Climate finance: Bangladesh perspective

“Climate Finance” is a relatively new concept. Climate finance is the mobilization and allocation of financial resources to support climate mitigation and adaptation activities, which involves funding projects, initiatives, and strategies aimed at reducing greenhouse gas emissions, promoting sustainable growth, and assisting communities at risk of climate change.

Climate change is a critical global issue, requiring significant investments in clean energy, adaptation, and resilience-building measures. Developing countries, in particular, often lack the financial resources necessary to address climate change, making climate finance an essential tool in the fight against it. Climate finance is essential in addressing the funding gap for climate-related initiatives, particularly in developing countries that require more financial resources.

The Paris Agreement highlights the urgency of limiting global warming to below 2 degrees Celsius above pre-industrial levels and striving for a temperature increase of 1.5 degrees Celsius or less. Climate finance also plays a crucial role in achieving other global climate goals.

Bangladesh, one of the most climate-vulnerable countries, is ranked seventh in the 2022 long-term Climate Risk Index, with negative impacts such as sea-level rise, floods, cyclones, droughts, and heat waves. Climate finance is critical to Bangladesh’s efforts to achieve sustainable development and resilience. Bangladesh is highly vulnerable to sea level rise due to its long coastline and large population living in low-lying areas. By 2050, sea level rise could cause the country to lose up to 17 per cent of its land area and uproot up to 30 million people. Climate change may intensify challenges in coastal areas, including crop cultivation and access to drinking water, due to saltwater intrusion and reduced freshwater flow, as well as increase the frequency and severity of cyclones, floods, and other natural disasters. These impacts could result in loss of life, property damage, displacement, and harm to infrastructure and crops.

Climate change is anticipated to alter rainfall patterns in Bangladesh, leading to water shortages, crop failures, and increased risk of flooding. Rising temperatures are already causing heat stress and lower crop yields, especially during the dry season. Bangladesh has experienced severe climate-related events, including flash floods, cyclones, and severe flooding, affecting millions of people and causing damage to infrastructure and crops.

It is necessary to invest in long-term measures, such as climate change-adaptation projects, early warning and better weather forecast systems, as well as in strengthening the capacity of local communities to cope with another natural disaster. To this end, education and awareness campaigns are essential for helping communities understand the risks of climate change and to take appropriate, preventive steps to protect themselves from natural hazards.

Cherrapunji, an upstream region of India near Bangladesh, received record-breaking rainfall in recent years, with the most rain in 122 and 100 years, respectively. Now comes the tricky part, funding and the functioning.

Climate finance can be funded through a variety of channels, including public and private investments, international aid, and multilateral development banks.

*Multilateral funds like the Green Climate Fund and Global Environment Facility provide funding for climate projects in developing countries. They are backed by developed countries and managed by international organizations.

* Direct bilateral financing for climate projects can come from developed nations to developing nations. This could come in the shape of grants, loans, or other financial resources.

* Private sector investments from banks, venture capitalists, and other financial institutions can provide funding for climate projects such as renewable energy projects, energy efficiency initiatives, and climate adaptation measures.

* Carbon markets facilitate the trading of carbon credits, allowing countries or companies to offset their carbon emissions. The revenue generated from these transactions can be used to finance climate projects in developing countries.

* Crowdfunding platforms can fund climate initiatives such as renewable energy projects or reforestation efforts by accepting small contributions from individuals.

The UNFCCC and Paris Agreement require developed countries to financially assist developing nations in addressing climate change, which is crucial for achieving a fair and effective global response and ensuring vulnerable countries are not left behind. Climate finance was also identified as a top priority at COP 27, with 6 key areas of work outlined. Bangladesh is active in international climate negotiations like UNFCCC and Paris Agreement, which helped it to gain access to bilateral funding sources for climate change mitigation like DFID, UNDP, UNCDF, USAID, SIDA, and GIZ. Funding sources like GEF, CIF, and GCF also provide support to Bangladesh.

However, Bangladesh still faces challenges in accessing climate finance due to its limited institutional and financial capabilities and barriers to accessing financing from international climate funds.

Besides that, Bangladesh has established the Bangladesh Climate Change Trust Fund (BCCTF) and implemented a National Adaptation Plan (NAP) to raise domestic funds for climate action.

The country has set ambitious targets for reducing greenhouse gas emissions and increasing the use of renewable energy sources. Bangladesh has launched initiatives to promote clean energy, energy efficiency, and sustainable transportation. The government has various mechanisms to distribute funds for national development. A validation workshop on the Climate Vulnerability Index (CVI) was recently held in the local government division, which will help the government allocate funds for addressing climate change. Climate change has had a significant negative impact on Bangladesh’s ecosystem, GDP,

migration patterns, basic needs, economy, and peace. Climate finance is one of the nation’s top priorities as a result. In a nutshell, according to national and international sources, personal experience, and expert opinions, climate finance is an essential tool in combating climate change (the climate crisis) for the sake of sustainability.

The writer is a finance professional working for an international donor agency