This column was first carried by Dhaka Tribune
The promotion of ‘green growth’ – growth that aims to minimise negative environmental impacts of economic growth engines of a country – requires substantial financial commitment. The G20 Green Finance Study Group defines green finance as “…financing of investments that provide environmental benefits in the broader context of environmentally sustainable development…” Climate finance, which supports green growth and sustainable development, comes through several bilateral and multilateral sources. Bangladesh, which is one of the most climate-vulnerable countries on earth, has been active in adopting strategies that would enable it to access climate finance.
Early on, Bangladesh formulated two policy documents – the UNFCCC-guided Bangladesh Climate Change Strategy and Action Plan (BCCSAP) and the National Adaptation Programme of Action (NAPA). Alongside, the Government of Bangladesh (GoB) allocated US$100 million annually for three successive years in the national budget towards its Climate Change Trust Fund. These initiatives were recognized globally as Bangladesh pressed on, by emphasising the looming climate disaster that the country faces. The Intergovernmental Panel on Climate Change (IPCC) estimated that rising sea levels may permanently submerge 6 – 8% of the coastal and low-lying lands of Bangladesh by 2050.
Subsequently, Bangladesh also received US$110 million towards the Bangladesh Climate Change Resilience Fund (BCCRF) in 2010; US$ 110 million in grants and concessional loans through the Pilot Programme on Climate Resilience; and US$135 million from an anonymous philanthropist towards the construction of cyclone shelters along the coastal line. But despite these early successes, Bangladesh’s ability to continue accessing funds in line with its requirements appears to have suffered over time. For instance, Bangladesh received a grant of US$139 million from the Global Environment Facility (GEF), whilst neighbours India (US$743 million), Nepal (US$217 million), and Sri Lanka (US$259 million) have been able to raise far more. There have also been a few missteps in claiming carbon credits from major solar power projects.
Several institutional challenges remain: limited understanding of the evolving global climate financing arrangements; a mixed track record in fiduciary management and implementation of projects; the reliance on multilateral agencies in the development of proposals and technical documentation required to access climate funds, etc. There is an urgent need to support key government agencies to make a case for Bangladesh, and to establish and run implementation units that meet the fiduciary and project management standards required to access and manage these global funds.
As time goes on, securing climate finance from multilateral and global funds is becoming more and more competitive. Many countries are at various stages of preparation to qualify for accessing the Green Climate Fund (GCF), the flagship global mechanism for climate financing that intends to support projects, programmes, policies and other activities in developing countries using thematic funding windows, and is aiming to raise climate finance worth $100 billion by 2020. Extensive technical assistance is provided to make countries ready to access GCF funds. Countries are required to follow a prescribed application process to make a strong case in their proposals. GoB has designated the Economic Relations Division (ERD), of the Finance Ministry as the Designated National Authority for direct access to the Green Climate Fund, while four institutions have been identified as National Implementing Entities (NIE) – one of which, IDCOL, has already been accredited as an NIE.
More needs to be done. In order to access the GCF (and climate finance from other international sources), Bangladesh needs a concerted strategy focuses on building and showcasing its institutional capacities. This strategy could be based around the following aspects:
- Division of roles and specialisation: It is increasingly evident that accessing climate finance requires a high degree of specialization in the form of technical experts. One option that could be considered is the establishment of a Climate Finance Unit in the Ministry of Finance (MoF) dedicated to securing climate finance. This will free up resources in the Ministry of Environment and Forests (MoEF) to the selection, implementation, and oversight of projects. The MoEF will also be then able to focus on an enhanced technical role in project implementation.
- Institutional capacity development: Within agencies designated to play key roles in climate finance bids and negotiations, GoB should demonstrate robust fiduciary management systems, with clear lines of accountability within government. A strong internal audit system that monitors project implementing entities is essential. GoB should take steps to enhance transparency and accountability by making public the data on climate finance raised, and results from projects implemented.
- Evidence and Learning: The discourse on climate finance, and the process of accessing funds is essentially an evidence-based one. GoB’s case for climate finance needs to be based on the latest available scientific evidence. Flagship projects need to robustly evaluate their results, and present evidence of impact. The government should continue to work with academia, researchers, and the civil society. These would be vital in supporting GoB at their ministerial negotiations on climate finance.
Bangladesh currently stands at the crossroads of accelerated economic growth and green transformation. There is a window of opportunity for Bangladesh to minimise environmental damage and use its natural resources efficiently by adopting a sustainable growth path. Green Finance can play a critical role; Bangladesh has to build on its existing success and knowledge, to scale up rapidly. It is possible.