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‘Adaptation swap can be an effective instrument if designed well’

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Police officers are seen in front of Carbis Bay Hotel ahead of the G7 summit, in Carbis Bay, Cornwall, Britain on June 5, 2021 Reuters

Leading climate policy expert Mizan R Khan talks about the G7 summit and its relations to climate change action

This year’s G7 summit is scheduled to begin tomorrow, where the leaders of the G7 countries will meet to discuss important policies. Climate change will be among the topics these economic superpower will discuss and take decisions on.

For Bangladesh, and other vulnerable countries, decisions taken in this summit will have significant impact on what actions will be implemented to combat climate change.

We spoke to Professor Mizan R Khan to understand more about the implications of the G7 summit in relations to climate change impacts on Bangladesh.

One of the leading experts in climate change policy in the country, Professor Khan is Deputy Director with the International Centre for Climate Change and Development (ICCCAD), one of the foremost research and capacity building organisations working on climate change and development in Bangladesh. Dr Khan also coordinates the LDC Universities’ Consortium on Climate Change (LUCCC), an official program of the LDC governments. He also represents ICCCAD at the ACT2025 platform, which is a consortium that convenes key stakeholders to discuss, identify and guide ambitious outcomes at UN climate negotiations.

Why is the G7 summit important to address climate change?

Let me first explain the relevance and purpose of the G7 meeting for the world at large. G7 is a club of rich countries. They include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. It started many years back, but in 2007 it got a new start when Russia was also included, but was later dropped after annexation of Crimea.

Together they control about 40% of the global economy today. They are the economic powers in the world. The G7 summit itself has many agendas. They discuss many issues including global peace and security, equality, women empowerment, education and other important global issues. Climate change is among these agendas.

From a developing country’s perspective, our interest is in climate change, where the most concerning issues include adaptation, climate finance, and mitigation. There are other issues like technology transfer, capacity building and so on. But those are the three main issues.

In terms of mitigation, for example, the G7 countries together contribute about 30% of global emissions currently. But historically, they emitted for 200 years leading up to the present day, which accounts for more than two third of the global emission. They have both a historical responsibility and a current responsibility to undertake ambitious mitigation, which means reduction of the greenhouse gases.

But the problem is that they are not doing that. European countries for example are doing much better. But America, Canada, Japan — these three countries are not doing as much as they could or expected.

That is why our main concern is that for the upcoming COP26, the G7 meeting kind of adopts a strong resolution for mitigation. This is one of our expectations from the perspective of developing countries. One good thing is that the G7 finance ministers re-agreed to phase out coal subsidy, which they agreed long back, in 2009 at Pittsburg summit. But no progress is there yet.

The second expectation is about supporting adaptation in developing countries and climate finance. Climate finance currently is very weak compared to the estimated needs. The mobilization of existing climate finance runs order of magnitude smaller than the real needs, and particularly the adaptation finance.

The balance of mitigation versus adaptation finance is 80-20. That is to say only 20% of the money goes for adaptation in the developing countries, even though the developed countries and the climate agencies also have provisions for a division of 50-50 between mitigation and adaptation. But still adaptation finance remains woefully poor.

The reason is that adaptation is viewed from a narrow economic perspective, as if it brings in local or national benefits only. This is one main reason for adaptation finance remaining poor. Another issue is that private sector looks at adaptation as contributing more of local or national public goods, with not much space for profit-making except insurance.

I have argued in one of my books — published from London and New York by Routledge — that adaptation should be viewed as a global public good. For example, more than 100 countries are extremely vulnerable. If these countries go under water or a significant part of their economies become disabled because of climate change, then the whole of the global economy will be affected. This is why adaptation should be viewed from this broader perspective. Our another expectation that the finance will split 50-50 between mitigation and adaptation, as these rich countries pledged.

What is important for Bangladesh to see from the G7 leaders summit ?

For Bangladesh, climate finance is an important area. We need climate finance. For the total funds invested annually for addressing climate change in Bangladesh, we get international support even less than 20%.

We hope that the G7 countries will enhance their climate finance budget. But the problem is that the $100 billion pledge that the developed countries made in 2009 in Copenhagen has not been delivered. They have promised to reach this amount by 2020. The OECD (the Organisation for Economic Co-operation and Development) report shows that about $79 billion has been delivered as climate finance by 2018. This is the last figure.

But Oxfam deflated it down by three times. So, Oxfam says that the net climate finance delivered has been about $20-22 billion. This overestimation happens mainly because the same money gets double or triple counted. This is why we get an inflated figure.

The reason is that we have no agreed upon definition of what climate finance is. So, developed countries based on their subjective interpretations of what is climate finance.

