Climate finance: The $100bn question for Pakistan

Published December 5, 2015
Boys look at a hot-air balloon of the environmental group Greenpeace, near the Eiffel Tower ahead of the 2015 Paris Climate Conference in Paris. -AFP/File photo
Boys look at a hot-air balloon of the environmental group Greenpeace, near the Eiffel Tower ahead of the 2015 Paris Climate Conference in Paris. -AFP/File photo

PARIS: Sipping a café-au-lait at a bustling restaurant whilst admiring the stunning Cathedrale Notre Dame de Paris, one can momentarily forget the chaos and politics going on at Le Bourget, the site of the momentous climate talks currently going on in the city.

But for those of us following the talks keenly, the relief is temporary, as our days are long. 195 countries have only six more days to come to an acceptable deal, if all is to go to schedule and the conference is to close by December 11. The day typically starts as early as 5.30 AM, well before sunrise, to grab a metro ride to the conference venue, and it is well past-midnight when one is able to make it back to the hotel.

It has almost been a week that the most important climate talks for years are underway. To date, progress towards a deal has been excruciating slow. The draft text of the document to limit global warming to less than 2 degrees Celsius - the level necessary to ensure the well-being of future generations - continues to be a hodgepodge of many options that reflect the different negotiating positions of various parties.

'Overstating progress'

Among the most contentious aspects of the deal waiting to be signed, is the issue of climate finance. In 2009 at Copenhagen, developed countries had promised to deliver at least $100 billion of finance every year to developing countries by 2020, to help them cope with climate change.

The logic is simple, developed countries today have historically contributed the most to carbon emissions that are causing climate change. Hence, they have a primary responsibility towards providing the finance that less developed countries need to tackle climate change. In principle, no one disagrees with that.

But as always, the devil lies in the details. Whether the commitment will be successfully undertaken or not depends on one’s point of view.

Read: Climate finance: The $100bn question for Pakistan

Back in July, an OECD (a grouping of the 34 most developed economies globally) report claimed that progress towards that target was on track, and that developed countries had mobilised almost $60 billion of climate aid per year in 2013 and 2014. That claim was challenged by poor countries; India’s ministry of economic affairs published a paper in the last week of November that called the claim “deeply flawed” and only “partially correct at best”, claiming that OECD had “overstated progress”.

Some counter estimates put the actual level of funding mobilised at as little as $2 billion, depending on what was counted.

A battle with developed countries

Several other sticking points on the '$100 billion' surfaced, and the battle on a number of those issues appears to have been won by developed countries. For example, loans as well as grants will count towards the $100 billion a year figure; and climate finance to developing countries will arrive not just in the form of aid, but also in the form of loans and private sector investments.

In Paris though, developed countries have focused on negotiations with formerly poor countries such as China and India, which are growing rapidly asking them to also contribute towards the fund. Most developing countries, represented by a group of 138 countries called the G77 and China (including both Pakistan as well as India, which is a critical player in this debate given its size and population) strongly resist this position, arguing that climate finance is “neither aid nor charity”.

Instead, according to them, climate finance in the form of financial resources, technology transfer and capacity building, are a legal obligation on developed countries as per the 2009 agreement. They argue that any contributions by developing countries towards climate finance should be seen as voluntary and additional, and not be counted towards the $100 billion climate fund. How this argument is resolved, and where it ends up as a result of negotiations, will be very interesting.

Developed countries are also pushing to tie climate finance with the creation of an “enabling environment” in recipient countries. Essentially, they want the assurance that recipient countries have transparent and strong governance mechanisms to be able to absorb climate finance funds. They also want recipient nations to introduce regulatory policies that encourage private sector investment. Their stance agrees with their earlier push to incorporate private sector investment as a part of climate finance.

A ticking clock

Pakistan, along with Switzerland, is co-chairing the working group that is refining the details of the institutional arrangements for climate finance. At a conference where Pakistan has otherwise remained largely invisible, this is an opportunity to gain some relevance, and to play an important role on a critical topic.

While the debate continues, any deal on climate finance is likely to be a last minute one and a compromise of sorts, with a couple of implications for Pakistan. First, Pakistan's current economic situations means that it is unlikely to be in included in the net of developing countries being asked to contribute to the $100 billion. Countries that are likelier to be impacted are China, India and Saudi Arabia.

However, Pakistan remains one of the ten most vulnerable countries globally to climate change, and as such, it needs to do more homework on how it can access some of the climate finance on offer.

To date, the amount of work done on that front is almost zero.

Also read: Climate change has cost the country $20bn: report

As the Himalayan glaciers that provide water to the Indus river system melt faster due to climate change, we can expect severe, almost annual country-wide floods; and at some point, as our water sources dry up and our population increases, Pakistan will need to cope with the water scarcity that it will face in the not too distant future.

Some of the climate finance fund available could be extremely useful to cope with these challenges. If international climate finance will come with limited money and significant conditionality, then Pakistan needs to start preparing today. This will require implementing governance mechanisms that are likely to be the prerequisite for accessing funds, and identifying projects eligible to receive global climate finance funds. The danger, if we delay any further, is simply that someone else will take that money.

Kashmala Kakakhel is a climate change expert attending Paris conference as an independent observer.

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