Developing Asia's climate-financing 'have-nots' plead for long-term solutions but get stuck with quick fixes
With rich and developing countries still at odds over who is going to pay for the exorbitant impact of climate change and how, experts say developing Asian nations will struggle to strike a balance between mitigating the effects of global warming and adapting to it.
"Unfortunately, developing Asian countries are mired in poverty, exclusion and marginalisation, and many are affected by conflicts within and across their borders, which rightly makes them a not-very lucrative place for investment," said Abid Qayyum Sulehri, executive director of the Sustainable Development Policy Institute, an Islamabad-based think tank.
He said they have "already become the have-nots" of climate financing because current mechanisms require "very tedious, very cumbersome" data. Strict conditions are often also placed on loans to developing countries by the International Monetary Fund and other such multilateral lenders.
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Sulehri was a Pakistani negotiator at the 27th United Nations Climate Change Conference (COP27) at the Egyptian Red Sea resort of Sharm el-Sheikh, which ended on Friday. During the two-week summit, little progress on crucial financial matters was made between the world's largest carbon emitters and the poorer countries suffering from the consequences.
The draft COP27 deal shows that developed countries remain deeply reluctant to compensate their poorer counterparts, whether with cash grants or debt relief.
But, COP27 yielded a renewed pledge from rich economies to fulfil a binding legal commitment they made in 2009 to provide developing countries with US$100 billion a year in so-called climate finance by 2024 - four years later than scheduled.
Developed nations provided US$83.3 billion in 2020, the Organisation for Economic Cooperation and Development reported in July.
The G20 accounts for 85 per cent of global GDP and is responsible for 80 per cent of global emissions.
Apart from industrial giants China and India, and hydrocarbon-producers like coal exporter Indonesia, developing Asian countries account for a very small percentage of global greenhouse gas emissions.
Recent estimates predict the cost of climate change mitigation and adaptation to developing countries will range between US$160 billion and US$340 billion a year by 2030.
Mitigation revolves around reducing carbon emissions, typically through the financing of projects like renewables-based power generation plants to replace ones fuelled by coal, oil or gas.
Climate adaptation programmes, on the other hand, involve measures meant to build resilience to the effects of climate change, such as building coastal walls and growing mangrove forests to hold back rising seas.
The draft COP27 deal published by the UN on Thursday renewed the language of the text produced at last year's conference in Glasgow, urging rich countries to "at least double" their financing for climate adaptation to US$40 billion by 2025.
A recent UN report said that international finance currently meets less than 10 per cent of climate adaptation needs, and that the gap is widening.
Pakistan suffered more than US$30 billion in damage and economic losses due to unusual monsoon rains in late August caused by global warming, according to an assessment issued on October 28 by its government with help from the UN and other multilateral agencies like the World Bank.
An Oxfam report from July suggests that by 2030, vulnerable countries could face US$580 billion a year in climate-linked losses and damage.
Despite severe pressure from members of the Group of 77 developing nations, backed by China, the world's second-largest carbon emissions producer, the COP27 deal did not make any provision for working towards the creation of a compensation fund for damage and losses.
Instead, the draft deal merely "welcomes" the inclusion of the issue on the agenda for the first time since the UN began holding annual climate change conferences 30 years ago.
"The issue of damage compensation is real and of growing importance, particularly as horror events such as this year's floods in Pakistan play out more frequently and intensively," said Grant Hauber, strategic energy finance adviser on the Asia-Pacific region at the Institute for Energy Economics and Financial Analysis, a US-based think tank.
But he did not foresee compensation funds "in the form of cash transfers".
He said there needs to be a plan and implementation management structure for "how those monies will be applied and managed".
"Donor economies are not going to throw money of any form - grant, concessional loan, or guarantee - into an unaccountable black hole for fear of there being no bottom ... and no progress," Hauber said.
While it is "only natural" for developing countries - especially highly indebted ones - to focus requests for support on no-strings-attached grants, "this is not realistic, no matter how much a particular country's leadership might want to do that," he said.
Instead, the G7 took the tentative step on Monday of backing the launch of Global Shield, an insurance scheme to help compensate people in poor and vulnerable middle-income countries struck by climate change disasters like severe drought and floods.
It was endorsed by the V20 group of 58 countries vulnerable to climate change, after Germany assured them the initiative was not a replacement for the damage and losses fund sought by developing nations.
V20 includes 20 countries in the Asia-Pacific, among them Cambodia, Vietnam and the fast-sinking island nation of Vanuatu.
Fiji, Pakistan and the Philippines will be among the first six beneficiaries of the scheme, which received financial backing pledges in the millions, rather than billions, of dollars from Western nations.
The issue of climate finance also remains clouded by the conflicting preferences of donor and recipient nations, COP27 negotiators said.
Experts said 66 per cent to 80 per cent of funding provided by developed countries is dedicated towards climate change mitigation, whereas vulnerable countries want more money spent on their overall adaptation to the longer term climatic impacts of rich nations' emissions.
Yet the International Renewable Energy Agency reported during COP27 that countries worldwide are currently on track to install only half of the renewable electricity generation capacity needed by 2030 to meet the 2015 Paris Agreement goal of keeping global warming to between 1.5-2 degrees Celsius above pre-industrial levels.
While mitigation programmes are based on technology and expertise brought in by consultants from developed countries, adaptation schemes harness the local knowledge of indigenous communities directly impacted by climate change," Pakistani COP27 negotiator Abid Sulehri said.
"When we ask for striking a balance between adaptation and mitigation, the main reason is that we in developing Asian countries like Pakistan know that we will have to live with this changing climate," he said.
He said climate mitigation projects were popular with donors because of their instant impact, whereas adaptation projects gave them "less political mileage" because the benefits of adaptation programmes were less tangible and more long term.
The balance of funding between mitigation and adaptation "should at least be 50:50", if not more tilted towards adaptation, Sulehri said.
Hauber of the Institute for Energy Economics and Financial Analysis said "there is no one-size-fits-all solution to the transition, no matter how much institutions, organisations, or countries wish it could be".
"Each country has to have a realistic plan that they own, tailored to their needs, and are willing to implement and see through," he said.
This article originally appeared on the South China Morning Post (SCMP).
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