What ends up happening is that development aid gets increasingly used as climate finance. But development aid is for provision of basic needs in the poor countries. So, there is an increasing displacement of development aid in favour of climate finance, which developed countries think bring in mutual benefit. But more of this ODA-CF goes for mitigation, which is not a priority for the LDCs.

Another aspect is that climate finance is our right, we argue. And the developed countries are legally obligated to support us under the Convention and the Paris Agreement. They are particularly obligated to support vulnerable LDCs and small island countries.

But about 80% of the climate finance is dispatched as loans, not grants. This is a tragedy. This means that the LDC countries are in a new `climate debt trap.’ We already have huge debts to developed countries that came in form of development aid. If climate finance gets added on to this already existing loans, then this will place us in extreme difficulty in servicing these climate loans. This is absolute injustice.

What are Bangladeshi and global civil society and think tanks doing to push the G7 leaders to take actions?

The global civil society is now very active in climate change, particularly in the area of adaptation. In 2019 at the G7 meeting in France, the French president was very vocal about inviting the civil society stakeholders to attend the meeting as observers. France was very emphatic about inviting civil society organizations as observers in G7 meetings.

So, we expect that this G7 will make more space for civil society to play their due role in the future.

Tell us about Act25. What are the goals and strategies? 

ACT2025 stands for Allied for Climate Transformation 2025. This is a consortium of seven globally reputed think tanks from North and South America, the Caribbean, Asia and Africa.  ICCCAD is a member of this consortium.

The focus of ACT25 is to promote active cooperation among the parties to rebuild trust between developed and developing countries, as there is a mistrust because of non-compliance of pledges on climate finance.

Climate finance is a prime issue to advocate for. Then adaptation in developing countries is our obvious focus. At COP24 in 2018, the parties adopted the Rulebook except for the article 6 of the Paris Agreement. Article 6 is about financial market mechanisms, which will replace the Clean Development Mechanism under the Kyoto Protocol.

And then COP26 will adopt the rules for implementation of article 6. Once we have the Rulebook, the implementation of the Paris Agreement will start.

For the world, mitigation is the ultimate form of adaptation, we argue. This is because even if all emissions somehow stops today, we will still need adaptation, because of the antecedent deposition of gasses for the last 200 years. But the more ambitious the mitigation, the less adaptation we will need in the coming decades. That is why the prime issue for the developing countries and for us is to have ambitious mitigation regime to be adopted in COP26.

But the NDCs — nationally determined contributions — submitted to the UNFCCC secretariat do not infuse a very high confidence about reduction of GHGs, compared to what is expected under the IPCC (intergovernmental panel on climate change) report on 1.5 degrees.

We already live with 1.2 degrees centigrade higher temperature than the pre-industrial level. So, in about the next 30 years how can we reach 1.5 degree Celsius? That is a great challenge. We are trying to advocate and raise our voice from the South, which is the voice of the most vulnerable countries.

What kind of leveraging power this group will have?  

Bangladesh now hold the chair position of the Climate Vulnerable Forum (CVF), a political lobbying groups of 48 most vulnerable developing countries – comprising of LDCs, low income and middle income countries — have some influence in climate diplomacy. Our Government has flagged the issues of our concern including the Loss & Damage to the visiting US Climate Envoy John Kerry and also to Alok Sharma, the President of COP26.

Another important aspect is that President Biden, unlike President Trump, already expressed America’s intention to rejoin the Paris Agreement and they have started the process. It will take some time, but we expect that at COP26 America will play a very strong and positive role, given that President Trump stopped contributing to climate finance.

We work together with NGOs and INGOs in the developed countries. They are also putting strong pressure towards these goals. We as CSOs have a number of memorandums submitted to the G7 leaders for consideration. These memos have been drafted by many civil society stakeholders and advocacy groups.

Climate diplomacy is complicated and it takes time. But we believe COP26 may end up with some good decisions on mitigation, adaptation and climate finance. But in terms of climate finance, I can’t be very optimistic about new money coming in, particularly in light of the Covid-19 pandemic.

Another new instrument, I think, can be introduced for adaptation is debt for adaptation swap. This is a new instrument. In Bangladesh, for example, we have the Arannayk Foundation which together with the USAID convert the loan amount into local currency and invest it for conservation of nature. This debt-for-nature swap can be extended for financing adaptation.

I have written a paper on this that the richest countries convert their high volume bilateral aid to countries like Bangladesh. We know that not much new money will be coming in due to the global pandemic. So, what these rich countries with high bilateral loans can do is to convert the bilateral loans into local funds. And these funds can be managed by both donor and the recipient countries for investment for adaptation in Bangladesh and other LDCs. So, adaptation swap can be an effective instrument if it is designed well.


Originally this interview was published on 10 June, 2021 at Dhaka Tribune.

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