Dr Bilawal Kamran

Prime Minister Shehbaz Sharif’s recent plea for climate finance at the World Government Summit in the UAE has brought to light a critical issue for Pakistan: the massive disparity between the nation’s climate funding needs and the available international resources. As one of the world’s most climate-vulnerable countries, Pakistan faces a severe financial shortfall in its efforts to combat climate change. While the country requires an estimated $40-50 billion annually for climate adaptation and mitigation, it currently receives a mere $1.5-2 billion from international sources. This stark gap in climate financing poses a dire threat to Pakistan’s future and underscores the urgent need for international solidarity and reform.

Despite contributing only a minimal share to global carbon emissions, Pakistan is highly susceptible to the effects of climate change. This is evident in the catastrophic floods of 2022, which submerged a third of the country, affected 33 million people, and caused economic losses exceeding $30 billion. Such devastating events are not isolated incidents but part of a broader pattern of climate-related disasters, with Pakistan projected to lose over 6% of its GDP annually due to climate damages. This relentless cycle of destruction highlights the pressing need for substantial and consistent climate finance to protect the nation and build resilience for the future.

The situation is further compounded by the colossal investment required for Pakistan’s energy transition. The country’s goal of shifting to renewable energy sources demands approximately $100 billion in investment. Yet, despite this urgent need, the international climate finance system remains deeply flawed, restricting access to the necessary resources.

A prime example of this systemic issue is Pakistan’s limited access to the Green Climate Fund (GCF), a primary vehicle for financing climate projects in developing countries. While India has received $782 million from the GCF and Bangladesh $441 million, Pakistan has only been allocated a mere $250 million. This disparity in funding allocation highlights the barriers that climate-vulnerable nations like Pakistan face in accessing international climate finance. Complex approval processes, stringent credit ratings, and high borrowing costs all contribute to directing funds toward lower-risk projects in wealthier nations, leaving countries like Pakistan struggling to secure the resources they need.

To address this disparity, significant reforms are required on both international and domestic fronts. Internationally, there is a pressing need for multilateral institutions to overhaul their frameworks to ensure that vulnerable countries have equitable access to climate finance. The creation of the Loss and Damage Fund, which promises compensation for countries impacted by climate disasters, is a step in the right direction. However, for this fund to be truly effective, its mechanisms must be streamlined to ensure swift and transparent access to the resources. The international community must recognize that climate finance is not a charitable donation but an issue of climate justice. Wealthier nations, having contributed the most to global emissions, have a moral and legal responsibility to support those most affected by climate change.

On the domestic front, Pakistan must take concrete steps to strengthen its institutional capacity to develop and implement bankable climate projects. While the country has set ambitious goals, such as producing 60% of its energy from clean sources by 2030 and converting 30% of its vehicles to electric, these targets need to be supported by actionable plans that attract both public and private investment.

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Creating a regulatory environment that encourages climate-friendly investments is essential to achieving these goals. Pakistan can achieve this by offering targeted incentives for green energy projects, introducing mandatory climate risk disclosures, and fostering public-private partnerships (PPPs). These efforts would not only create a more attractive environment for investment but also ensure that the country can effectively utilize the climate finance it receives.

In addition, Pakistan must prioritize financial innovation in the climate space. This includes exploring blended finance models, which combine public and private sector resources, as well as issuing green bonds to fund renewable energy and environmental projects. Parametric insurance schemes, which provide rapid payouts following climate-related disasters, could also play a crucial role in enhancing the country’s resilience to future climate shocks.

Developing specialized expertise in climate finance and technology will also be essential. Pakistan must invest in building a skilled workforce capable of navigating the complexities of international climate finance and executing climate-related projects. Furthermore, ensuring coordination between the federal and provincial governments is critical for the effective deployment of funds. Local governments must be empowered to play a more active role in implementing climate policies and managing the financial resources allocated for climate projects.

While Pakistan works on strengthening its domestic capabilities, it is essential for the international community to honor its climate finance commitments. Many wealthy nations, particularly those in the Global North, have pledged billions in climate finance to developing countries. However, these promises often fall short, and the funds that are allocated are insufficient to meet the vast needs of vulnerable countries like Pakistan. The international community must not only meet its existing commitments but also increase financial support in line with the growing impacts of climate change.

Furthermore, the international climate finance architecture needs to be restructured to provide easier access to funds for countries facing the most significant challenges. The current system, with its complicated application procedures, rigid credit requirements, and lengthy approval processes, often discourages countries from pursuing climate projects altogether. If global institutions are serious about tackling climate change, they must reform their systems to ensure that climate finance reaches the most vulnerable countries in a timely and efficient manner.

In conclusion, the urgent need for climate finance in Pakistan cannot be overstated. The country’s vulnerability to climate change, combined with its limited financial resources, makes it critical for both international and domestic stakeholders to act. While Pakistan must work to strengthen its institutional capacity, innovate in climate finance, and create a more conducive regulatory environment, the international community must also live up to its commitments and ensure that climate finance is distributed equitably. Only through these combined efforts can Pakistan build the resilience necessary to face the climate challenges of the future and safeguard the well-being of its people.

The time for meaningful action is now. The global community must recognize that addressing climate change is not just about financial assistance but about climate justice. By working together, we can ensure that vulnerable nations like Pakistan are not left behind in the fight against climate change.