Pakistan’s global climate leadership

In July 2023, the international Green Climate Fund (GCF) announced US$66 million in funding to support “Recharge Pakistan”, a seven-year project using nature-based solutions to build resilience against climate disasters in the Indus Basin like the super floods of 2022, which devastated Pakistan’s southern provinces. While it is certainly beneficial for Pakistan to receive such a large grant for the Recharge Pakistan project, it is even more important for Pakistan to celebrate the role that it is playing at a strategic level at the GCF. Pakistan is currently Co-Chairing the GCF Board along with the United States of America (USA) for the year 2023. This is Pakistan’s second Co-Chairmanship of the GCF in three years; it Co-Chaired the Board for the first time in 2020,along with Canada.

In addition to approving projects, the GCF Board also sets the strategic and policy direction of the Fund. Co-Chairs are jointly responsible for driving the agenda for the entire year. Major decisions are made by the Board, which formally meets three times a year. 

Within that context, this year is even more crucial. It is replenishment year at the GCF, where contributors (developed countries) are going to pledge finances for the next four years. The final announcements are due on 5 October 2023, at the Pledging Conference to be held in Germany. In order to decide how these funds will be utilised between 2024 and 2027, the Board approved a Strategic Plan in July 2023. The GCF is currently the largest climate fund in the world, and replenishment of the Fund takes place every four years.

Pakistan, together with the US, has played an instrumental role in not only preparing the Strategic Plan, but also ensuring consensus across representatives of all developed and developing countries serving on the Board. 

Pakistan’s contribution as Co-Chair

According to Nauman Bashir Bhatti, who currently serves as the ambassador of Pakistan to Kazakhstan as well as Co-Chair of the GCF Board, representing the Asia Pacific region, as Board Co-Chair for 2023, Pakistan has been playing an important role in shaping the Fund’s strategic direction and operational policies. “We earlier served as Board Co-Chair in 2020 and provided critical leadership for the Fund’s continued operations during the COVID-19 pandemic” he says. “So far this year, we have steered Board decision-making on issues that aim at improving the Fund’s overall management and operational capacity, including ensuring predictability, speed and scale of GCF flows to developing countries, including Pakistan. The appointments of a new executive director and heads of two independent units, as well as the approval of the GCF Strategic Plan for 2024-27 and contributions policy, are some of the major Board decisions taken during our Co-Chairmanship.”

The GCF, which was set up during the Copenhagen Climate Summit that took place almost 14 years ago, was supposed to have been an annual US$100 billion fund but only ever reached around US$20 billion. There are 24 GCF Board members of which 12 are from the western countries and 12 from developing countries. Each year, two Co-Chairs are elected. The GCF gives out all kinds of money to developing countries: loans, grants, equity, etc. for use in both adaptation and mitigation. Around US$10-12 billion are expected to come into the Fund this year. Developing countries must apply for this money through a competitive and stringent process and only the best proposals are awarded.

“Pakistan currently has a very myopic view of climate finance. Our primary focus is on grant money. While that is very important given our vulnerabilities, we also need to understand that globally, only 20 per cent or less is provided as grants to all countries combined. For the rest, you have to have a solid business case. That is where the opportunity lies for building partnerships and leveraging investments in Pakistan. We need to start using climate money smartly,” explains climate finance expert Kashmala Kakakhel who routinely provides advice on climate finance to the Government of Pakistan.

In her view, the new Strategic Plan of the GCF provides a great incentive for the private sector of developing countries like Pakistan to start engaging with climate investment opportunities. “Most international funds prefer to engage with well established private entities with strong global presence. The GCF, through the new Strategic Plan, will now also provide a level playing field to the domestic private sector of developing countries. The public sector alone cannot solve the climate problem; the domestic private sector has to be incentivised to support climate action”, she says.

GCF’s five projects in Pakistan

The Recharge Pakistan project is currently the fifth project awarded to Pakistan by the GCF. Earlier GCF projects in Pakistan include the Scaling-up of Glacial Lake Outburst Flood (GLOF) risk reduction in Northern Pakistan, currently being implemented until 2025, and the Asian Development Bank supported Green Bus Rapid Transit (BRT) in Karachi due for completion in 2024, which aims to build a zero-emissions BRT system that is safe and accessible to all citizens of Karachi.

Then there are the Food and Agriculture Organisation’s initiative to Transform the Indus Basin with Climate Resilient Agriculture and Water Management in eight selected districts of the Indus region due to be completed in 2026 and the recently approved Pakistan Distributed Solar Project, which is to be implemented by JS Bank. The solar project will provide loans for domestic solar panels to help bridge the financing gap for these investments in Pakistan.

