The development comes amid concerns that developed countries haven’t provided adequate financial assistance to help developing countries make a rapid transition to clean energy without repeating the damage that the advanced economies caused during their development process. While the option of setting up a development bank exclusively for climate finance has been discussed, sources told TOI that the issue needs to be examined in detail and it may not be easy to implement it with just one objective.
The developing nations, including India, have accused advanced economies of not honouring their commitment to fund the massive transition. Countries such as the US are in favour of getting an existing multilateral agency, most likely the World Bank, to step in.
“One place where there is alot of common ground is on reforming the multilateral institutions, including the World Bank. There is shared priority on one, shifting the focus of those institutions to public challenges like climate change, while maintaining focus on development goals. That would mean increasing lending to middle income countries in order to help India, Brazil, other key countries in fight against climate change,to respond,” Mike Pyle, the US deputy NSA and Sherpa to G20, had told TOI during his trip to India for the first meeting of Sherpas in Udaipur last month.
In 2021, multilateral development banks (MDBs) provided around $51 billion (62% of overall MDB climate finance) in climate finance to low and middle-income economies. Of this total, more than $33 billion (65%) was for climate change mitigation and more than $17 billion (35%) for climate change adaptation. The amount of mobilised private finance stood at $13 billion, data released by them showed.
In addition, in 2021, MDBs provided more than $31 billion (38% of overall MDB climate finance) in climate finance to high-income economies, with $29 billion (95%) for climate change mitigation and $1. 6 billion (5%) for climate change adaptation. The amount of mobilised private finance stood at $28 billion.