Finance is vital for the success of COP26

The United Kingdom—as the incoming President of the 26th Conference of Parties (COP26) under the United Nations Framework Convention on Climate Change (UNFCCC), to be held in Glasgow, Scotland in November—held a ministerial meeting on March 31 to discuss the issue of raising adequate funds for enabling developing countries to tackle climate change.

The COP26 Presidency invited ministers from about 40 developing and developed countries, and also key institutions such as the World Bank and International Monetary Fund (IMF). Bangladesh was amongst the countries invited, and the foreign minister of Bangladesh spoke on behalf of both Bangladesh and the Climate Vulnerable Forum (CVF), which is currently chaired by Bangladesh. Although the speeches of individual speakers were not made public, the COP26 Presidency has released a summary of the discussions held with pledges of follow-up action from the UK as COP26 President going forward.

The good news is that this was a very timely meeting on one of the most important global issues that will determine not only the success of COP26 but also, more importantly, how developing countries will be able to tackle the reality of climate change which is already affecting them.

The main discussion at the meeting revolved around the promise made in 2015 in the Paris Agreement by developed countries about providing a total of USD 100 billion to developing countries each year from 2020 onwards. Another talking point was the fact that this amount was meant to be a foundation, to be built on in each subsequent year. Unfortunately, the experience so far has fallen short both in terms of the total amount provided in 2020 and the distribution between support for mitigation versus support for adaptation. Vulnerable developing countries demanded a 50-50 split between support for mitigation and adaptation while, in practice, there has been 80 percent support for mitigation and only 20 percent for adaptation.

The COP26 Presidency promised to lobby with the developed countries to enhance their share of support for adaptation for the most vulnerable developing countries by June this year. This will be a key outcome for COP26 as, without financial support, the developing countries' COP goals will not be achieved.

Another positive outcome of the ministerial meeting was to establish that the issue of loss and damage was now important to recognise and act upon. This would include the preparation of the Santiago Network on Loss and Damage, which was agreed to be set up at COP25 in Madrid, Spain in 2019. The UK COP26 Presidency plans to hold some consultations on this during the COP26 summit, which is a positive development.

However, a more important aspect in terms of dealing with loss and damage is financing the victims. This was, unfortunately, not resolved at COP25 in Madrid but it was agreed that there would be an exploration of potential avenues for new and additional sources of finance for loss and damage, and there are some ideas for how this can be done.

The first point is that this issue has become politically sensitive due to the framing of liability and compensation from the polluting countries, which the developed countries are not willing to acknowledge yet.

However, this does not preclude the possibility of raising funds from either governments or non-governmental sources through a framing of solidarity, rather than liability and compensation. This could be done through a crowdsourcing of funds from citizens or organisations from any country which would support the poorest victims of climate change in the most vulnerable developing countries. With regard to who would manage such a fund, one possibility might be a consortium of major international NGOs. Another possibility could be the fund that has already been set up by the Climate Vulnerable Forum (CVF) countries.

There are also some excellent ideas being put forward by different countries and groups to use debt swaps or even pre-disaster financial support (such as the forecast-based financing that the Red Cross has initiated in a number of countries, including in Bangladesh).

In the context of Bangladesh, there is an initiative underway to take a public-private partnership approach and a whole-of-society approach to setting up a National Mechanism on Loss and Damage, where the reserve funds that have been created under the Bangladesh Climate Change Trust Fund (BCCTF), which is equivalent to over USD 100 million by now, could be utilised to initiate financing for loss and damage in Bangladesh.

These are just some of the ideas that could be explored in a positive atmosphere of discussion prior to and at COP26 with a decision to make them more concrete by COP27, which will be hosted in Africa in 2022.

The bottom line is that the need for financial support for the poorest victims in the poorest developing countries is now an unavoidable reality that has to be addressed in a befitting manner. All governments as well as non-governmental actors should come up with ideas which could be taken forward out of a sense of solidarity with the victims of human-induced climate change.

Saleemul Huq is Director of the International Centre for Climate Change and Development (ICCCAD) and Professor at Independent University, Bangladesh (IUB).