The Global North is making an effort to undo harm done. Climate change caused largely by developed countries’ high carbon footprint has disproportionately affected the Global South. Pakistan’s floods in 2022 covered a third of the country and caused inflation to rise to a whopping 45% by February 2023. This failure can only be rectified through dual systematic action: in the form of climate finance from developed countries, and climate projects implemented on-ground by Pakistani institutions. One such partnership crucial to Pakistan’s survival is the Green Climate Fund (GCF).
As the United Nation’s premier fund for climate mitigation and adaptation projects in developing countries, the GCF has approved USD 131 million (as of 2022) for climate targeted projects in Pakistan. Four projects have been approved, and are currently being implemented: the Green Bus Rapid Transit System in Karachi has been granted USD 40 million, the Indus Basin Transformation project and Glacial Lake Outburst Flood Risk Reduction program have been given USD 35 and 37 million respectively, while the latest initiative (Distributed Solar Project) by JS Bank has been promised USD 10 million in 2022.
GCF’s accreditation process adds validity, and offers hope of materialized impact for these projects. All entities must pass through a stringent verification process, and so far, two Pakistani entities have been accredited: JS Bank and National Rural Support Program. However, three key issues threaten to erode impact potential. Firstly, it is concerning that a large proportion of funds are co-financed by institutions within Pakistan. The total value of all four projects is evaluated at USD 722.7 million, the majority of which is allocated to Karachi’s Green Bus. Only 18% of this substantial amount is financed by the GCF, while the rest is co-financed by Pakistani institutions. This undercuts the GCF’s commitment to truly helping developed countries.
Secondly, of the USD 131 million financed by the GCF, USD 37.2 million are loans to be paid back to the GCF. Given that sustainable practices are a merit good, and that climate projects are not expected to yield significant profit in the near future, how can the international community justify demanding repayment of climate finance with interest?
Slow disbursement is the third problem: while the GCF has promised USD 131 million, as of 2022 only 25.7% of the funds have been disbursed, despite some projects being approved 8 years ago. To put this into perspective, India has received over 40% of USD 315 million promised by GCF, while Bangladesh has received 48% of USD 85 million. It is yet unclear whether trust issues or logistical concerns lead to this discrepancy.
As Pakistan witnesses an exodus of those able to secure jobs abroad, and once-optimistic citizens are inundated with despair, it is imperative to establish that all hope is not lost. Inflation and the plummeting rupee can be countered by internal capacity building and climate resilience. Reparations from the Global North are incoming to assist with these tasks: the GCF’s establishment is evidence. The work that remains is ensuring that these funds are swiftly disbursed and utilized sustainably to empower the poorest of the masses.
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