Equity and Transparency in Climate Finance: Expectation in COP-24

Absence of legally binding agreement on funding has created immense uncertainty for the vulnerable developing countries to secure the required finance especially for adaptation. 

Under the initiatives of the UN Framework Convention on Climate Change (UNFCCC), developed countries promised to mobilize required funds following the polluters-pay-principle to address the climate change impacts in the developing countries. Following that, in 2009 under the Copenhagen Accord developed country promised to provide  USD 100 billion per year by 2020 as new and additional to the overseas development assistance. This commitment has been reassured in the Paris Agreement and is promised to continue to delivery until 2025. Moreover, under Goal-13 (climate action) of the Sustainable Development Goals (SDGs), developed countries are committed  to provide the required finance to combat  the impact of climate change in the developing countries. To ensure the visible progress and equity in climate finance along with the Transparency Framework the rulebook to implement Paris Agreement is supposed to be finalized in upcoming COP-24 in Katowice of Poland.

Despite continuous demand from the developing countries to mobilize the funds that was pledged by developed countries and ensuring the transparency in climate finance the funding under the Paris Agreement remained is not legally binding. This absence of legally binding has created immense uncertainty for the vulnerable developing countries to secure the required finance especially for adaptation.

The most vulnerable seven countries including Bangladesh have received only 7% of the total adaptation funds from the Green Climate Fund (GCF) and other international climate funds.

GCF, supposed to be key fund channelling entity of the UNFCCC,itself received only USD7 billion so far while the current demand based on the projects submitted is around USD12 billion. How that gap and what would be the potential sources to fill up the gap of USD 5 billion is still uncertain. Moreover,as a separate provision to climate adaptation finance the Paris Agreement created the a provision to provide support to address the ‘loss and damage’ of the vulnerable countries but additional fund to address ‘loss and damage’ is yet to be provided.

One of the major drawbacks in securing the pledged finance is the absence of a definition of climate finance agreed by all parties.

Consequently, due to not having such definition it is also in the haze that if the funding will be a new or additional or whether it would be grant or loan. That has been reflected in the funding from the GCF and among fund disbursed so far only 45% of that was grant. Even though funding ratio between adaptation and mitigation was supposed to be distributed equally (50:50), but only 32% of the approved amount is allocated for adaptation so far.

Due to the absence of a time-bound roadmap of the GCF about fund disbursement from approval of the project to its implementation. As a result, GCF has approved only USD 1.4 billion (of supposedly USD 100 billion)so far since 2015. From approval to disbursing the money the process GCF has is quite lengthy and if for this delay if the targeted vulnerable people become even more vulnerable, there is no provision or policy of the  GCF to compensate them. This has put the effectiveness of GCF in question.

The most vulnerable countries are also often less developed countries. It is often very challenging for the national institutions from LDCs to get accreditation by GCF through complying the strict standards. As one of the most climate vulnerable countries, Bangladesh is among those who require climate finance urgently. However, despite two organizations, IDCO Land PKSF got accredited from GCF, many GOs and NGOs in Bangladesh are yet to get accreditation due to strict fiduciary, environmental and governance related standards required for direct accessing. So far Bangladesh has received only USD 85 million grants for three approved projects from the GCF whereas Bangladesh needs at least USD 2.5 billion per year only for adaptation. Different international financial investment entities are taking this as opportunity to use this getting accredited and implementing their self-business interest which is immoral and violation of the Paris Agreement. 

The government of Bangladesh has formulated Bangladesh Climate Change Strategy and Action Plan (BCCSAP) in 2009. To implement BCCSAP, the GoB has established a national fund, Bangladesh Climate Change Trust Fund (BCCTF) from its revenue budget. Government has mobilized BDT 3,500 crore to BCCTF so far since its establishment, but the trend of allocating the fund from national budget is noticeably decreasing which is a concern. The Government of Bangladesh has prepared a climate fiscal budget in FY 2018-19 separately.

Moreover,since the 2013 Bangladesh Climate Change Resilience Fund (BCCRF) did not receive any fund from development partners and all the activity is stopped as of now.

The challenges like not prioritizing the vulnerability in project selection, lack of transparency, participation of citizens accountability and integrity in utilizing climate finance are also there.

Besides,to ensure transparency of financing under the Paris Agreement a ‘transparency framework’ under Article 13 has been proposed. However, since this framework does not have any legal binding, a doubt has emerged whether the target set by the Paris Agreement would be achievable.

In this backdrop, in favor of millions of climate victims of affected countries and to further enhance climate finance governance to achieve sustainable development the following recommendations should be considered by the relevant stakeholders in Bangladesh and other countries that ratified the Paris Agreement:

1. Paris Agreement should be legally binding for both developed and developing countries and integrity, and transparency should be ensured based on a collectively agreed transparency framework;
2.  ‘Polluters Pay (Compensation) Principle’should be considered in defining the climate finance that recognizes only public grants instead of loans and it should be ‘new’ and ‘additional’ to ODA;
3. Bangladesh along with other less developed countries should strongly demand to finalize the Rulebook of the Paris Agreement and to mobilize the required resources (climate funds, technology and technical assistance) from the developed countries;
4. Concrete, time-bound roadmap for climate finance should be adopted with due consideration of the priority to adaptation and needs  for meaningful adaptation in developing countries and implement accordingly;
5. Creating a collective demand through climate diplomacy by the affected less developed countries through integrated voice raise to mobilize the adaptation fund on priority basis and making access mechanism affected country-friendly;
6. Creating a separate and dedicated fund to address the ‘loss and damage’ in addition to adaptation finance to the less developed countries and LDCs should raise voices for immediate findings under that fund;
7. Dedicated  finance from both GCF and Adaptation Fund should be ensured to rehabilitate, ensure welfare and economic prosperity of the climate induced migrants;
8. The Board of Green Climate Fund should be reformed to ensure equitable representations; and the GCF Board should give priority in mobilizing the grant based finance for climate adaptation in the affected countries.