According to Malik Amin Aslam, a former special assistant to the prime minister (SAPM) on climate change and global vice president of the International Union for the Conservation of Nature (IUCN), “Pakistan has had a mixed bag of success with the GCF both in terms of the funds raised as well as their impact on the ground. The approval processes (for GCF funding) need to be made simpler and easily accessible for highly impacted countries like Pakistan who no longer have the luxury of time at their hand being at the epicenter of the climate crisis.”

The GLOF and the Climate Resilient Agriculture and Water Management projects started when Amin Aslam was serving as the SAPM from 2018 to 2022. In his view, the GLOF project has certainly been a success story and has assisted marginalised mountain communities in preparing and understanding the sudden and ravaging impacts of glacial bursts. “It has also clearly mapped out the highly vulnerable points and installed real time glacial weather reporting stations. All of that is building capacity to face up to an unraveling catastrophe from which there is no escape. The GLOF project had financial transparency issues, which have now been fortunately resolved for rapid on ground delivery. The project on climate smart agriculture has unfortunately not been able to create a significant impact although it addresses the badly needed issue of climate induced food security. I hope it can get over the long stretched managerial hiccups and start delivering,” he says.

In the future, Amin Aslam adds, Pakistan needs to focus on procuring financing for more nature based solutions to climate change as well as exploring avenues such as building retrofits for enhancing energy efficiency as well as facilitating the transition to electric vehicles through the GCF.

GCF funded Recharge Pakistan project

Amin Aslam says that he has high hopes for the recently approved Recharge Pakistan project “as it clearly turns a yearly crisis into an opportunity by capturing and effectively utilising the yearly flood deluge to restore degrading wetlands and recharge the groundwater aquifer”. In addition to the US$66 million GCF grant, the Recharge Pakistan project is supported through a collective US$12 million investment from the Coca-Cola Foundation, the U.S. Agency for International Development (USAID), and WWF-Pakistan. They have all come together to expand large-scale green infrastructure, develop wetlands, manage floodplains, and promote local businesses in the agriculture and forestry sectors in the Indus region.

Overall, this US$77.8 million partnership is the largest-ever investment in an ecosystem based approach to build Pakistan’s climate resilience. Pakistan’s former minister for climate change Sherry Rehman, in whose tenure the GCF project was approved, says that the Recharge Pakistan project would help reduce flood risks and enhance water recharge in targeted catchments of the Indus basin. This would improve the resilience of over seven million people and safeguard vulnerable ecosystems by 2030.

This is the same region where the devastating floods of 2022 claimed 1,700 lives, affected 33 million individuals, and caused damages worth $30 billion to the economy, according to estimates by the Government of Pakistan.

The Recharge Pakistan project aims to reduce flood and drought risks in the Indus basin, the largest basin in Asia drained by the Indus river and its tributaries. The GCF funding is a grant and not a loan, which in itself is a success story. Rehman says: “We pressed to have all loan financing converted to grant financing for this particular GCF project especially because Recharge Pakistan needs to move fast, and it does not need to be bogged down by the deficit in provincial and federal debt resourcing that would have been required. Countries like Pakistan are already severely debt stressed at the public financing level, so climate financing that is projectised, evaluated and transparently monitored now needs to be unencumbered by debt. I am grateful to both GCF and WWF for their support in this.”

According to WWF-Pakistan’s director general Hammad Naqi Khan, the seven-year-long project would begin to show effects after two years. The project has an adaptation focus and the final agreement will be signed within this year. WWF-Pakistan, supported by the Ministry of Climate Change, has been accredited as an implementing entity.

Pakistan’s role at upcoming COP28 in Dubai

As the annual UN Climate Change Conference date nears, all eyes are on whether another global fund called the “Loss and Damage Fund” will finally be set up this year. The Conference of the Parties of the United Nations Framework Convention on Climate Change, more commonly referred to as COP28, will take place in Dubai this December.

At COP27 held in Egypt last November, a group of 134 African, Asian and Latin American states and small island nations finally secured an agreement on a new fund that would pay to repair the devastation caused by climate change. Pakistan, as the Chair of the G77 group of developing countries at COP27, played a leading role in producing the accord to set up the fund.

The details of where the money will come from and how it will be disbursed were left to be worked out by the COP28 conference in Dubai. Pakistan is a member of the “Transitional Committee” working on these details, led by Pakistani representative Ali Waqas Malik.

So far, three major meetings have been held in the lead up to COP28 and multiple workshops have been organised on the side. “Pakistan will continue to shape the final outcome of the Loss and Damage Fund. It also has the prior experience of being on the Transitional Committee when the GCF was being set up back in 2010,” points out Kakakhel who was a member of the official Pakistani delegation to COP27 that helped push the creation of the Loss and Damage Fund.

For now the proceedings of the Transitional Committee are underway. Will it be an independent fund or use existing facilities? Where will the fund be based? Which impacts should it cover and for whom? Kakakhel says: “As of now, all ideas are on the table. By November the picture will hopefully become clearer.”