Huge Support for Bangladesh to Fight Changing Climate

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Development partners are expressing their commitment to support the climate agenda of the Government of Bangladesh through various means. They are initiating the Bangladesh Climate and Development Platform (BCDP). The Government of Bangladesh (GoB) and its Multilateral Development Banks (MDB) and bilateral development partners are establishing the BCDP to execute the country’s climate agenda. The BCDP aims to create a robust portfolio of climate projects, accompanied by a comprehensive financing strategy. This holistic approach, in collaboration between the GoB and its partners, is anticipated to incorporate climate risks into fiscal planning, enhance the responsiveness of public investment management to climate-related challenges, reinforce climate-related risk management for financial institutions through climate stress testing, improve and institutionalize the monitoring and reporting of climate-related expenditures, and strengthen disaster risk reduction and management efforts. The article will concentrate on the matter and subsequent aspects, demonstrating that Bangladesh is moving in the correct direction.

On December 3, 2023, a collaborative effort was announced by various organizations, including the Asian Development Bank (ADB), World Bank, International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), Asian Infrastructure Investment Bank (AIIB), Agence française de développement (AFD), the European Union, European Investment Bank (EIB) under Team Europe, the Green Climate Fund (GCF), the Government of South Korea, Japan International Cooperation Agency (JICA), and the United Kingdom. This joint initiative aims to support a set of measures for Bangladesh, enhancing the country’s capacity to mitigate and adapt to the impacts of climate change. This unique partnership, the first of its kind in Asia, aligns with the $1.4 billion Resilience and Sustainability Facility (RSF) arrangement approved by the International Monetary Fund (IMF) in January 2023, the World Bank’s $1 billion programmatic series for Green and Climate Resilient Development (GCRD) Policy Credits, and the Asian Development Bank’s (ADB) ongoing funding for climate projects in Bangladesh.

The RSF arrangement and GCRD credits focus on supporting reforms to strengthen Bangladesh’s resilience to climate change, promote the decarbonization of the economy, and manage transition risks. These reforms, endorsed by the IMF program and GCRD, aim to integrate climate and green considerations into public procurement and planning, encourage locally led climate actions, and scale up a national disaster risk financing strategy. Additional reforms include adopting a periodic formula-based price adjustment mechanism for petroleum products, addressing air pollution and greenhouse gas emissions, improving the efficiency and resilience of water supply and sanitation services, and updating the Policy on Green Bond Financing by Bangladesh Bank. The implementation of these reforms, coupled with collaboration with partners, is expected to create a conducive environment for attracting additional climate finance.

Bangladesh’s innovative approach to addressing climate change involves inter-ministerial and inter-agency coordination. Recognized as one of the most vulnerable countries to climate change, Bangladesh has been a pioneer in climate change adaptation and disaster risk preparedness. To enhance government coordination, the Ministry of Environment, Forest, and Climate Change (MoEFCC) has established the National Committee for Environment and Climate Change (NCECC) as an inter-ministerial platform led by the Prime Minister. The NCECC will oversee the implementation progress of national climate strategies, offer guidance and solutions for implementing these strategies, and consider the implementation of decisions made at United Nations’ conferences on climate change.

The establishment of a Project Preparation Facility within the BCDP will enhance the feasibility of crucial projects, a multi-donor and multi-sector project preparation facility will be created within the Bangladesh Climate and Development Platform (BCDP). This facility, spearheaded by the Asian Development Bank (ADB) and the World Bank, aims to improve coordination with other development partners while supporting scalability to attract private investments nationwide. This collaborative effort seeks to integrate projects into development plans, lessening the financial burden on the public sector. There are more to dig into.

Policy-based lending of $1.85 billion is another feature. The ADB is in the process of securing a $400 million policy-based loan for Bangladesh in 2023. Of the ADB’s projected project financing of $1.9 billion in 2023, approximately 53 percent is earmarked for climate financing. The ADB is committed to allocating more than half of its 2024-26 allocation for Bangladesh, amounting to $5.5 billion, in alignment with the Government of Bangladesh’s (GOB) climate agenda. Additionally, the Korean Government has pledged $50 million in support of the GOB’s climate initiatives, and the Asian Infrastructure Investment Bank (AIIB) is considering providing an additional $400 million in 2024, as requested by the Government of Bangladesh. Moreover, World Bank’sfunding for sustainable development should be taken into account. The World Bank’s $1 billion Green and Climate Resilient Development Policy Credit series financing is aiding Bangladesh’s transition to green and climate-resilient development. The World Bank is also assisting Bangladesh in aligning with Article 6 of the Paris Agreement to better access and utilize international climate and carbon finance.

Furthermore, Bangladesh is receiving funding(~$610 million) for nine private-sector climate projects, with contributions from the Green Climate Fund (GCF), other development partners, national implementing entities, private banks, and the Government of Bangladesh. The Japan International Cooperation Agency (JICA) will expand support for Bangladesh’s green transition and green industrial diversification through direct financing to the private sector. Additionally, the International Finance Corporation (IFC) will deploy its own funds and attract other investors for climate financing in the private sector. The Multilateral Investment Guarantee Agency (MIGA) will leverage its experience in Bangladesh to provide investment guarantees, especially in the renewable energy sector, reducing the cost of climate finance. Standard Chartered Bank (SCB) is actively contributing to Bangladesh’s climate ambitions by introducing new products, such as the first local green bond and the first sustainable letter of credit, and offering blended finance solutions.

Bangladesh is unequivocally on the path of commendable progress, demonstrating substantial dedication to climate-resilient sustainable development. The nation has successfully streamlined regulatory and institutional frameworks, implementing an extensive array of policies, plans, and programs to address climate change and disaster management. Key initiatives include the Bangladesh Climate Change Strategy and Action Plan (BCCSAP), National Adaptation Programme of Action, and the Nationally Determined Contributions (NDC).

The nation’s strides in renewable energy and energy efficiency further bolster its reputation as a leader in low-carbon development. Achievements in solar and wind power, coupled with significant reductions in greenhouse gas emissions and adherence to international agreements like the Montreal Protocol and the Kigali Amendment, highlight Bangladesh’s proactive environmental stewardship. As evidence of these achievements, Bangladesh retained its position as the president of the CVF. The ongoing efforts, facilitated by the aforementioned initiatives, underscore Bangladesh’s commitment to a sustainable and resilient future.

– Syed Raiyan Amir is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

Published in Daily Observer [Link]