Innovation in Climate Finance

(Article originally published on The Daily Star here)

The recent Champion of the Earth award conferred upon Prime Minister Sheikh Hasina by the United Nations Environment Programme (UNEP) was, significantly, a recognition of the struggle against climate change of the government and people of Bangladesh.

Achim Steiner, the head of UNEP, in his citation mentioned both the Bangladesh Climate Change Strategy and Action Plan (BCCSAP) as well as the innovative Bangladesh Climate Change Trust Fund (BCCTF), where the Government of Bangladesh has allocated the equivalent of around $100 million in each year’s national budget to the BCCTF for implementing 44 programmes under six pillars identified in the BCCSAP.

The climate finance mechanisms set up in Bangladesh are unique and innovative features of climate finance, which other developing countries can learn from.

The first innovative measure was launched six years ago when the government of Bangladesh set up the BCCTF, now allocating the equivalent of around $400 million towards tackling climate change.

The second innovative measure was to set up a parallel climate fund called the Bangladesh Climate Change Resilience Fund (BCCRF), at the same time, which consisted of contributions from development partners and totalled around $130 million over six years.

While the BCCTF and BCCRF had different governance structures and the World Bank managed the latter, both funds supported actions identified under the BCCSAP, thus avoiding parallel donor-led activities with the government activities.

Both these funds have by now supported hundreds of actions by all relevant ministries across the country, and are now mainstreaming climate change into the national planning.

The third major innovative measure was to allocate 10 percent of each fund to the civil society and NGOs through the Palli Karma Sahayak Foundation (PKSF), which has supported hundreds of NGOs to mainly carry out Community Based Adaptation activities with the most vulnerable communities.

The fourth innovative step was the development of a public-private partnership, with support from the Bangladesh Bank to the Infrastructure Development Company (IDCOL) which has already delivered four million Solar Home Systems (SHS) around the country, through the private sector and is installing nearly 30,000 SHSs a month.

Thus, Bangladesh has been a pioneer of developing innovative climate finance mechanisms which include using its own funds, donor funds and private sector funding for both adaptation as well as mitigation.

At the moment the government is preparing to look at a brand new potential innovative climate finance mechanism to combat losses and damages from climate change. Such an initiative would keep Bangladesh at the forefront of climate finance innovations far into the future.

Written by: Dr. Saleemul Huq, Director, ICCCAD