Making the best of climate fund projects

After years of constant efforts to recognise the need for financial resources to combat climate change impacts, the United Nations Framework Convention on Climate Change (UNFCCC) has operationalised Climate Finance through several funding mechanisms for developing countries throughout the late 20th and early 21st century. These funding mechanisms have been derived from international negotiations and agreements to support marginalised and vulnerable countries directly or indirectly affected by the impacts of climate change. However, there have always been debate and controversies from both donors and receivers' side which led to remodelling of these initiatives.

The evolution of climate finance has been remodelled over the years from the Rio Earth Summit (1992), the Kyoto Protocol (2005), and the Paris Agreement (2015) to COP28 (2023), where a Loss & Damage Fund (LDF 2023) has been established, which will help developing countries pay for climate-induced damages. Some of the Climate Finance Funds are: Green Climate Fund (GCF), Adaptation Fund (AF), Climate Investment Funds (CIF), Global Environment Facility (GEF), Least Developed Countries Fund (LDCF), Special Climate Change Fund (SCCF), Clean Technology Fund (CTF), Strategic Climate Fund (SCF), Loss and Damage Fund (LDF).

All these initiatives and mechanisms evolved to facilitate and channel climate finance to support developing countries in their efforts to mitigate and adapt to climate change.  However, though all these efforts played a significant role in combating climate change in developing countries, debate over equitable distribution of climate finance resources as well as fulfilment of funding commitments necessities for an evaluation of the entire finance ecosystem to get a clear understanding of how and why countries are getting access to and using the finance. This piece attempts to explore these from the perspective of Bangladesh, one of the most climate vulnerable countries of the world.

CLIMATE FINANCE IN BANGLADESH: Bangladesh has been at the forefront of climate vulnerability, making the country eligible to receive climate finance funds. Bangladesh relies on adaptation and mitigation strategies to gain climate finance funds since the country's emission rate is low compared to other countries. Climate finance plays a crucial role in supporting such adaptation & mitigation efforts. International Climate Finance mechanisms such as the Green Climate Fund have approved nine projects in Bangladesh and have yet to allocate approximately $441.2 million for the country. Additionally, the ADB allocated 53 per cent of its $1.9 billion project financing budget towards climate financing in 2023. It has committed to allocating more than half of its 2024-2026 budget for Bangladesh to support the climate agenda, up to approximately $5.5 billion. The World Bank is also committed to supporting Bangladesh with the Paris Agreement's Article 6 to better access and utilise international climate and carbon finance by funding the country's transition to green and climate-resilient development and several other bilateral aids.

Several projects and programmes have been initiated under the climate finance funds, many of which have been funded by the GCF, explicitly catering to adaptation, mitigation, and climate resilience for vulnerable communities. Some of the recent projects include 209 projects for implementation of solar-powered streetlamps, 23 projects for infrastructure development like drainage construction, and roughly 90 other projects for river embankment, biodiversity, and ecological conservation projects, etc., from a total of 322 projects with a total spending of approximately $3.38 billion between FY 2019-2020 and FY 2023-2024. Some other notable projects include, Solar Home Systems Project funded by The World Bank, the Global Environment Facility (GEF), and the Government of Bangladesh; Renewable Energy Development Project financed by the Asian Development Bank (ADB) and more similar projects to promote sustainability, resilience, locally led adaptation and mitigation efforts. 

DEBATE OVER ABUNDANCE AND INADEQUACY: Analysis of evolution and implementation of climate finance shows measures taken has allowed the development of several project initiatives to ensure coastal resilience, exalt the use of renewable energy, build capacity for local communities, and more. However, regardless of the efforts to gain climate finance, Bangladesh faces several challenges in utilising the funds, which is why many organisations, despite promising fund donations, feel reluctant in increasing funds. On the other hand, Bangladesh also blames the organisations on several grounds. Thus, analysing both sides claim the challenges that could be identified include-- gaps between demand and supply of climate finance funds, low implementation capacity, bureaucratic inefficiencies, targeting and taking on proper projects and programs, coordination, and poor governance.

