One way to stop limited climate funding derailing climate action
Climate finance is a pressing and difficult area facing international development, and the innovation and expertise of Bangladesh is an example to follow. After two years of negotiation, the implementation guidelines for the Paris Climate Change Agreement are set to be adopted at COP24 this December. Final preparations to these guidelines were recently made by representatives of the world’s governments, in Bangkok, and one of the key questions being asked there was: where is the money coming from?
While it is widely agreed that the guidelines should be fair and transparent, there are some sticking points in negotiations around what this constitutes. Should higher- and lower-income countries be obliged to include the same types of information in their climate pledges? Where should ‘loss and damage’ appear in the rulebook? How should mitigation be captured?
Meanwhile, the economic impact of climate change (as well, of course, as the human impact) keeps escalating. With the worst droughts, flooding, and heatwaves on record hitting many of the world’s most vulnerable communities, and the recently published IPCC report revealing the effect of a 1.5°C global warming, low- and middle-income countries (LMICs) are often shouldering the financial burden. Campaigners at Bangkok asked when the promised money from higher-income countries was going to materialise. These governments have agreed to mobilise $100 billion per year in climate finance by 2020, to support LMICs becoming climate resilient and transforming to clean energy while also tackling the after-effects of climate-related disasters – but the amount of finance currently available is far below this figure (Oxfam estimate $16-21 billion), and there is a lack of clarity about future provision.
The example of Bangladesh
As international environmental law has established in the ‘common but differentiated responsibilities’ principle, all countries are responsible for addressing the effects of climate change, but are not equally responsible. Many of the countries that receive the worst impacts have done little to contribute to the negative human reasons for this impact – yet some of these countries have also taken giant leaps in the area of climate finance.
Looking specifically at Bangladesh: according to a recent BCAS review of various adaptation and mitigation projects and the country’s NDC, Bangladesh would need about $3 billion per year to achieve climate adaptation by 2030, and about $2 billion per year to mitigate against the effects of climate change over the same period. The average domestic and external investment in this area is $1.3 billion, leaving a $1.7 billion climate finance ‘adaptation gap’ each year.
We witnessed the Government of Bangladesh’s innovation and expertise first-hand when running an interactive training workshop in the country, looking at climate finance mechanisms and instruments. The aim of the course was to identify the international and national systems and capacities needed to effectively use climate finance, as well as the tools, mechanisms, and modalities available to help with climate finance readiness - and ultimately improving climate resilience. Alongside Bangladesh’s Ministry of Environment, Forest, and Climate Change, representatives from many academic and corporate institutions in the country attended. Through interactive exercises, the participants could devise the best responses to common climate-related problems.
The response of the Government of Bangladesh to their climate adaptation gap has been similarly impressive, and a useful example for other countries to follow. They adopted the Bangladesh Climate Change Strategy and Action Plan (BCCSAP) in 2009, and have initiated the creation of the Climate Change Trust Fund to finance projects that would implement BCCSAP. Measures like this not only exemplify a government’s commitment to prioritising the combating of climate change, they can contribute to the discussion on how limited resources can be used efficiently for maximum impact.
Mainstreaming climate finance
In the same vein, the adoption of the Climate Fiscal Framework in 2014 provided a roadmap for integrating climate finance into the country’s public financial management systems. The subsequent adoption of a climate budget tagging system means it is far easier to report on budgetary provisions for climate change within the country, with the second annual climate protection and development budget report published by the Government of Bangladesh this year. That report demonstrates that the domestic budget for climate change isn’t siloed into a single ministry; rather, it is embedded in the budget of 20 line ministries (including agriculture, housing, energy, industries, and food) that have climate-relevant programming. An important addition to this report was made this year, when the government also published a Citizen’s Climate Budget Report, summarising the key messages in an easy to understand and visually engaging format.
By mainstreaming climate finance across a government’s budget, and reporting on spending regularly and transparently, there is more evidence to demonstrate the cross-cutting impact of climate-related programming. In the OPM-led Action for Climate Today (ACT) programme, we are currently working with accountability actors to strengthen advocacy around public finance for climate change. This has included sensitisation workshops with civil society and journalists, and as a result a detailed CSO Response to the climate budget will be launched shortly. In it, a coalition of Bangladeshi CSOs welcome the initiative taken by the Government of Bangladesh to publish information on the climate budget, while also calling for more information how much of the allocated budget for climate change was actually spent and what the impact of that spending has been (two points on which the Government of Bangladesh has yet to elaborate). We recognise that the transition to a new model for climate finance isn’t always a frictionless activity, and advocacy of this sort helps show the existing needs and the possible benefits.
The financing frameworks for resilient growth, that we have developed as part of ACT, also offer a way that any country (whether lower-income or higher-income) can approach the challenge of accessing the necessary finance for tackling climate change. To date, no country has completed their financing plan for the Nationally Determined Contributions, a crucial part of the Paris Agreement. Financing frameworks allow the identification of strategies to close the adaptation gap. This includes an effective approach to mainstreaming climate finance into public budgets, similar to the admirable approach Bangladesh has taken, and builds institutional processes and mechanisms that can allow adaptation financing needs to be met.
The solution isn’t simply more money
As the negotiations around financing the Paris Agreement continue, and particularly as debates around contributions and reporting take place, we have to remember that the solution isn’t only simply a greater influx of money. While a better understanding and navigation of global climate finance architecture, and access to finance mechanisms, can help identify more sources of funding, it is more important to follow the lead of Bangladesh.
Their forward-thinking determination to maximise the available resources can be combined with financing frameworks, interactive training, and climate expertise of the variety that OPM offers; this multifaceted approach is the best way to ensure that climate finance can best meet each country’s need across many sectors. Where the money is coming from isn’t the only crucial question – but also how best to allocate, use, and report on the money that there is.
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