How can we revitalise climate financing for Bangladesh?
Given the context of Bangladesh and based on global learning, we can focus on adopting some strategies, including diversifying funding sources, as relying on a single source of climate finance is risky
Bangladesh, a nation in South Asia with a low-lying delta, faces significant impacts of climate change, despite making minimal contributions to global greenhouse gas emissions. Its geographical landscape makes the country highly susceptible to the negative effects of climate change. Thus, it is imperative for Bangladesh to secure substantial global climate financing to bolster its climate resilience.
Bangladesh has been obtaining funding from various channels. According to the Ministry of Environment, Forestry, and Climate Change, Bangladesh has received about $168.298 million as a grant and $250million as a loan from the Green Climate Fund (GCF), and approximately $34.41 million from the Least Developed Countries Fund (LDCF). These amounts are not at par with the severity of the impact of climate change in Bangladesh. Hence, Bangladesh must accelerate the inflow of funding.
The financing options include multilateral and bilateral scopes, as well as innovative opportunities. Multilateral Climate Funds encompass various avenues. The Green Climate Fund (GCF), established under the United Nations Framework Convention on Climate Change (UNFCCC), is a key source that channels funds from developed to developing countries and supports projects aimed at reducing greenhouse gas emissions and strengthening resilience to climate change.
The Global Environment Facility (GEF) supports projects related to biodiversity, climate change, international waters, land degradation, and chemicals and waste management.
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Besides, the Adaptation Fund finances projects that assist vulnerable communities in developing countries to adapt to climate change. Additionally, the Least Developed Countries Fund (LDCF) is designed to support the work program for the least developed countries under the United Nations Framework Convention on Climate Change (UNFCCC). Furthermore, the Special Climate Change Fund (SCCF) complements the Least Developed Countries Fund (LDCF) and is primarily for other developing countries.
In addition to the multilateral sources, there are opportunities to obtain funding through bilateral aid, provided by individual countries, to support climate action in developing nations. Furthermore, it is crucial to explore innovative financing mechanisms, such as green bonds, carbon markets and insurance schemes, to secure funding.
Despite the availability of various sources, Bangladesh encounters several obstacles in accessing these funds. Applying for climate funds often involves intricate and lengthy procedures, necessitating robust institutional capacity. In addition, strict eligibility criteria can be challenging to meet, making it difficult for countries with limited technical expertise to qualify. Limited knowledge about available financing options and inadequate capacity to prepare and implement projects also hinder access to funds. Poor coordination among government agencies, development partners, and stakeholders also contributes to inefficiencies in fund utilisation.
Studying global experiences is also crucial for devising new strategies. For example, Kenya has successfully leveraged funds from the adaptation fund to support its National Drought Management Authority.
Fiji also became the first developing country to issue a sovereign green bond, raising funds to support its climate resilience projects. Besides, Costa Rica stands out for its use of green bonds to finance reforestation and renewable energy initiatives, effectively accessing global capital markets to advance its climate efforts.
Given the context of Bangladesh and based on global learning, we can focus on adopting some strategies, including diversifying funding sources, as relying on a single source of climate finance is risky. Bangladesh should diversify its funding sources by exploring various international, bilateral, and multilateral options.
Moreover, exploring more funding from the Green Climate Fund (GCF) is crucial, as it is a significant source of climate finance for developing countries. Bangladesh should also focus on building strong project proposals that align with GCF priorities to secure funding. However, the alternatives of this fund should also be considered, as Bangladesh is graduating from LDCs in 2026.
A special focus on leveraging bilateral agreements through engaging with developed countries is important. This can unlock additional funding. For instance, partnerships with countries like Japan, Germany, and the Netherlands, which have strong climate finance commitments, can be beneficial. Additionally, exploring private sector finance can be instrumental, as mobilising private sector investment through public-private partnerships (PPPs) can supplement public funds. In this regard, encouraging green investments and providing incentives for sustainable projects can attract private capital.
Additionally, it is crucial to develop a comprehensive national climate finance strategy to outline priorities, targets, and a roadmap for accessing and utilising funds. Gaining the trust of international donors and financial institutions requires effective governance and financial management systems. A dedicated Climate Finance Authority/unit could streamline the process of identifying funding needs, preparing proposals, and managing funds.
Moreover, utilising carbon trading mechanisms can generate additional revenue for climate projects. Developing and registering carbon offset projects under international standards, creating a national carbon trading platform, and establishing bilateral agreements for carbon credit purchases can leverage international carbon markets.
Importantly, we need to focus on developing bankable projects, as they are crucial for attracting climate finance. Investing in technical expertise to develop and manage climate projects is essential. Projects that offer multiple benefits are more attractive to funders; highlighting these co-benefits can strengthen funding proposals.
Apart from other initiatives, issuing climate bonds can raise capital for specific climate-related projects and can be attractive to investors looking for sustainable opportunities. Negotiating debt-for-climate swaps and employing blended finance mechanisms can de-risk investments and attract more private capital.
Furthermore, developing impactful communication strategies is essential, and crafting compelling narratives that highlight the human and economic impacts of climate change is a key part of this. Proactively engaging with international media can help raise awareness about Bangladesh's climate challenges and funding needs.
Securing climate financing from global sources is a multifaceted challenge that requires a strategic and coordinated approach. Bangladesh should take action now to access more global funds to address the impact of climate change. With the global community increasingly recognising the urgency of climate action, Bangladesh has the opportunity to leverage international support to build a more resilient and sustainable future.
Dr Mohammad Kamrul Hasan is a Public Administration researcher and Practitioner. email:mkhmiraz@gmail.com
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
