Climate change
NOT many know Pakistan was elected co-chair of the Green Climate Fund Board for 2020; fewer realise its significance. With $17 billion in the kitty and growing, GCF is the most important global fund for climate change. As contributors, interests of the developed world are well represented on the board. Facing global economic powerhouses, Pakistan, co-chairing with Canada, tackled the challenge of aligning the fund to the needs of 130-plus developing countries that bear the brunt of climate change.
Despite Covid-19, it was an eventful year. Pakistan’s leadership increased its stature, highlighting the significance of performing credibly on the international stage, especially since over the decades our voice at multilateral institutions has waned. A transition to virtual board meetings allowed the business of the fund to continue at pace. GCF approved 37 projects worldwide worth $2.1bn, more than ever before. Under our leadership, GCF also approved an updated strategic plan, shaping the fund’s direction.
Reflecting on the past year, the GCF experience offers four takeaways.
1. The world is on the cusp of change — ride the wave: Policymakers in Pakistan continue to see climate change as a problem of the future. The reality is different. It is impacting policy choices for countries and the world, today. The 2015 Paris Climate Change Agreement was a tipping point. The world is acting now; EU is committed to reducing emissions by 55 per cent by 2030, China to go carbon neutral by 2060 and the UK by 2050. With the US rejoining under Biden, momentum will build further.
Pakistan can prepare well or miss the bus.
The timelines shouldn’t breed complacency. The global shift is happening now, with consequences. The terms of global finance are already becoming conditional to action on climate change. The European Green Deal aims to address ‘carbon leakage’ in all future trade and investment agreements. Green manufacturing will increasingly drive the quantum of a country’s exports. Pakistan can prepare well and be rewarded, or it can miss the bus. Decisions such as our energy mix, industrial policy, and how we integrate carbon management into economic and social policies will impact financing we have access to, quantum of trade and economic competitiveness.
2. Understand where the money is and learn how to access it: The terms of development assistance, a contributor to Pakistan’s economic development, are shifting. With pressure on the developed world to contribute more to climate financing, the Covid-induced global economic slowdown is forcing the lines between development support and climate finance to blur. Pakistan needs to understand this shift to benefit.
International climate funds provide an unprecedented opportunity. If used well, billions of dollars of climate finance can be accessed by the government and private sector to set up new industry, creating millions of green jobs. Climate finance should not only be confined to helping us combat floods, rather, it is a vehicle to consciously align with the global economy-wide transition to reap dividends of sustainable growth.
3. Build partnerships and leverage technology: As the world moves to a greener economy, the importance of attracting investment and leveraging greener technology grows manifold. Pakistan must leverage every opportunity in this space. There is low-hanging fruit. For example, this year the GCF approved a $250 million project, providing concessional financing and assistance to textile manufacturers in a least-developing country to upgrade from badly maintained machines with poor energy management to energy-saving technologies. If Pakistan did the same, we would not only reduce emissions by 14.5m tonnes, but also gain competitive advantage by producing exports at a lower cost.
Pakistan is significantly improving its ease of business rankings. If the public sector plays its role in facilitating investment, and the private sector in targeting the right technology and partnerships, Pakistan can create a growth trajectory based on tomorrow’s green economy rather than yesterday’s carbon-based one — a clear case for competitive advantage.
4. Use climate change ‘diplomacy’ as a key foreign policy instrument: For too long, Pakistan has allowed itself to take a back seat at the international policy table, without realising the price it has been paying for doing so. Looking inward, Pakistan let itself be pushed to the fringes of all multilateral decision-making processes. Pakistan’s performance as co-chair of the GCF needs to instil in us the belief that we can play a bigger international role; if Pakistan positions itself as a key player on climate change, it can guarantee itself a long-term, strategic voice on climate change priorities in the developing world, as a pathway to a greater say on other matters of international political and economic significance.
The writer is a climate finance expert.
Published in Dawn, January 28th, 2021