Analyzing Trends in Climate Finance Committed to Pakistan; An Assessment relating to the USD 100 Billion Goal of Copenhagen Accord

Abstract

The Copenhagen Accord provided a workable target for climate finance flows from the developed world to the developing world. This agreement was further endorsed in the succeeding agreements including the Cancun Agreement and the Paris Agreement. One year past the initial deadline of the meeting the goal of providing USD 100 billion per year in climate finance, the developed world still falls short of achieving the set commitment. Furthermore, the overall architecture of climate finance has been fraught with difficulties. This study aims to assess the trends in climate finance committed to one of the most climatically vulnerable developing economies, Pakistan. The research tends to explore the degree of balance in mitigation and adaptation financing which was stressed upon in the Paris Agreement. It also assesses the dominant financial instrument that governs these financial activities. Moreover, the alignment between committed finance and recipient’s announced country priorities are analyzed. These faucets of analysis provide a complete picture of the suitability of climate finance for Pakistan’s climate action and resilience buildings. This study basis the assessment on the commitment level data provided by OECD Climate Finance database. The activities are assessed for their respective contribution to the Rio-Markers i.e. adaptation and mitigation. The financial instrument for each activity is assessed to determine the loan vs grant shares in mobilizing total commitments. For the evaluation of alignment between commitments and country priorities, Pakistan’s Nationally Determined Contributions were used as reference of identifying priority sectors. Collective sums of sectoral allocations were calculated to examine if country’s priorities are funded by international climate finance or not. The findings of the study conclude that mitigation finance dominates the overall as well as year by year financial commitments directed towards Pakistan. The mitigation financing outweighs adaptation financing by 2 times. Adaptation remains underfunded in the financial portfolios of all major donors particularly the bilateral providers and the development banks. Finances are majorly distributed via loans with grants forming only a small portion of both adaptation and mitigation financing. Finances are mostly allocated climate component category i.e. to projects in which climate action serves a part and is not the major motivation behind it. Climate component financing is also loan dominant. With respect to country priorities, Pakistan’s NDCs highlight energy, transport, and agriculture as key country priorities of climate action. Agriculture and water and sanitation are prioritized for raising adaptive capacity. The financial allocations remain high and increase over the course of 11 years for energy, transport, and water and sanitation. However, the sector of agriculture that holds prominence for both adaptation and mitigation interventions remains underfunded with irregular flows of climate finance directed towards it between the 11 years. The loan dominance adds to the debt burden of Pakistan while the limited adaptation financing may propagate a low funding trap. This study explores the trends in climate finance provided to Pakistan under one of the most prominent climate agreement i.e. the Copenhagen Accord. The success of the accord was ingrained in not only the delivery of the USD 100 billion goal but also its suitability with respect to adaptation-mitigation balance, and utilization of non-burdening financial instrument. The research provides an in-depth analysis that is based on activity level commitment data and presents a case of climate finance allocations to one of the most climatically vulnerable developing country. The findings of this study thus provide insight into the responsiveness of providers’ commitment to meeting the financial cost of climate action as well as resilience in developing country.