Four lessons from the UK-Bangladesh Climate Partnership Forum – and four actions needed by policy-makers
By Simon Maxwell and Saleemul Huq
The highway to zero carbon is marked by high profile milestones, strung out like market towns on the Grand Trunk Road. COP26 in Glasgow is one such. But lying between the market towns are the lay-bys and wayside inns where people meet, conversations are held, networks are formed, and deals are struck. They are intrinsic to the success of the flagship events.
We have been privileged to host one such series of conversations, between Bangladesh and the UK. They have covered resilience, nature-based solutions, renewable energy, and finance – thus, a significant sub-set of climate issues.
The partnership between the two countries matters, because these are two countries with much to learn from each other in the fight against a climate emergency; but also because both are in leadership positions, the UK as President of the UN climate talks in 2021, and Bangladesh as Chair of the Climate Vulnerable Forum, leading 48 countries most vulnerable to the impact of climate change.
There are reports available on each of the conversations, but from a personal perspective, we see four cross-cutting conclusions; and a four point agenda for policy-makers.
Everyone gets it
First, everyone gets it. There is no longer a need to make the case for climate action. The evidence is available globally, in the form of higher greenhouse gas concentrations in the atmosphere, rising temperatures, and more extreme weather events; but also in the day-to-day experience of people working in and with communities in Bangladesh and the UK. Adaptation and resilience-building have become high priorities in both countries, driven, for example, by the experience of floods. And working on the ground, whether in Manchester or the Eastern Delta of Bangladesh, also makes it clear that the impact of climate change hits the poorest hardest, and that climate impacts are linked to other aspects of environmental degradation, including the loss of biodiversity.
So, this is, indeed, an emergency, and one recognised as such. It is important that climate action has been prominent in calls to ‘build back better’ after the pandemic – and prominent in the promises of leaders. A foundation stone of accountability has been laid. Many countries, including the UK (but not yet Bangladesh) have committed to net zero emissions by mid-century. Most also have adaptation plans. But a test of commitment will be whether the 2030 plans submitted before Glasgow keep the world on track – and whether pledges are translated into short-term action.
At present, global pledges fall horribly short, and national action further still. Parliaments are not silent on the gap, in the UK and in Bangladesh, and nor is civil society. There is an important role, too, for independent, outspoken, and often uncomfortable oversight by bodies like the UK Committee on Climate Change, charged by law to advise the Government and report to Parliament on progress.
Lots of innovation, but hard to scale up
Second, climate action is marked by technological, institutional and financial innovation – in all countries. There is enormous potential for reciprocal learning between the UK and Bangladesh, and for new networks, with knowledge and experience flowing both ways. We heard many examples of innovation, from flood control in Leeds and Manchester, to rewilding projects in the English countryside, to the linking up of distributed grids in Bangladesh, or the creation of new financial products, like the various green funds promoted by the Central Bank in Bangladesh. It is genuinely exciting to see what can be done when the public and private sectors come together, when new technology is deployed, and when local communities are drawn into planning and implementation.
But it is also dispiriting to hear how often it proves difficult to scale up, or to move from ‘point innovation’ to system-wide change. There were repeated calls for better planning and greater Government support.
Is this just about infant industries needing time to grow, or the ‘machine’ taking time to catch up? After all, there have been successes at scale: the virtual elimination of coal from the UK energy system is one, with low carbon sources now accounting for over 50% of power generation. Perhaps resilient infrastructure, distributed grids, and integrated, nature-based solutions will just take time to catch on and catch up. Will Bangladesh, for example, be able to Power Past Coal?
That is possible, but there are also challenges associated with mainstreaming. Climate action cannot be separated from overall development – in countries at all levels of income. That is why we talk about ‘climate compatible development’. There is no sensible renewable energy policy, for example, which tackles carbon emissions, but does not take into account energy access or the need for energy to underpin growth in jobs and livelihoods. Equally, Governments need to recognise that rapid restructuring generates losers as well as winners, so climate action needs a social package to accompany the technical and economic.
Countries do not need multiple plans, but they do need a green deal mission. The wider impacts need to be captured much more effectively in Nationally Determined Contributions, and, especially for countries like Bangladesh, in conditional NDCs which specify additional support required from donors.
Market failure holds up progress
This links to a third conclusion, which is that innovation can only progress so far when markets are flawed. Nick Stern, now Lord Stern, famously described climate change in 2006 as the greatest market failure in history. It still is.
Market failure takes many forms in the climate context. The absence of a global price for carbon is the best-know externality affecting global warming directly, but the costs of not protecting and enhancing biodiversity also need to be taken into account, as do the human and economic consequences of extreme weather events. We also heard about missing markets and coordination failures in the energy sector, for example, and in global finance. Imperfect information is also a big issue in monitoring and regulating carbon emissions along supply chains.
