Climate finance in Asia: Assessing the state of climate finance in one of the world’s most climate-vulnerable regions – Afghanistan
Asia is particularly vulnerable to climate hazards, including extreme temperatures, floods, droughts, cyclones and rising sea levels. The most vulnerable communities need financial support to help them s adapt to the climate crisis – they cannot do it alone. Developed countries have pledged $100 billion in climate finance to developing countries every year until 2025.
This promise was not kept. Asian countries outlined the support they need, and meeting those needs is key to bringing climate justice to those most vulnerable – but least responsible – for the climate crisis. We see that the climate finance provided to Asia is woefully insufficient to support needed adaptation actions and that vulnerable communities are suffering as a result.
The climate crisis continues on a shocking trajectory, with record annual global emissions leading to increased rates of global warming. The world has already experienced anthropogenic +1.2°C warming and warnings have been repeated time and again about the dangers of allowing temperatures to rise further.
While the current ambition of the Paris Agreement is to keep global warming to just +1.5°C on average, this belies the strong regional differences inherent in such a scenario. Different regions of the world will warm at different rates, be affected in different ways, and react differently to the new realities they face.
The complexities of the climate crisis are no better illustrated than in Asia.
As a diverse region with hot-humid, tropical and subtropical climate profiles, Asia experiences many weather phenomena, from cyclones and monsoon rains to heat waves and droughts. Reducing the risk of such events has been an important ambition for governments and development actors. However, the challenges ahead are growing as the atmosphere and oceans continue to warm.
The Intergovernmental Panel on Climate Change (IPCC) outlined in its latest assessment report the stressors and associated risks of the climate crisis in Asia (see Box 1). Here, a high exposure to climate impacts is coupled with a socio-economic context that makes a large number of communities highly vulnerable to climate change. Half of the world’s population lives in the region and many are on the front lines of the crisis. In the 18 Asian countries included in this study1, half of the total population lives below the poverty line of $5.50 a day. Poor people are much more vulnerable to climate shocks and less prepared to cope and adapt to the new situations they face. Other marginalized communities are also highly vulnerable, with gender and age being key demographic factors governing an individual’s climate vulnerability.
The effect of extreme exposure and vulnerability can be seen in recent examples of climate-related events such as the devastating 2022 floods in Pakistan. Caused by extreme monsoon rains that have been modified by a warming climate and made worse by heavy glacial melt linked to extreme heat waves earlier in the season, the floods and their impacts mean many people are pushed into poverty or saw their entrenched poverty.
The ND-GAIN index provides a valuable indication of a country’s vulnerability and preparedness to climate change. Afghanistan scores the lowest of all countries in the region, followed by Bangladesh, Myanmar, Cambodia and Pakistan, in that order. All of these countries are least developed countries (LDCs) – the poorest in the world, with the exception of Pakistan.
Of the 18 countries analyzed in this report, 8 are LDCs, 6 are Lower Middle Income Countries (LMICs) and 4 are Upper Middle Income Countries (LMICs). The 18 Asian countries analyzed are collectively responsible for 42% of current global emissions, falling to just 15% if Chinese emissions are excluded. Countries like Afghanistan, Bangladesh, Bhutan, Cambodia, Laos, Myanmar, Nepal and Timor-Leste (all LDCs) have contributed negligible amounts of greenhouse gas emissions ( GHG) in the atmosphere. And yet, today they are among the most affected by the climate crisis.
This injustice must be corrected by directing climate finance to where it is most needed, in particular to enable adaptation to future impacts. The annual cost of adaptation globally is estimated to be between $280 billion and $500 billion by 2050. In contrast, if developing countries are not supported to adapt, the cost of losses and damages resulting from the climate crisis could reach 1 to 1.8 trillion dollars. by the same year. Continued inaction and delays only increase these expenses.
Support for developing countries was promised in the form of $100 billion a year in climate finance from 2020. It is now clear that this promise has not been kept – only $83 billion has been committed in 2020. Despite the promise to deliver the $100 billion on a delayed time scale (i.e. by 2023), this again highlights that climate commitments are so often not backed by proper commitments . stock.
As international talks move from defining ambitions and pledges to delivery and implementation, it is important to assess the quantity and quality of climate finance being provided to Asia – the purpose of this study.
In official reports to the United Nations, many of the countries in question have described the financial support they need to implement appropriate mitigation (reduction of emissions) and adaptation measures by 2030 – their “quantified needs”. “. To fully meet these needs, countries collectively need $1.3 trillion per year, every year up to and including 2030 (falls to $371 billion per year if China is excluded). It is important to note that the quantified needs should come from various public and private sources, national and international suppliers.
While public, private and domestic financing have a huge role to play in bridging the quantified needs gap, international public sources account for the majority of financing to which LDCs have access. Currently, this funding is far below what is needed. Over the eight-year period 2013-2020, only $14 billion per year on average was committed in climate finance for the 18 Asian countries.
However, much of this funding is provided in the form of loans and other debt securities. Bilateral providers only committed 18% of their climate finance to the region through grants ($1.2 billion per year on average), the remaining 82% was offered in the form of concessional loans and grants. other debt instruments ($5.4 billion per year on average). In contrast, multilateral providers (e.g. World Bank, Asian Development Bank, Green Climate Fund, etc.) committed only 5% of their climate finance as grants (0.4 billion per year on average), and the remaining 95% through loans and other debt instruments ($6.7 billion per year on average). In addition, the multilaterals delivered 67% of these debt instruments on non-concessional terms (4.5 billion dollars per year on average), ie by lending at rates close to market rates.
The use of such financial instruments risks plunging countries already struggling with debt burdens into further financial difficulties. This is counterproductive to the original purpose of climate finance. The goal of improving the climate resilience and adaptive capacities of developing countries is jeopardized when these countries find themselves redirecting money towards servicing the debt burden – money that could otherwise be used to provide public services, such as schools and hospitals. The deterioration of these services places nations in increasingly climate-vulnerable situations.
To give a more accurate picture of the net value of this climate finance to developing countries, it is possible to calculate the grant-equivalent value of the flows received. This measure shows that only 43% ($6.1 billion) of the initially calculated annual average of $14 billion can be considered grant-equivalent funding.
Another key aspect of the $100 billion commitment was to provide a “balanced” amount of finance for mitigation and adaptation. Unfortunately, the amount of adaptation finance committed in Asia has only accounted for one-third of total climate finance, compared to two-thirds of mitigation finance between 2013 and 2020, representing a clear imbalance. Although this picture is improving somewhat – with 43% of 2020 commitments targeting adaptation goals, the need for large-scale, grant-based adaptation finance is glaring.
If this underfunding of climate finance pledges and the defined needs of developing countries continues, rich countries risk devaluing international climate agreements and the vital ambitions they contain that seek to mitigate the worst impacts of climate change. climate crisis.