As the 29th Conference of Parties (CoP29) to the United Nations Framework Convention on Climate Change (UNFCCC) progresses, the global focus intensifies on the significance of climate finance. In sectors like agriculture, forestry, and other land use (AFOLU), and in emerging economies facing a disproportionate burden of climate impacts, concrete actions on operationalising Article 6.4 of the Paris Agreement are crucial. For India, where small and marginal farmers and forest-dependent communities rely heavily on natural resources, the outcomes of COP29 could be transformative.

Highlighting the Complexities and Inconsistencies

The Energy and Resources Institute (TERI) has observed the complexities and inconsistencies within climate finance mechanisms through its work in the international voluntary carbon market, particularly in nature-based solutions (NbS). While carbon finance holds the potential to support both conservation and community development, the lack of uniform standards remains a significant barrier. Clear and accessible standards are essential to bring transparency and trust to the voluntary carbon market and channel meaningful investments into NbS projects that directly benefit local communities.

Establishing Inclusive Mechanisms at CoP29

CoP29 presents a unique opportunity to address this issue by establishing mechanisms under Article 6.4 of the Paris Agreement. These mechanisms should ensure that carbon market participation is accessible to small and marginal farmers, creating a pathway for them to benefit from climate finance. Clear and transparent standards can empower these communities and recognise their contributions to sustainable land use and conservation.

Addressing the Gap for Smallholder Farmers

Conventional climate finance mechanisms often overlook the realities of smallholder farmers and forest-dependent communities in countries like India. Agricultural and forest-based livelihoods are deeply intertwined with natural ecosystems, but existing carbon market frameworks lack an inclusive outlook. CoP29 must introduce guidelines to recognise and support the participation of smaller stakeholders in climate finance. A standardised framework could unlock new revenue streams for farmers and communities engaged in sustainable practices, balancing environmental benefits with financial gains.

Reconciling Climate Action and Development

One of CoP29's most important tasks is to reconcile climate action with the economic and development priorities of emerging economies. In many developing countries, sustainable development and poverty alleviation are top goals. Climate policies should not force trade-offs that compromise these objectives. India, for example, cannot sideline its development agenda. Instead, climate finance mechanisms should support dual objectives of reducing emissions and promoting sustainable economic growth.

Shaping a More Equitable Future

Ultimately, CoP29 has the potential to reshape climate finance, making it more effective, inclusive, and responsive to the challenges of emerging economies. The outcomes will have a profound impact on countries like India, where efforts to mitigate the climate crisis must balance community needs. COP29 must set ambitious climate targets and create practical pathways for their achievement, ensuring that climate finance becomes a tool for equitable progress rather than a privilege for developed nations. As we look to the outcomes of CoP29, we hope to see frameworks that prioritise inclusivity, empower smallholders, and encourage sustainable land-use practices, leading the way to a fair and equitable low-carbon future.