The issue of climate finance has now taken centre stage in the debate on climate change. Climate finance refers to various financial resources and instruments that can be used to support remedial action to combat climate change. Climate finance availability is of vital importance because large-scale investments are needed to move towards a low-carbon global economy and to help affected countries adapt to the impacts of climate change.

Climate finance can come from different sources: public or private, national or international, bilateral or multilateral. It can employ different instruments such as grants and donations, green bonds, equities, debt swaps, guarantees, and concessional loans. Some multilateral funds that developing countries can access include the Green Climate Fund (GCF), the Global Environment Facility (GEF), and the Adaptation Fund (AF). These funds were established throughout the years as financial instruments of the United Nations Framework Convention on Climate Change (UNFCCC) to provide resources to developing countries.

The matter took on a new urgency at the recently concluded COP29 climate summit in Baku where  the establishment of a New Collective Quantified Goal for climate finance emerged as a bone of contention between the countries of the Global North and Global South. Developed countries are mainly responsible for the bulk of GHG emissions and are expected to take the lead and provide necessary finance to tackle the climate challenge. But as the Baku summit showed, they are not yet ready to shoulder this historical responsibility. The wealthy nations only agreed to raise the climate finance figure to $300bn, which is much lower than the minimum of $1tr a year needed by 2030 just to meet Paris Agreement goals.

The controversies surrounding the climate finance summit at Baku underlined the continued reluctance of richer nations to take responsibility for their disproportionate contribution to the climate crisis and provide adequate support to vulnerable societies. The question is whether the climate funds will be in the shape of grants or private financing. No wonder, developing countries oppose wealthy nations’ idea of private finance, emphasising the need for public funding in view of the heavy debt burdens on poor nations. But the US and European nations which have precipitated the climate crisis in the first place are reluctant to shoulder responsibility in this regard. Needless to say, developing nations expect massive support from wealthy countries  to tackle the devastating effects of the crisis but also to develop sustainable, green energy systems.

PM Shehbaz Sharif during his speech at COP29 emphasised that global climate finance systems must address the needs of developing nations by prioritising grants and non-debt financing solutions, instead of loans with exorbitant interest rates. Pakistan is among the top five countries in the world most affected by climate change. According to experts, Pakistan faces a climate finance gap of $348bn by 2030. Pakistan’s delegation strongly criticised the rigid attitude of the wealthy nations towards providing funds to societies vulnerable to the vagaries of climate change.

Demonstrating its commitment to global climate action Pakistan hosted a series of roundtable discussions at the Baku summit. On his part, PM Shehbaz Sharif reiterated the pressing need for grants, not loans, to avoid worsening the debt trap. Pakistan has taken many initiatives to combat climate vulnerabilities, including a National Climate Finance Strategy and the Recharge Pakistan program to manage the flood crisis and other climate related challenges. But to be successful these initiatives need financing which is not forthcoming.

A high-level six-member Pakistani delegation led by Prime Minister of Pakistan’s Coordinator Romina Khurshid Alam called on COP29 President, Minister of Ecology and Natural Resources of the Republic of Azerbaijan Mukhtar Babayev and discuss various matters of bilateral interests including working together for common environmental sustainability and climate resilience building goals. She informed the COP29 president that Pakistan is among the world’s most climate-vulnerable countries, despite contributing less than 1% to global greenhouse gas emissions. Its geography, economic dependencies, and limited adaptive capacity make it highly susceptible to the impacts of climate change.

The PM’s climate aide Romina Khurshid Alam particularly appreciated the COP29 presidency and congratulated him on behalf of Pakistani government for successful arrangement of the 29th Session of the Conference of Parties in Baku capital city, where delegations from over 196 countries discussed matters related to climate finance, transfer of technology and capacity building. The COP29 president Mukhtar Babayev thanked the PM’s coordinator on climate change and assured his government’s all-out support and cooperation in tackling core climate risks in Pakistan and helping build climate resilience of the people of Pakistan and their livelihoods.

Pakistan immediately needs about 100 billion dollars to implement its climate resilience and mitigation plans, including Nationally Determined Contributions (NDCs). It is the responsibility of the international community to come to the aid of Pakistan, enabling it to mitigate the adverse effects of the climate challenge which is severely damaging its economy.