In a blog, the IMF’s Simon Black, Florence Jaumotte, and Prasad Ananthakrishnan argued that emerging and developing countries (EMDEs) need $2 trillion annually, a fivefold increase from 2020.
Even if advanced economies meet or somewhat exceed their promise to provide $100 billion a year, the bulk of the financing for these low-carbon investments will need to come from the private sector, they argued.
“Eight years on from the Paris Agreement, policies remain insufficient to stabilise temperatures and avoid the worst effects of climate change. Collectively, we are not cutting emissions fast enough and are falling short on the needed investment, financing, and technology,” the IMF blog noted.
The IMF guidance comes just ahead of the COP28 meeting to be held in Dubai, where policymakers and governments will converge to chalk out future strategies for climate mitigation.
The 2023 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly referred to as COP28, will be the 28th United Nations Climate Change Conference, which will be held from November 30 until December 12, 2023, in Dubai.In its blog, authored by three IMF officials, they said their analysis showed that the private sector share of climate finance must rise from 40 per cent to 90 per cent of the total in emerging and developing countries by 2030.”That means a broad mix of policies to overcome barriers such as foreign exchange and policy risks, underdeveloped capital markets, and too few investable projects,” the blog read.
Of the 50 per cent cut to emissions needed by 2030 to stay on track for the 1.5-degree target, more than 80 per cent can be achieved from technologies available today.
Getting to net zero by 2050 will, however, require technologies that are still under development or yet to be invented, the IMF said.
“Unfortunately, patent filings for low-carbon technology peaked at 10 per cent of total filings in 2010 and have since declined. Worse, key technologies aren’t spreading fast enough to emerging and developing countries.”
India, a developing country ambitious to become developed by 2047, committed to an ambitious five-part “Panchamrit” pledge at COP26 held in 2021. They included reaching 500 GW of non-fossil electricity capacity, generating half of all energy requirements from renewables, to reducing emissions by 1 billion tonnes by 2030.
India also aims to reduce the emissions intensity of GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070.
Ahead of COP28, India’s Finance Minister, Nirmala Sitharaman, called for concrete action on climate funding and the transfer of technology at the upcoming global climate summit, COP28. Climate finance typically refers to any financing that seeks to support mitigation and adaptation actions that will address climate change.
Demanding action instead of words, the Union Minister, addressing a virtual session at the inaugural event of the India Global Forum Middle East and Africa 2023 (IGF ME&A) held on Monday, said, “Particularly for developing and emerging market economies, funding this is going to be a huge challenge. So, I would think the conversations can happen; a lot of talks can happen but eventually, COP28 should show the direction, both for the transfer of technology and for the actual funding.”
