India and China, the world’s two most populous nations, are central to global climate efforts. Together, they represent over a third of the global population and contribute significantly to global emissions. As major economies and leaders in the developing world, their actions will play a decisive role in achieving – or hindering – global climate goals.
The recent 29th Conference of the Parties (COP29) in Azerbaijan underscored this reality, marking a significant step forward in the global climate agenda. With key agreements reached to accelerate climate action, the summit, dubbed the “climate finance COP,” saw countries unite to establish a more ambitious climate finance target, aiming to accelerate action on emissions and adaptation.
A key outcome was the establishment of the New Collective Quantified Goal (NCQG), which will replace the expiring US$100 billion target and commit to mobilizing US$300 billion annually for developing countries by 2035..
However, the NCQG falls short of the US$1.3 trillion target developing countries had advocated for — and even that figure may be insufficient to fully address their climate financing needs.
Key questions remain: Who will shoulder the costs? Will the funding be in the form of grants, concessional loans, or private sector loans? And, crucially, how will these resources be allocated and distributed? These uncertainties must be addressed for the NCQG to be truly effective.
The new agreement holds significant implications for both India and China. As central players in this climate finance commitment, their contributions, alongside global support, will be crucial in determining whether the world can meet its climate objectives.
As a major emerging economy, India faces the challenge of balancing climate goals with economic development and poverty alleviation. Recent discussions at COP29 underscored India’s need for increased climate finance to transition to a low-carbon economy.
New Delhi has long argued that developed nations, responsible for the bulk of historical emissions and with higher levels of economic development, should shoulder a larger share of the financial burden. While India has made progress in renewable energy — setting an ambitious target of 500 gigawatts (GW) of non-fossil fuel-based energy by 2030—it still faces significant obstacles in scaling these efforts without substantial financial and technological support.
The NCQG’s commitment to mobilizing US$300 billion annually for developing countries offers hope. But India’s call for more substantial climate finance remains unmet.
India’s approach to climate action is inherently linked to its development priorities. Despite this, India ranked 10th in the latest Climate Change Performance Index (CCPI), with a relatively low per capita emission of 2.9 tons of carbon dioxide equivalent (tCO2e), well below the global average of 6.6 tCO2e. This ranking reflects India’s proactive climate policies, demonstrating that sustainable growth is achievable even for developing countries.
However, India has repeatedly emphasised that climate finance should not come with strings attached, such as green standards or policy restrictions that could hamper its economic growth. For New Delhi, the key challenge will be to balance its development needs with climate commitments, ensuring that financial assistance is both equitable and transparent.
China, for its part, has also faced scrutiny. At COP29, China came under intense scrutiny for its insufficient contributions to climate finance. As the world’s largest emitter, its financial commitment to global climate action is increasingly seen as a critical test of its leadership on the world stage.
Under the 2015 Paris Agreement, climate finance responsibility falls on developed nations due to their historical emissions. However, negotiators have increasingly urged China to take on a larger financial role.
While China maintains its stance as a developing country and resists mandatory contributions, its voluntary pledges have raised questions about its commitment — setting the stage for continued debate on China’s financial responsibility in global climate action.
Critics argue that China’s rising global influence, its strong industrial capacity and its status as the world’s largest greenhouse gas emitter necessitate greater responsibility in addressing climate change. As global pressure for climate action intensifies, China’s role in climate finance will face heightened scrutiny – especially if Beijing aims to assert greater influence in shaping international climate diplomacy.
Since 2016, China has committed over US$24.5 billion in climate finance to developing nations, according to Chinese officials. Annual contributions are estimated at around US$4 billion – roughly 5% of what developed countries contribute. While significant, it still falls short of the US$100 billion annual target for developed nations, a responsibility China has yet to meet.
Although China has emerged as a key player in climate finance, it operates outside the traditional United Nations framework and on its own terms. Notably, a significant portion of its financial contributions is in the form of loans rather than grants, raising concerns about the long-term sustainability and potential debt burdens of recipient nations.
As China’s geopolitical and economic power expands, its climate finance strategy will face increasing pressure, especially as calls for greater transparency and more robust commitments intensify.
COP29 set a crucial milestone with the NCQG. For India and China, the conference underscored their pivotal roles in funding global climate action. Both countries must now lead by example. After all, their actions will shape the future of climate diplomacy and global sustainability.
Neeraj Singh Manhas is special advisor for South Asia at the Parley Policy Initiative, Republic of Korea. He has previously worked as the Director of Research in the Indo-Pacific Consortium at Raisina House, New Delhi.
