Bangladesh can take the lead on facilitating climate finance delivery

In the 2021 United Nations (UN) COP26 summit, Bangladesh—a country severely affected by climate change—put forward an agenda for the developed countries to deliver on their promises to channel $100 billion per year annually to climate-affected countries, to help them adapt to climate change and mitigate rising temperatures. 

The COP28 UAE summit in 2023 concluded that the New Collective Quantified Goal (NCQG), which was agreed upon at the 21st summit in Paris in 2015, will be finalised on COP29 by 2024. The New Collective Quantified Goal on Climate Finance (NCQG) is the official global target for climate finance. The Conference of the Parties (COP), acting as the meeting of the Parties to the Paris Agreement (CMA), will establish this goal with a minimum of $100 billion annually, to be determined before 2025.

The latest figures released in May 2024 by the Organisation for Economic Cooperation and Development (OECD) confirmed that in 2022, developed countries channelled a total of $115.9 billion in climate finance for developing countries, exceeding the goal of providing $100 billion for the first time. 

The figure was $89.6 billion and $83.3 billion in 2021 and 2020, respectively, missing the target by a glaring $10.4 billion and $16.7 billion margin. It was $80.4 billion in 2019 and $80 billion in 2018. A year before, the figures were $78.3 billion, and in 2017, they spent $71.1 billion, respectively.

However, the controversy over the numbers reported by the OECD goes on, as the organisation is tasked with tracking and producing the figures requested by the donor countries. 

Climate Finance: The Debate on the numbers 

Some analysts argue that developed countries have vastly inflated the figures of international climate finance mobilised so far. Oxfam, one of the largest NGOs in the world, reported that public climate-specific net assistance is significantly lower than the reported figures of the OECD. 

They reported that it was $15-19 billion and $19-22.5 billion per year against the reported $44.5 billion and $59.5 billion in public finance provided in the 2015-15 and 2017-18 periods, considering that they count most loans as a full-face value rather than the money mobilised to developing countries once repayments, interest, and other charges are adjusted. 

The Government of India's Ministry of Finance has questioned the OECD's method of calculation of climate finance numbers. Excluding the non-grant equivalent public finance, they have concluded that $2.2 billion of climate finance had been disbursed in the year 2013-14 compared to $57 billion, as reported by the OECD. 

A group of researchers at the University of Cambridge and Sheffield Hallam University have questioned the numbers as well as the definition of climate finance being considered by the OECD. They also raised doubts that if a climate-vulnerable country has to pay back the loan received from a developed country with an added interest, it raises "the question of who is financing whom?" 

Where does Bangladesh stand? 

Being a climate-vulnerable country, Bangladesh remains a major recipient of climate-related financing from multilateral and bilateral donors. According to the OECD, the World Bank is the largest provider of multilateral climate-related finance, whereas India is the largest recipient and Bangladesh is the seventh largest recipient from these sources, receiving $1,050 million of climate-related financing in 2019. 

Within the portfolio of the Green Climate Fund (GCF), an operating entity of UNFCC that provides financing to developing countries, Bangladesh has received $368 million, most of which goes to climate adaptation-related projects. 

Among the bilateral donors, Germany and Japan have contributed the most, whereas, in 2019, Bangladesh received $2,337 million of financing from these sources. 

Among others, corruption has become a critical issue in implementing climate-related projects in Bangladesh that are being financed by these donors. 

Researchers at the University of London reported that around 35% of project funds are being misused and around 85% of the projects have a problem of poor construction of adaptation sites.  

Way forward

At the last UN COP summit held in the UAE, developed countries renewed their pledge to fulfil their commitment to providing $100 billion annually to developing countries. Bangladesh could take a central stage to facilitate this payment. Under the leadership of Bangladesh, a consultative body could be set up. 

This body could help track the flows of finance and come up with an improved method of calculation for reporting climate finance flows. This would reduce the disagreement between donor and recipient countries. 

A group of researchers could be deployed to undertake analysis and simulations that would highlight the need to put more financial instruments into climate-vulnerable countries and focus on critical sectors that should be prioritised and need immediate attention. 

Lack of coordination among the affected countries is another key issue that should be resolved. At each COP summit, countries put forward their climate agenda separately and made their voices heard. However, joint efforts and effective coordination are needed to raise the climate issues, which would strengthen the argument and could help facilitate more financing to fight climate change. 

Zayeed Hasan Talukdar is a former Consultant at the International Finance Corporation (IFC), The World Bank Group.

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.