Pakistan’s Climate Finance Opportunity, Challenges

How Pakistan is faring in the world of international climate finance.

Pakistan ranks seventh in the 10 countries thar are most affected by climate change globally, with 133 events directly attributed to it in the last two decades and costing the country $3.82 billion in losses, and is therefore in need of innovative technologies and international climate finance to fight impending disasters. In this interview, Kashmala Kakakhel, ‎an economist and independent expert on climate finance, speaks to The Diplomat about the difficulties Pakistan faces in extracting and managing climate finance and how climate change must not be treated as just a threat, but should also be seen as an opportunity to urge Pakistan to find new climate solutions that will improve the way its people live.

What are the latest international developments on the global climate finance front?

The Paris Agreement on Climate Change in 2015 confirmed political commitment of nations to the cause, and the establishment of the Green Climate Fund (with a global commitment of $100 billion), through which climate finance is being channeled.  There is actual money on the table now that developing countries (like Pakistan) can access.

As of now, the GCF has approximately $10 billion, of which it has committed $2.2 billion to 43 projects globally, which collectively aim to increase climate resilience for 125 million people. With two-thirds of this funding going to Africa and the Asia-Pacific, 41 percent of these initiatives are for mitigating or reducing activities that cause climate change, 27 percent for adapting to the impacts of climate change, and 32 percent address both.

The Long-Term Climate Risk Index (CRI): the 10 countries most affected from 1996 to 2015 (annual averages). Courtesy – Global Climate Risk Index 2017

What climate finance projects in Pakistan currently involved in?

International finance for climate change initiatives coming into Pakistan hasn’t yet been significant. Apart from basic funding for capacity building and other such initiatives, so far, Pakistan received a little over $5 million from a global fund, the Adaptation Fund, for disaster risk reduction activities against glacial outbursts in the Gilgit-Baltistan region. The Adaptation Fund project was a few years ago, now the same project has been upscaled and funding of $38 million approved by the GCF.

We also have some projects with the Global Environmental Facility (GEF) — they vet, approve and disburse funds. Pakistan’s Ministry of Climate Change has a few GEF projects detailed on their website; I believe this funding is also being used for adaptation. In my opinion, our focus on adaptation finance is unfortunate.

Why do you think it’s unfortunate that most of Pakistan’s focus is on adaptation finance? Where would you want to focus?

This is unfortunate because while adaptation finance is very important, we mustn’t miss out on opportunities that mitigation finance can bring to developing countries such as Pakistan. Pakistan is one of the most vulnerable countries to the impacts of climate change, and it needs resources to adapt to climate change; but we must also remember that the global narrative on climate change is morphing into a narrative of opportunities, and we need to pay very close attention to these developments.

Pakistan needs to play an active role in shaping how the $100 billion will be spent in the coming years. For starters, as an energy-starved country, it should use climate finance as a leverage to diversify its energy mix, move towards renewable energy solutions, bring in the private sector, and develop new business models that will increase employment opportunities in the process and contribute to the economy.

As a developing country, we do need to ensure that we are safe from floods and other natural disasters, but at the same time we need to also focus our climate finance on mitigation and make use of our wind corridors, potential hydro energy, and solar solutions.

Is it difficult to approach the GCF for financing?

The problem is that often the standards of developing country organizations are not on par with GCF standards, it takes a long time to meet the stringent accreditation standards of the Fund. So far 54 such entities have been accredited. None from Pakistan as yet. It will be very beneficial for Pakistan to have its own direct access entities, because they will then work with the government to design different projects on the provincial level.

The Fund itself is newly established and is developing its governance structures and systems, while learning from its shortfalls to improve the process. Due to its own teething issues, countries find it frustrating to access the GCF for financing.

Why do each of these projects take so long to receive funding?

Accredited entities have their own established procedures in place. Aligning those with the GCF, and the Fund’s with the entity, usually take time. Now that the GCF has signed mutual agreements with 28 of the 54 entities, money should start moving to approved projects soon.

India had one national entity accredited in 2015, and Bangladesh has also shortlisted and submitted several national organizations for accreditation to the GCF. How far is Pakistan from having NIEs?

The Ministry of Climate Change in Pakistan has set a national process through which it puts forward national/direct access entities to be accredited to the GCF. Following consensus, a number of organizations have been cleared, and currently undergoing the accreditation process with the GCF. We hope to hear good news soon.

Let’s now talk about the potential of corruption on a larger scale. There is much talk about double counting of climate finance since its often confused with international aid. Are there safeguards in place to ensure this doesn’t happen?

This issue has been of international concern. Since there is no standard methodology for calculating climate finance, each country, or group concludes its own amount, leading to extremely incongruous results. Developing countries have constantly been pushing for climate finance to be “new and additional” and not repackaging of international development assistance. As a form of success for developing countries, the Paris Agreement has agreed to develop a uniform accounting methodology by 2018, which will be used as a potential safeguard against double counting.

That sounds promising. What is not as promising is that even if Pakistan meets the targets it stated in the Nationally Determined Contributions (NDC) it won’t be meeting the target of keeping global warming below 2 degrees? Is Pakistan lacking in ambition?

Not just Pakistan’s commitments, but the aggregate NDCs of each and every country, globally, only take us to about two-third of the emission reductions required to reach the below 2-degree goal. The gap has been recognized, and for this purpose, as part of the multilateral negotiation process under the UN for climate change, a global stocktaking will take place end of 2018, where countries will be urged to increase their ambitions as set in their NDCs.

What we are lacking in is that we are not treating climate finance as an opportunity. We have systems such as the National and Provincial Disaster Management Authority, and our military to take care of natural disasters, they are focusing on adaptation already. This means that international climate finance should and can focus on bringing innovative solutions to the country, you use that as an opportunity to create more jobs in the country, encouraging more research, and export this research and ideas. Once we develop a business model for mitigation solutions in Pakistan, with the help of climate finance, we will even have our private sector latching on.

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