In an interview with The Business Standard from Baku, Azerbaijan, COP29 Scientific Council Member Professor Dr Mizan R Khan discusses the urgent need for grant-based climate finance for developing countries like Bangladesh.

Least developed countries should never accept loans for adaptation. But this is not the case, Professor Mizan R Khan told The Business Standard in an interview from Baku, Azerbaijan, where COP29 is currently taking place. Professor Khan is a member of the COP29 Scientific Council, a visiting scholar at Brown University and technical lead of the LDC Universities Consortium on Climate Change.

In this interview, Professor Khan discusses the urgent need for grant-based climate finance for developing countries like Bangladesh, highlighting the role of COP29 in climate finance reform.

He discussed the increase in climate debt per capita, the inadequacy of adaptation finance and the impact of “creative accounting” by developed countries in achieving the $100 billion climate fund. It highlights the need for a loss and damage fund and the role of private sector investment despite political changes; and anticipates modest progress against the ambitious COP29 financing targets.

With decades of experience as an academic and researcher, Professor Khan has worked closely with the Bangladeshi government and international development sectors. He is a former Deputy Director of ICCCAD and an expert in climate finance, focusing on access to global funds for climate adaptation and mitigation in developing countries.

Bangladesh’s per capita climate debt is increasing. How should Bangladesh and other climate-affected countries approach this COP to secure more grant-based funding?

COP29 is considered the COP for climate finance, with more than 30 agendas focused on this issue. One of them is the NCQG or New Collective Quantified Goal on Climate Finance. Today (November 12) we had the first meeting on the NCQG.

Keeping the $100 billion floor, the amount of funding to be agreed is under discussion. As an LDC, we have received $220 billion so far, but a new target is being discussed, which ranges from $220 billion to $1 trillion.

The United Nations Environment Program recently said the world needs $150 billion to $387 billion a year to combat climate change and other environmental problems. Additionally, the G77 discussed the need for $1.3 trillion in climate finance under the new climate finance package.

However, I am not very optimistic about the New Quantified Collective Objective.

Then there is the question of doubling adaptation funding. It must be doubled by 2025 compared to 2019. Adaptation financing amounted to $20 billion in 2019, it must now reach at least $30 billion.

(The Glasgow Climate Compact calls on developed countries to double adaptation funding by 2025 compared to 2019 levels.)

Today, whatever the absolute numbers – whether it is $200 billion or $30 billion – the most important aspect is the quality of financing. This raises the question of grants versus loans.

Around 55% of the climate finance LDCs receive is in the form of loans, creating a climate debt trap. Half of LDCs are already in a situation of debt distress. Bangladesh also spends a large portion of its revenue on debt servicing. More than 60 countries now spend more on loan repayments than on education and other social sectors.

We therefore demand that LDCs never accept loans for adaptation. But that doesn’t happen. The sessions have just started and as discussions continue, we will eventually know the outcome.

I also participated in an important program aimed at making climate finance consistent with a trajectory towards low greenhouse gas emissions and climate resilient development. I participate in this program as a negotiator.

Article 9 of the Paris Agreement states that developed countries must provide financial resources to assist developing countries in both mitigation and adaptation, building on their existing commitments under the Convention.

Furthermore, Article 2.1(c) aims to align financial flows on the path to low-GHG and climate-resilient development. Discussions are ongoing on how to align these two articles and chart a path forward. Negotiations have begun, but let’s see how far they progress.

However, personally, I am not very optimistic about the overall outcome.

The $100 billion funding target was delayed but was met in 2022. How do you rate this target, when many believe the target has too many gaps?

Developed countries claim to have mobilized almost $116 billion in climate finance in 2022. However, closer analysis reveals that this figure is inflated by “creative accounting”. The least developed countries receive less than 3% of the funds they need to adapt to climate change, even though immediate financing for adaptation is crucial for them.

Adaptation funding remains extremely low. As developed countries express willingness to increase adaptation financing, the focus has shifted to the loss and damage fund, thereby reducing the focus on adaptation. At the last COP, an adaptation fund target of $300 million was set for LDCs, but we only managed to mobilize around $200 million. This deficit shows why progress remains limited.

Tell us about your views on the Loss and Damage Fund. Why is this necessary and what do you think the funding threshold should be? How realistic do you think it is to achieve this year?

Bangladesh recently experienced a flood that caused billions of dollars in damage, but we only receive on average about $300-400 million in climate funding, far short of what is needed. This year, the loss and damage fund is not expected to bring in significant amounts. Loss and damage currently focuses on establishing fund operations rather than the actual allocation of funds.

Trump’s re-election is seen as a setback for global climate initiatives. Are climate finance efforts doomed to fail with Trump in office? And how would you describe the atmosphere of the COP in Baku?

Trump will likely withdraw some federal support, but if that happens, many US states, such as California – a leader in climate action and green policies – will continue their efforts independently. Even with reduced federal support, some climate initiatives will persist, particularly in the area of ​​renewable energy.

The United States is the world’s second largest player in renewable energy after China, and private investment in this sector is already significant, limiting Trump’s influence in this area. Although it could cut U.S. contributions to global climate funds, resulting in an estimated $4 billion shortfall, the European Union and China could help offset the loss.

This COP is being dubbed the “Climate Finance COP,” but the chances of reaching a meaningful agreement are considered slim. What is your observation?

Negotiations have just started and I believe we will eventually reach an agreement. Although it may not be enough, at least something will be achieved; otherwise, the presidency of COP29 will lose its credibility.

The presidency aims to create a new fund of $10 billion, to which the Baku presidency would contribute in part. Fossil fuel companies and other countries are also expected to participate. I am cautiously optimistic about these new funds.