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

LDCs should never accept adaptation loans. But this is not happening, said Professor Dr. Mizan R Khan for The Business Standard in an interview from Baku, Azerbaijan, where COP29 is currently taking place. Professor Khan is a board member of the COP29 Scientific Council, a visiting scholar at Brown University and a technical lead at 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 rising per capita climate debt, insufficient financing for adaptation and the impact of “creative accounting” by developed countries in achieving the $100 billion climate fund. He emphasizes the need for a loss and damage fund and the role of private sector investment despite political changes; and anticipates modest progress on COP29’s ambitious funding targets.

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

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

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

Keeping the $100 billion as the limit, the amount of funding to be agreed upon is now being discussed. As an LDC, we have received $220 billion so far, but the new target is under discussion, ranging from $220 billion to $1 trillion.

The United Nations Environment Program recently said the world needs between $150 billion and $387 billion annually to address climate change and other environmental issues. In addition, the G77 noted 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 comes the issue of doubling adaptation funding. It must be doubled by 2025 compared to 2019. Adaptation funding was $20 billion in 2019, now it must reach at least $30 billion.

(The Glasgow Climate Pact called on developed countries to double adaptation finance by 2025 from 2019 levels.)

Now, regardless of the absolute numbers – whether $200 billion or $30 billion – the most important aspect is the quality of the financing. This brings up the issue of grants versus loans.

About 55% of the climate finance LDCs receive comes in the form of loans, creating a climate debt trap. Half of the least developed countries are already in trouble. Bangladesh also spends a large portion of its revenue on debt service. More than 60 countries now spend more on debt repayment than on education and other social sectors.

So our demand is that LDC never accept adaptation loans. But that doesn’t happen. The sessions have only just begun and as the discussions continue, we will eventually know the outcome.

There is also an important agenda that I have participated in, focused on delivering climate finance in line with a path to low greenhouse gas emissions and climate-resilient development. I am involved in this agenda as a negotiator.

Article 9 of the Paris Agreement requires developed countries to provide financial resources to assist developing nations in both mitigation and adaptation, continuing their existing commitments under the Convention.

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

Personally, however, I am not very optimistic about the overall outcome.

The $100 billion funding target was delayed, but was reached in 2022. How do you rate this achievement, given that many say the target has too many gaps?

Developed countries claim to have mobilized nearly $116 billion in climate finance by 2022. However, closer analysis shows 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, but immediate funding for adaptation is crucial for them.

Adaptation funding remains extremely low. While developed nations express a desire to increase adaptation funding, attention has shifted to the loss and damage fund, reducing the focus on adaptation. At the last COP, an adaptation fund target of $300 million was set for LDCs, but we were only able to mobilize about $200 million. This deficit reflects why progress remains limited.

Tell us about your perspective. about the loss and damage fund. Why is it necessary and what do you think the funding threshold should be? How much do you think can realistically be achieved this year?

Bangladesh recently experienced a flood that caused billions of dollars in damage, but we only receive an average of about $300-400 million in climate finance, far below what is needed. This year, the loss and damage fund is not expected to bring in significant money. The current focus of loss and damage is on establishing fund operations rather than actual funding allocations.

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

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

The United States is the second largest player in renewable energy after China, and private investment in the sector is already substantial, so Trump’s influence here is limited. While it could reduce US contributions to global climate funds, resulting in an estimated $4 billion shortfall, the European Union and China could help offset that loss.

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

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

The presidency proposes to establish a new fund of 10 billion dollars, with part of it contributed by the presidency in Baku. Fossil fuel companies and other countries are also expected to participate. I am cautiously optimistic about these new funds.