Adapting to climate change

By Zain M Khan Pakistan has recently faced multiple crises, which have exposed the country’s vulnerability to exogenous shocks. Recently, the IPCC called for a reduction in emissions to limit the increase in global temperatures by 2° Celsius. However, given the current growth in emissions, an average rise in global temperatures of 5° Celsius is apprehended, which will result in rising sea levels, catastrophic weather changes, desertification, famine, water scarcity, etc. As Pakistan has the world’s largest glacial mass in its north, it is particularly vulnerable to global warming. Under the Durban Platform for Enhanced Action adopted at the United Nations Framework Convention on Climate Change (UNFCCC) meeting held in 2011, the international community launched negotiations for the 2015 international climate change agreement for shaping international climate policy beyond 2020. As the 2015 agreement envisages legally binding commitments to reduce greenhouse gas (GHG) emissions by all countries, there are serious implications for a country such as Pakistan facing steep climate change challenges. Pakistan’s lack of action to adopt the required level of mitigation stems not only from the fact that it has one of the lowest per capita emissions/carbon footprint in the world, but there is hardly any fiscal space for investment in cutting emissions or investing in alternate energy resources. The shift to low carbon strategy involves technological change and structural shifts in the economy. Clearly, fossil fuel intensive strategies have led to adverse climate change and GHG impacts. While there is a strong imperative of shifting the country’s development planning towards a green, sustainable economy, exorbitant expenditure on imports of fossil fuels has crowded out investment in renewable energy, thus resulting in gross misallocation of scarce resources. Besides, the country also lacks the capacity to monitor its emissions. Kyoto Protocol provides three mechanisms to help countries control their emissions through flexible arrangements. The clean development mechanism (CDM) allows industrialised countries to invest in climate-friendly projects in poor countries and earn carbon credits in exchange. The joint implementation mechanism enables industrialised countries to invest in climate-friendly projects in other industrialised countries and earn carbon credits in exchange. Finally, emissions’ trading creates a market for trading carbon credits with countries that have surpassed their target. From among these streams, Pakistan has had a wholesome CDM project portfolio. CDM has proved effective in generating private sector funding for clean energy projects in developing countries and helping industrialised countries to meet their emission cutting targets. But problems abound. The CDM involves extensive bureaucratic red tape that delays the actual registry of many preapproved projects. The CDM is also blamed for earning some companies high levels of carbon credits for low-cost changes, due to which national regulation or other means of financing emissions reductions appear to be more viable alternatives. The main problem relates to funding. At the Copenhagen Climate Change Conference held in 2009, the industrialised countries pledged to provide $100 billion by 2020 to developing countries. They also pledged to establish a green climate fund at Cancun in 2010. But concrete funding streams have yet to materialise as the total disbursed funds for climate change initiatives, both within and outside of the UNFCCC, adds up to only $2.1 billion. The International Energy Agency has projected a requirement of roughly $5 trillion for achieving climate goals by 2020. An emerging but even more complex mechanism related to funding is emissions’ trading that is considered effective in overall emissions reductions. The EU carbon market has an estimated value of $120 billion. Yet, overall, carbon markets are still underdeveloped. Their main issues are price discovery, price volatility and exposure to political risk. There is also the question of profit motive as the price of carbon is too low to attract investments. At the same time, the capital markets are unregulated and unstable to provide a solid base for global efforts against climate change. There is a dire need for the country to assess its priorities for the new agreement. An equitable global climate regime based on cooperation between the developed and the developing countries should recognise our lesser historical responsibility due to low carbon growth and our low ability to pay. The allocation of the global cap on emissions should be broken down to individual nations and sectors based on equitable negotiations that take into account the constraints and necessities of the developing countries. Without an adequate global framework to support, finance and implement the most efficient technology mix, a rise in GHG emissions will continue unabated. In order to finance the huge upfront cost of GHG mitigation and climate resilient infrastructure, we can no more afford to be indifferent to emissions’ trading system and other carbon market instruments in combination with appropriate funding and efficient regulation. In this context, continuation and upscaling of the CDM is important to link our (yet to be established) carbon markets with the global carbon market. Within the domestic energy fiscal regime, a trade-off can be struck between the burden on the poor and the richest segment of the society by progressive taxes on luxury emissions, such as use of personal cars, air travel, etc. In this way, survival emissions for the basic needs of the poor can be balanced with a reduction in luxury emissions by the wealthy. Due to acute funding constraints and increasing competition for funds, we need to be proactive in tapping all the sources of funding available. Among these are multilateral funds established under the UNFCCC, the World Bank and the Global Environment Facility to provide grants and loans, albeit limited, for funding specific climate change projects in the areas of adaptation and development of clean technology. Further, through the CDM, the UNFCCC regime also provides carbon credits for deforestation and reforestation projects. Negotiations at the 15th meeting of states party to the UN climate convention secured a pledge for $3.5 billion to combat deforestation in developing countries, which complements an existing UN-REDD programme funded by Norway, Denmark and Spain. Additionally, the World Bank Forest Carbon Partnership Facility also provides better forestry management and conservation. International institutions have begun to promote domestic policy shifts through measures such as technical assistance provided by organisations, such as United Nations Environment Programme (UNEP) and United Nations Development Programme. The writer is studying international development