Adaptation financing at NAP Expo 2024

The NAP Expo 2024, organized by the Least Developed Countries Expert Group (LEG) under the UN Framework Convention on Climate Change (UNFCCC), will be held in Dhaka from April 22 to 25. The aim is to share experiences and promote partnerships among stakeholders on how to accelerate the implementation of National Adaptation Plans (NAPs), to achieve ‘transformative adaptation’. This concept is increasingly being used by development organizations because mere incremental steps will not suffice against climate extremes that affect the least developed countries the most. But this requires an important provision that makes this possible: adequate international adjustment support, especially for the least developed countries.

But what is the current status of adaptation financing? The first fact to emerge is that more than 60 percent of the adaptation financing provided to the least developed countries comes in the form of loans and not grants, further fueling their already acute debt burden. In addition, more than half of the aid to the least developed countries is intended to finance mitigation efforts, where adaptation is the primary and urgent need. Moreover, a lion’s share of foreign aid packaged in the form of climate finance increasingly accrues to middle-income countries, with serious losses for LDCs/LICs. Looking ahead, no roadmap was provided at COP28 for doubling adaptation financing, as decided at COP26. Finally, evidenced by the mobilization of less than US$200 million for adaptation at COP28, against the target of only US$300 million.

The shrinking fiscal space is already evident from the US’s very meager climate finance commitments, followed by the recent aid budget cuts by some major EU countries. Coincidentally, 2024 is an election year in more than fifty countries, but at least twenty of them, with competitive elections, will see climate change as a contentious issue. The likely political shifts following this year’s elections will have lasting consequences for climate diplomacy. There are already indications that Europe’s green parties will not fare well, and if Trump wins, already weak US support is likely to decline even further.

Against these expectations, some positive trends present themselves as thin silver linings. We may recall that last year’s finance meetings in Paris and Nairobi, together with the Bridgetown Initiative, advocated debt relief, improved international taxation to tap new sources of finance, and reforms to the financial architecture. The multilateral development banks have committed another $300 to $400 billion to low-income countries over the next decade. Another reform agreed upon is a change in the World Bank’s debt-to-equity ratio by one percent to 19 percent, which could free up about $4 billion a year. The Executive Secretary of the UNFCCC recently called on the International Monetary Fund (IMF) to make greater use of an obscure fund called the Catastrophe Containment Relief Trust, which provides debt relief grants to the poorest countries when disasters reach a preset threshold of destruction . But the latest IMF report shows that the fund is in poor financial condition.

There is therefore no way that adequate climate finance can be mobilized without some additional budgetary resources. As president of the G20, Brazil is working to agree on a small tax on billionaires, and part of this levy could support climate action.

Another new tool agreed upon by International Maritime Organization governments is putting a price on shipping emissions. But shipping negotiators suggest this money is being used to clean up their industry, not as climate finance. Another study being completed by this author and his team is on a revised International Air Passenger Adaptation Solidarity Levy, which could mobilize up to $50 billion per year to finance adaptation.

We may recall that the main principle of the climate regime – the common but differentiated responsibilities based on respective capabilities – implicitly refers to the polluter pays principle (PPP), a principle that developed countries do not agree on for international application, but in different ways apply within their limits. The Western market-based model on which the climate regime is based taught us that climate change was the biggest market failure, which can be corrected through the application of the PPP. As solid waste dumping becomes increasingly expensive, emissions extend beyond borders, as if atmospheric dumping were free. Such moral corruption may not last long, as a growing number of lawsuits are pending around the world seeking monetary damages from major emitting governments and fossil fuel companies.

We can also remember the climate talks in Dubai, where 159 world leaders committed to action on food security and climate change by signing the Emirati Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action – the first of its kind. This commitment must be in line with other plans to scale up financing. Such a recalibration of institutions’ balance sheets to attract adaptation financing is a welcome development.

The NAP Expo 2024 will be an opportunity to share many good adaptation practices in the South. As a host country, Bangladesh has many lessons to share: the model of disaster management and the smart agriculture and adaptation practices in between. These lessons can be reinforced with two additional steps: scaling up locally led adaptation as identified in the Mujib Climate Prosperity Plan and developing the monitoring, evaluation and learning framework as proposed by the COP28 decision under the Global Goal on Adaptation . But these achievements in Bangladesh, largely at the expense of domestic resources, cannot be sustained for long given the country’s rising debt burden. Thus, there is no alternative for LDCs/LICs to scale up grant-based adaptation finance, which can be mobilized by imposing solidarity taxes on emissions.

Mizan R Khan is an independent advisor and technical lead at the LDC Universities’ Consortium on Climate Change (LUCCC).

The opinions expressed in this article are those of the author.

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