How to meet Bangladesh's climate finance needs?
How to secure the funds necessary to help Bangladesh combat climate change
The Summit for a New Global Financing Pact, held in Paris on 22–23 June, saw heads of state from the Global North and South, multilateral development banks (MDBs), and non-governmental and grassroots organisations gather to discuss how the global financial system can be restructured to be more equitable and resilient, especially when it comes to climate finance.
Among the representatives of Bangladesh at the summit was the Youth Policy Forum (YPF), which conducted two webinars in the run-up to the event, on 14 June and 16 June, to gain critical insight into Bangladesh's climate finance needs.
The first webinar included local youth leaders from Uttaran, Youth Empowerment in Climate Action Platform (YECAP), YouthNet Global, and Gross International Nature.
The second webinar hosted a panel of experts, including Saber Hossain Chowdhury (MP, Special Climate Change Envoy to the Prime Minister), Hubert Blom (Green Inclusive Development Attaché, EU Delegation to Bangladesh), Tabith Awal (BNP executive committee member, private businessperson), Barrister Shameem Haider Patwary (MP, Jatiya Party, Bangladesh Parliamentarians' Caucus on Migration and Development), and Dr Sebastian Groh (Founder and CEO, Solshare Ltd).
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Inadequate adaptation finance
According to Bangladesh's most recent National Adaptation Plan, implementing adaptation measures in sectors such as water resources, agriculture, and ecosystems will require funding of $230 billion between 2023 and 2050. However, the Government of Bangladesh's climate-related budget allocations have only increased by 1.1% between FY15 and FY22.
There is an urgent need to improve Bangladesh's fiscal space to increase budget allocations to relevant ministries and agencies. Pursuing grant-based or heavily concessional climate assistance would greatly ease the stress on Bangladesh's fiscal space, as would renegotiating and restructuring existing development loans. One option that can be pursued is Debt-for-Climate (DFC) swaps, wherein external debt payments can be redirected towards domestic climate projects.
Climate adaptation funding should be structured to avoid negatively impacting marginalised and vulnerable segments of society. Saber Hossain Chowdhury, Member of Parliament, emphasised the importance of not framing poverty reduction and climate change as an "either-or" situation. Addressing both developmental requirements and climate change concerns is essential for achieving equity and fairness.
International climate finance is largely inaccessible
Despite Bangladesh's urgent need for adaptation finance, accessing international climate finance remains a major challenge. Although there are various global climate funds available, such as the Green Climate Fund (GCF), the Least Developed Countries Fund (LDCF), and the Adaptation Fund (AF), strict eligibility criteria prevent Bangladeshi agencies from qualifying for them.
So far, Bangladesh has only managed to access $1.2 billion from various climate funds until 2022. At this rate, Bangladesh will not be able to meet its adaptation finance needs by 2050. To overcome this challenge, Bangladesh must pursue international capacity-building support to make its adaptation projects eligible for this funding and also advocate for more lenient eligibility criteria.
This challenge of accessing adaptation financing is even more pronounced at the grassroots level, especially for youth organisations based outside Dhaka. Bangladesh's national budget does not allocate any funds for youth development or youth-led activities, so the majority of climate financing for their organisations comes from international sources.
Sumaiya Ferdous, a fellow at the Youth Empowerment in Climate Action Platform, noted that youth-led grassroots organisations struggle to apply for available grants due to strict eligibility criteria and a lack of know-how.
Warefta E-Murshed, the founder of Gross International Nature, said that even if organisations are aware of how to apply for such funds, it often takes several years and dozens of funding rejections before these groups can gain the trust of funders.
The high taxes imposed on the meagre grants they are able to access further restrict grassroots organisations. This is highly demotivating for youth who are eager to contribute to solving this crisis.
It is crucial to support knowledge-building initiatives that enable these organisations to access international funds. The government of Bangladesh must consider factoring in youth development in the national budget and lowering, if not eliminating, taxes on the incoming finances of youth-led grassroots organisations.
Urgent need for a standardised definition of "adaptation assistance"
The lack of a globally accepted definition of "adaptation assistance" has often made adaptation aid indistinguishable from regular development aid. As a result, fossil fuel and other high-emissions projects have been categorised as climate assistance, and donor countries have exaggerated their adaptation aid outflows, thus eroding trust between donor and recipient countries.
To address this issue, it is essential to advocate for the development of a global adaptation finance tracking system that includes project-level meta-data, which helps determine a project's relevance to climate change.
Comprehensive vulnerability mapping
In the past, certain geographic areas have seen a saturation of similar adaptation projects while others have gone underserved. To address this issue, conducting comprehensive vulnerability mapping becomes essential. By identifying vulnerable areas and allocating adequate resources to them, we can ensure a more inclusive approach to adaptation financing.
Shameem Haider Patwary pointed out that a sizable portion of Bangladesh's population is at risk due to the climate crisis. Therefore, a comprehensive list of damages caused by river erosion, deforestation, and extreme weather must be compiled, and their impacts on the well-being of Bangladesh's population must be assessed.
Challenges of green sector development
Green sectors such as renewable energy, Energy Service Companies (ESCOs), plastic recycling plants, etc., are still in the early stages of development in Bangladesh.
Tabith Awal spoke at length about the challenges of attracting private investment to these sectors. Green sectors require high upfront costs—equipment and technology patents for these sectors are expensive, and they are also subject to high import duties in Bangladesh—so firms are reluctant to invest in them.
Dr Sebastian Groh highlighted the absence of fiscal incentives for renewable energies in Bangladesh. Lowering import duties on green technologies and increasing lending to renewable energy firms will encourage growth in the sector.
Saber Hossain Chowdhury pointed out that MDBs should explore insurance mechanisms to de-risk green sector investments, while Huber Blom said that MDBs should also investigate what green products Bangladesh's market demands and assist Bangladesh in developing those industries accordingly. He further stressed the need for increased engagement between the government and private sector development partners so that greener products can be designed.
Communication gaps between stakeholders
Sumaiya Ferdous cited a communication gap between local researchers, the government, and international donors, which prevents cohesive and effective action against climate change.
Tabith Awal reiterated this during the expert panel, saying that Bangladesh's industries need to forge partnerships with domestic and international universities and industrial counterparts to develop and fine-tune green products, technologies, and innovations.
Possible ways of bridging the communication gap include organising regular dialogues, seminars, and workshops between grassroots organisations, academics, government agencies, international development partners, and industries.
Bangladesh is a part of the solution
While it is essential to hold the Global North accountable for its role in raising global temperatures and responsible for financing adaptation and mitigation efforts in the Global South, it is also important to remember that "We [Bangladesh] are not only the victims of climate change but also part of the solution," said Saber Hossain Chowdhury.
Bangladesh can leapfrog its traditional dependence on fossil fuels to renewable energies. It can raise its GDP while making its economy and infrastructure more climate-resilient. It can lower carbon emissions, adopt sustainable production practices, and do much more if the government, industries, and people choose to be part of the solution to the climate crisis.
Anannyo Samayel is the Deputy Leader of the Youth Policy Forum's Foreign Policy Team.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
