In 1992 the first ever international treaty to combat climate change was held in Rio de Janeiro. In this summit, the need for funds especially for developing nations in combating and mitigating climate change was agreed upon. This was named the United Nations Framework Convention for Climate Change (UNFCCC) and was put under the charge of devising a framework for finance allocation for climate change. Kyoto Protocol in 1997 also emphasized the finances needed for combating the factors contributing to polluting of the planet earth. Adaptation Fund 2001, developed under the Kyoto Protocol aimed to fund adaptation programs that are specifically vulnerable in developing nations. These mechanisms and frameworks contributed to the formation of an agency known as Climate finance or in other words, climate finance regime.
The climate finance regime refers to the funds allocated by wealthier nations to address the climate change mitigation and adaptation efforts by developing nations. This includes the transfer of capital, technology, and investments which can be public or private and it may also include funds allocated by international organizations such as the UN. The climate finance agenda was set to reach almost 100 billion by 2025 under the Paris Agreement 2015. Funds contribution for climate finance is regulated by some principles, such as
PPP (polluter pays principle)
This principle emphasizes that instead of contributing equally, all nations must identify those who are the biggest emitters of carbon, CFCs, nuclear wastes, and greenhouse gases as they are the major contributors of climate change hence, they must bear the repercussions more. This seems only logical and just way because one must bear the cost of managing it if one has damaged it.
CBDR (common but differentiated responsibilities)
It is a recognized mechanism under UNFCCC, 1992 which recognizes the common responsibilities of all nations to save the planet and its environment, but some nations have played a different role in polluting the environment and thus have a different responsibility to rectify the harms they inflicted upon our environment.
Despite its utmost importance, the climate finance regime exacerbates the post-colonial division of the donor and recipient countries by facilitating the dependency of former colonies, and recipient states, on the colonizers, and donors, by various measures.
Post-colonial structure of the world
Post-colonialism is an analytical framework to analyze the grave effects left as colonial legacies in social and cultural institutions in the former colonies. The colonial and imperial powers were the countries situated in the global north and the prominent ones were England, Spain, Portugal, Germany, France, and Italy. And colonies being majorly in South Asia, Southeast Asia, Africa, and Latin along with South America. From the 16th to the 20th century colonialism loomed in the world. This was the time when these countries achieved the industrial revolution through the work labor, capital, and raw materials from colonized countries, and ultimately selling their goods in the markets of those colonies where they had the market hegemony. Therefore, not only had there been historic exploitation of the colonies but also, they had been unable to go through a capitalistic industrial revolution hence leaving them lagging behind the world economically. Through the Bretton Woods system, these new nations were given extensive loans which led them into debt traps in their initial days which left economic holes in their economies. Since then, these former colonies have flawed economic systems due to colonialism leaving aside the social and cultural effects. These effects are common to all with some regional differences, and led to a division, a group of nations that share the historical exploitation trauma and those who enjoy the looted wealth. This division is still controlled and managed through various measures. The usage of soft power to influence former colonies and such indirect measures to affect their work is known as neo-colonialism. Climate finance serves as such a tool.
Dependency and world system theory delve into the workings of the world as some countries are donors and form economic ties that serve them more and keep the recipient countries dependent on them. Therefore, the world is divided into peripheral or recipient nations and core or donor nations.
Neo-Colonialism and Climate Finance, a complex interplay
International climate finance thus as an agency works to control further depletions along with making up for the already harmed environment. But as most intra-governmental organizations it works for the interest of major powers. As mentioned, it gives funds as debts rather than grants which leads to economic burdens, and it keeps on adding to the economic woes of already suffering nations. These funds allocated in the name of mitigating climate change also come with conditions. Recipients or developing nations are eager to take such funds because they are vulnerable to climate hazards and these climate changes are existential issues for them as a result these conditionalities pose serious questions on the state sovereignty of these recipient nations. One of the major conditions for countries to take part in such exercises is to cut down their carbon emissions. For developing nations, mega-development programs are fossil fuels (coal, gas, oil) based, and cutting down carbon would mean cutting down the development and industries. One must wonder what benefits the donor nations might get from it. What we overlook is that cutting development means manufacturing of the goods would be seriously affected while the consumption market is thriving; to fill the void, goods of those donor countries may be consumed in the markets of these poor countries leaving them dependent and poor while they flourish themselves.
While the recipient countries are struggling with high interest rates, climate hazards keep lingering as an imminent threat. For instance one of the major sources of infrastructure developments and mega economic and energy projects in Pakistan are those which are regulated by CPEC. More than 62 billion dollars have been invested via CPEC and around 32 billion dollars of that are for energy sectors. However, due to both parties being a signatory of EIA, environment impact assessment, 3 plants that were set to be installed in China had been shut down. These projects may serve as a minute inconvenience to the Chinese economy but to Pakistan’s fragile economy, it is of existential importance. These International laws also serve as an instrument for great powers. Industrial growth is therefore diminished in poorer countries as fossil fuel-based industries do not have a future and otherwise are an unmanageable burden to poorer economies. This leaves these countries to pursue their old trade roles of which 80 percent is raw material based. Now these poor countries can only trade in raw materials, by exporting them, which have significantly less market value to those goods that are already made and processed, which constitute their imports. Therefore, this pattern will continue to create a dependency relationship between poor or recipient countries and the richer or donor countries who have products that are capable of generating several folds more capital than their raw materials. This makes the developed nations self-sufficient and thus have a higher position in the global arena in all spheres while developing nations along with poorer nations of less significance. In this way, environmental institutions strengthen the donor-recipient relationship of the world. Thus, international climate finance has been playing the role of imposing new colonial agencies in developing countries.
Way Forward
The international climate finance needs significant and immediate structural changes. Must include more inclusive policy-making bodies. This means engagement of developing countries generally and most environmentally degraded nations specifically in climate finance bodies. Their governmental and bureaucratic ineffectiveness and shortcomings are a reality and leaving it to them has not been effective at all. Providing ulterior frameworks with the indulgence of local decision-making bodies for recognition of the most vulnerable regions and allocation of funds to these must be carried out by these bodies.
The inclusion of indigenous knowledge of climate interactions and strategies to combat these is also necessary. Regional specificity rather than a single global finance system is a need of the hour. Regional organizations must be consulted and included in decision-making as well.
