crucial mechanism for directing climate finance to developing nations that, despite contributing minimally to global carbon emissions, face significant impacts from climate change.
  • The fund primarily focuses on two major areas: reducing greenhouse gas emissions and increasing resilience to the escalating effects of climate change, such as storms, droughts, heatwaves, and rising sea levels.
• The GCF has identified 19 climate-vulnerable countries that have received little to no financial assistance.
  • These countries include Algeria, the Central African Republic, Chad, Iraq, Lebanon, Mozambique, Papua New Guinea, and South Sudan.
  • The GCF is now prioritizing support for these nations to provide targeted climate funding.
• The GCF has reaffirmed its commitment to becoming the “partner of choice” for vulnerable countries, ensuring that funds are allocated to areas of urgent need.
  • For example, Somalia, which has been severely impacted by devastating floods and the worst drought in decades, is set to receive over USD 100 million in GCF investments in 2025 to support climate-related initiatives and attract additional investments.

India’s Climate Financing Mechanisms:

• NAFCC: The National Adaptation Fund for Climate Change (NAFCC) is a Central Sector Scheme established in 2015-16. Its primary objective is to support tangible adaptation initiatives aimed at mitigating the negative impacts of climate change.
• NCEF: The National Clean Energy Fund (NCEF) was established to invest in innovative ventures and research related to clean energy technologies.
• Compensatory Afforestation Fund: The CAMPA funds are utilized to compensate for the loss of forest land and ecosystem services. This includes activities such as compensatory afforestation, enhancing forest quality through assisted natural regeneration, enriching biodiversity, improving wildlife habitats, controlling forest fires, protecting forests, and implementing soil and water conservation measures.

• First Sovereign Green Bond: India has issued the inaugural tranche of its first sovereign green bond, valued at INR 80 billion. This positions India as a leader in green bond issuance among Asian emerging markets (excluding China).
• Advocacy for Separate Climate Financing: India has expressed concerns that financing arrangements through multilateral institutions may adversely affect its primary focus on development lending. Consequently, India is advocating for climate finance to be treated independently from development finance.
• CDRI: On the international front, the Coalition for Disaster Resilient Infrastructure (CDRI), led by India, is executing intergovernmental programs aimed at building climate-resilient infrastructure. CDRI is strategically positioned to assist in structuring the loss and damage fund, developing operational mechanisms, and facilitating the deployment of funds to vulnerable nations.
• CBDR-RC: India is raising the issue of climate finance on behalf of the Global South and is promoting the principles of equity and Common But Differentiated Responsibilities and Respective Capabilities.

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