Carbon pricing is essential. The UK has launched a new cap and trade emissions trading scheme, to replace its participation in the EU scheme, though as with the EU scheme, international aviation and shipping are yet to be included. The issue has also been on the agenda in Bangladesh.
Nature-based solutions, like those we heard about in the Sundarbans or in coastal Bangladesh, as well as in the UK, contribute indivisibly both to adaptation and mitigation: the benefits of both need to be captured in project appraisal. So, planning needs to be holistic.
It is notable, in this context, that the integrated assessment models used to estimate least-cost pathways to net zero, and which provide the basis for accountability, take no account of extreme weather events: for this reason, they underestimate the pace of change needed. Compensation for Loss and Damage has been a key policy ask in Bangladesh, is now embedded in the UNFCCC process, and was recognised as important by Alok Sharma, the COP President, in the last of our sessions.
Information is key in regulating markets, and the UK is among countries to have introduced legislation on measuring and reporting direct and indirect emissions in supply chains. Companies are required to report on Scope 1 and 2 emissions, those within the business (Scope 1) and related to power consumption (Scope 2). They are strongly encouraged also to report on Scope 3 emissions, those incurred along their supply chains. This has become an important trade policy issue, with implications for exporting countries like Bangladesh. The alternative to investment in this area is likely to mean that Bangladesh will face Border Carbon Adjustments, or carbon taxes on exports to developed countries. The Bangladesh central bank has strongly encouraged sustainable finance disclosure by banks and financial institutions.
Climate finance needs a rethink
Finally, climate finance needs a rethink. It is obvious that the green transition needs to be funded, from all sources: public and private, national and international. In particular, public funding will continue to be needed, to support infant industries, and to cover the costs of local, regional and global public goods.
Additional Government spending will be important. The UK has a multi-annual spending review in the pipeline, and among other initiatives a ten point plan for a Green Industrial Revolution. Bangladesh has a commitment to climate action, and the fiscal space to spend.
Development banks look like being important, to support innovation and help fund infrastructure. The UK has just established a new infrastructure bank, with a specifically green mandate and a financial capacity of £22bn. This is in addition to an announcement about new green sovereign bonds. Bangladesh also has instruments of this kind, including a $US50m Green Fund to support investment in clean energy, and a $US500m Green Transformation Fund to support the leather and textile industries. International financial institutions have also contributed; we heard about an innovative green financing model pioneered by the IFC, to reduce risk and incentivise private sector investment.
Internationally, of course, there is a complex array of climate funds, including the Green Climate Fund. The UNFCC has endorsed the totemic commitment to $US 100bn a year, within the framework of the Paris Agreement, and also other climate finance, for example to cover disaster relief or compensation for loss and damage. The call for this funding to be ‘new and additional’ has not been met in recent years, as research by the Center for Global Development has shown. The same source questions the cost-effectiveness of emissions reduction in many projects.
An interesting question, discussed in our conversations, is whether green financing has reached a tipping point, beyond which earmarked green instruments are no longer necessary. In the UK, the Bank of England has been given a new mandate to incorporate environmental sustainability and the transition to net zero. We also heard evidence that most green investment can be funded by traditional means. If this conclusion is correct, green financial markets are due a big shake-up, and so are climate-specific institutions.
Is it time for a review?
An agenda . . .
We have not covered here everything that was discussed. For example, transboundary spillovers were discussed, as well as opportunities for collaboration across borders. There were also many issues not covered, like the treatment of climate by the private sector, carbon trading, or legal accountability for climate action. However, the four points contribute to an agenda for the future. We have our own four point plan, arising from these discussions.
First, stronger short-term ambition is a priority in time for the COP in November. NDCs, and particularly conditional NDCs, need to be stronger, recognising the multi-faceted nature of climate compatible development plans. Donors need to commit to supporting Conditional NDCs.
Second, investment in stronger innovation networks, including with more learning across countries, greater investment in research and development, and sustained support to system innovation. There are examples on which to build, like the International Solar Alliance and the Energy Transition Council. Further examples could be found, for example in adaptation.
Third, a big investment in measuring and reporting emissions along supply chains, and in action to green supply chains, in order both to reach climate goals and avoid Border Carbon Adjustments. This is another key area for donor support.
Fourth, better designed and managed climate finance, recognising the mainstreaming of green issues, but acknowledging the need for national and international public finance tightly focused on innovation and on the provision of public goods. A review of the climate finance architecture is overdue.
There is a climate and development summit on 31 March. The UK will host and Bangladesh will represent the climate vulnerable. Will the two countries lead on these proposals?