When we agreed in Paris in 2015 that we would mobilise our assets for nature, the world might have smiled once again on the hope of a new future. But today in 2024, we may have forgotten what we committed to climate at that time. In the current condition of the climate and environment at large, channelling funds to finance climate protection is critical to addressing the climate crisis, and we successfully politicised our whole survival mechanism. The political economy of climate finance reveals a complex web of competing interests and inequities. To mobilise resources effectively, we must explore how politics and economics intersect in decisions about funding climate action.
Public Finance and Climate Action
Public finance is more than economics; it’s deeply political. Governments use subsidies, tax breaks, and concessional loans to steer economies toward clean energy. Bangladesh’s ambitious push for 50% renewables by 20250 highlights this. In a notable shift towards sustainability, developed nations have ramped up their public investments in climate action. Take the European Union, for instance, which committed an impressive €72 billion in 2022 to propel climate and energy transition projects forward. Yet, it’s essential to recognise that these substantial investments often come with their own set of political compromises. A prime example is the U.S. Inflation Reduction Act, hailed as a landmark in green investment. Its creation was far from straightforward; it involved intricate negotiations with various industries and unions. This illustrates how even groundbreaking initiatives can be deeply influenced by the art of persuasion and the need for compromise.
Local Heroes: Communities Taking Charge
While international funds often steal the spotlight, the most transformative climate actions frequently unfold at the community level. Municipalities, being closest to the ground, are leading the charge in funding their own resilience projects.
Take Jakarta, Indonesia, for instance—this vibrant city is facing a daunting challenge as rising sea levels threaten to submerge 25% of its land by 2050. In response, Jakarta has stepped up by issuing $400 million in municipal green bonds. These funds are earmarked for vital infrastructure improvements like seawalls and flood barriers. However, this commendable initiative hasn’t come without its hurdles. Local political resistance emerged, with concerns about equitable resource distribution and the risks of accruing international debt.
Then there’s Kenya, where communities are stepping up to confront the growing threat of drought, exacerbated by a 1.1°C rise in global temperatures since the pre-industrial era. Here, grassroots water management systems have been set into motion, showcasing how local voices and actions can ignite sustainable change. These stories reflect the power of local innovation in the fight against climate change, proving that impactful solutions often begin right in our own backyards.
International Climate Finance: Unmet Promises
Global climate agreements often come wrapped in a veil of optimism, yet the reality is starkly different. Take the Copenhagen Accord of 2009, where wealthy nations committed to providing $100 billion annually by 2020 for climate initiatives in developing countries. Fast forward to 2023, and this promise has faltered, with actual funding falling short by approximately $17 billion each year.
The plight of Mozambique underscores the severe implications of this funding gap. Hit hard by cyclones—most notably Cyclone Idai in 2019 that displaced 400,000 individuals—Mozambique desperately seeks international support for its recovery. Unfortunately, instead of receiving vital grants to aid reconstruction, it finds itself overwhelmed by loans, further deepening its economic vulnerability. This scenario reveals a troubling reality: climate finance often perpetuates existing inequalities, forcing those least responsible for climate change to bear the heaviest burdens.
COP Challenges: Politics Undermining Progress
At COP27, the creation of a “loss and damage” fund was a breakthrough for compensating nations most impacted by climate change. Yet, vague funding commitments reflect developed nations’ reluctance to lead. Meanwhile, island nations like Tuvalu face existential threats, with 80% of their land at risk of submersion by 2100. For developing countries, climate finance is not aid; it’s justice. In Baku’s COP29, Change Initiative, a Dhaka-based think tank warns the world that LDCs are gradually falling into a climate debt trap due to the climate fund they have been denied.
Bangladesh: A Resilient Nation
Bangladesh exemplifies the urgent need for climate finance due to its low-lying geography, which faces rising sea levels that could submerge 17% of its land by 2050, displacing 20 million people. Climate change is a daily reality for the nation. But what politicians are doing is running here and there, prioritising the political interest over nature’s interest.
Despite these challenges, Bangladesh demonstrates resilience through early warning systems, cyclone shelters, and adaptive agriculture. However, scaling these efforts requires external funding. Wealthy nations need to provide grants, not loans, to empower Bangladesh to overcome these adversities. Bangladesh’s situation highlights that climate finance is about justice, recognising the disproportionate burden faced by those least responsible for the climate crisis.
With global temperatures already 1.1°C above pre-industrial levels, climate finance is a moral imperative. Rising seas, stronger cyclones, and displaced populations underscore the urgency for justice-driven solutions. By aligning ambition with action, we can create a more equitable future where no one is left behind.
We are the proud children of nature, taking the world to heightened prosperity both in knowledge and material wealth, innovation and discovery that changed people’s lives, stepped on the moon, and even our developments have footprints beyond the galaxy. We did and proudly doing all the things with Mother’s blessings. But you know what the irony is? Our Mother Nature is waiting for us, expecting her proud children to just nurture her before she leaves forever. But we put little effort into protecting our nature. It’s not that we lack assets; we are colonising Mars, searching for another livable planet, so money is not a problem at all. We just keep forgetting that popular American proverb that when the last tree has been cut down, the last fish caught, and the last river poisoned, only then will we realise that one cannot eat money.
Research Associate at Change Initiative