The gap between the demand and supply of climate finance funds is still not clear and transparent to the stakeholders. The demand of climate finance for addressing adaptation and mitigation needs is fundamental due to the urgency of investments to improve resilience of the vulnerable communities affected by the climate induced hazards and disasters. Despite the availability of international finance mechanisms, it can be challenging to gain access to those funds for developing countries like Bangladesh. Limitations such as institutional capacity, complexity of the application process, and project implementation restrict the country from flourishing in its plans which sparks the debate regarding the country's climate finance needs of whether the funds received are sufficient or it needs additional resources.

Organisations promise donations but do not fulfil their commitments. One of the main reasons for that is institutional weakness. Additionally, implementation challenges, lack of transparency and accountability on the receiving end and budgetary constraints pose a real threat to Bangladesh's reputation. According to the National Adaptation Plan (NAP), the country's adaptation plan requires approximately $230 billion to implement adaptation measures in sectors like agriculture, ecosystems, and water resources. However, the government's budget allocation for climate-related sectors has barely increased in the last few fiscal years.

In addition to weak institutional capacity, poor governance actions are frequently seen to hinder managing climate funds. For example, lack of coordination between government, donors and stakeholders give rise to duplication of efforts, weak policy frameworks, inefficient resource allocation, political interference, and delayed response to project implementation.

One of the most important issues related to climate finance is choosing the right projects for implementation. Several available climate funds may have their own priorities, mandates, and funding criteria depending on the donor institution which may not align with the demands of Bangladesh to address its adaptation and mitigation needs which are often not sustainable and ultimately results in a gap between the needs and supply of proper funds.

So, over all analysis shows there is no lack in intent and commitment or overall good will in disbursement as well as utilisation of climate change related funds and projects from both donors and receiver's side. The donors are continually showing commitments to allocate more funds to fulfil the needs of Bangladesh. Similarly, Bangladesh is also trying to fulfil their commitment related to fund utilisation. However, the gap and lack in the process from both sides creates some uncertainties creating problems for both parties to understand the need of funding and capacity of utilisation of funds.

WAY AHEAD: Given the extent of the impacts of climate change, Bangladesh's efforts to adapt and mitigate climate change, more than climate finance, might be needed if not used in a planned, efficient way. Hence, efforts are required to mobilise additional resources, promote innovation, increase stakeholder engagement, and improve the governance structure to strengthen the country's resilience. Climate funding plans should also consider marginalised communities to protect them from additional vulnerability in the social context.

Furthermore, Bangladesh faces institutional constraints, meaning it needs to utilise its total capacity despite getting funds. Gaps in project planning, implementation, coordination, corruption, and governance challenges restrict the efficient utilisation of resources. However, Bangladesh can avoid losing resources if it engages in more public-private partnerships (PPP). Project spending can be managed strategically by involving local communities, using the Monitoring, Reporting, and Evaluation (MRE) system for informed and accountable engagement within stakeholders, leveraging local resources and more. On the other hand, from the donor's side, more certainty and assurance in timely disbursement of funds as well as reduced bureaucratic hassles in reporting will certainly help Bangladesh in timely implementation of initiatives and thus fulfilment of commitments related to fund utilisation. In providing commitments capacity of Bangladesh as well as measures to enhance those capacities further should be taken in account. 

Finally, it can be said that, without blaming each other a microscopic scrutiny of shortcomings of both sides and taking related remedy measures can only ensure a win-win situation for Bangladesh and donors. Failure to take proper measures will create an environment where both parties will fail to understand each other's need and demand to fight climate change. 

Dr. Shanawez Hossain is an Associate Professor at the Global Studies and Governance (GSG) department at Independent University, Bangladesh (IUB). [email protected]

Nuzhat Fatima Purnota is a Research Assistant and Student at Department of Environmental Science and Management, IUB. [email protected]