Asia Pacific Climate Week 2018 (APCW) was held at Resorts World Sentosa, Singapore and Johore observes the start of the weekend on Friday whereas Singapore starts its weekend on Saturday.
Before the event started, all the members of Malaysia Youth Delegation who participated in APCW had a meeting for coordination and task purposes. When it came to accommodation, I decided to stay with my parents in Johore Bahru and make daily trips.
I felt the first day of the event was more into business, financial dealings and promotion – nothing more, nothing less. One thing that I liked about the first day of the event was the inconvenient truth and realistic view for climate finance stated by UN, businesses and government representatives. The balance of adaptation and mitigation should be the priority for funding the projects. People need to understand market demand and supply.
The day ended for me after I headed back to Johore Bahru with full confidence and belief that the second day would not let me down. I was excited to go back early as I boarded the MRT at 8.30 pm and reached Queen St. around 9.30 pm. I also got to the bus on time and reached home around 12.00 am.
The second day was more fascinating – the event was attended by national negotiators and United Nations representatives. I interviewed and spoke to them regarding what was on my mind regarding climate finance. At the same time, this conference helped me understand further on the United Nation’s role in every sector.
Mr. Stefanos Fotiou from United Nations, Economic and Social Commission of Asia Pacific (UNESCAP) said:
“Our role (United Nations) is to facilitate, not to mandate or to dictate the country to follow the agreement. NDC (National Determined Contributions) are determined nationally, and the nations need to coordinate.”
Amjad Abdullah, National Lead Negotiator for Maldives said:
“I’ve been there in the process back in United Nations, the UN’s role is to facilitate, not to dictate, and most of the agreements are voluntary based.”
Back to the interviews, the first approach was with Mr. Clifford Polycarp from Global Climate Fund who advised on seeking an opportunity behind ASEAN Banking Integration Framework 2020 for climate finance. I met with Mr. Yossef Zahar from Institute for Global Environment Strategies (collaboration with UNFCCC Secretariat) and Mr. Adam Cotter from The Official Monetary and Financial Institutions Forum (OMFIF) regarding blockchain technologies as a catalyst of green credit in the green finance context and Climate Related Financial Disclosure (CRFD).
A fruitful discussion was held with them and I was filled with excitement for such discussions to succeed in other sectors. However, I do hope that all of the connections have a better focus or balance between mitigation and adaption programs and investment.
With the second day drawing to a close, at the end of the conference, the representing MYD members at the event carried out a daily reflection and repositioning of tasks for the final day. Singapore Youth Climate Action (SYCA) and the MYD members mingled over dinner and got to know one another.
As I reached the event for the last day, Emily Oi Yen Tse from the Malaysian Youth Delegation and Youth Non-Governmental Organization of Climate Change (YOUNGO), was there to speak on a session that focused more on the National Determined Contributions (NDC) – Mr. Stefanos Fotiou and Emily stressed the importance of youth in combating climate change.
Mr. Stefanos asked: – “How many of you in this room were born at the end of the 60s or beginning of the 70s?” Sadly, the response showed that most of the participants in the room had raised their hand. He then said,
“For us who have raised our hands, we have completely failed to deliver a better planet to your generation.”
Emily then said: –
“The current language of NDC’s are immensely mitigation oriented. This need to be addressed and translated to be more adaptation centered for the future of young people.”
The final session ended with the Talanoa Dialogue on Green Financing with it’s main focus on the aspirations and what we are looking forward to at the 24th Conference of Parties (COP 24) in Katowice, Poland and the end phase of Paris Agreement. One of the panelists was our very own Nur Syahirah Khanum, an MYD member and representative of YOUNGO.
The topic got interesting after Steve Chao from Al Jazeera opened the session and the momentum of the session rose when the earliest carbon trader (1990), Frank Joshua and Dirk Forrester talked about carbon exchange and climate finance in the financing language. The heated session ended with Syahirah emphasizing her point regarding youth participation in climate change, especially in the climate finance context.
Syahirah Khanum said: –
“We (the youth) are here, and we are dedicated to make the Earth a better place.”
I caught up with Frank Joshua after the session and interviewed him regarding carbon exchange, the future of carbon exchange in the Asia Pacific region and the relation to the next financial crisis and how it would affect the carbon market. Deadly question for him indeed, yet, he did not break a sweat.
All of the MYD members gathered after the conference ended, had dinner and a short discussion at the Harbourfront Point Food Court before we left the island. It was the same routine going back to Johore Bahru – I would gladly remember this event seeing as my goals and objectives had been fulfilled.
Urgency of South-South and Triangular Cooperation to Combat Climate Change
Asia Pacific Climate Week 2018 (APCW) happened in Singapore on the 11-13th of July 2018. The focus of this conference was on Business to Business (B2B), Business to Government (B2G), and Government to Government (G2G) – these were to enhance the green finance and effective implementation on Paris Agreement as we enter the second half of the year prior to 24th Conference of Parties (COP 24) in Poland.
For those who don’t know much about the focus in the Paris Climate Agreement, 195 countries signed a pact called the Paris Climate Agreement (Also known as Paris Accord) to combat greenhouse gas emissions, mitigation, adaptation and finance starting from 2020. The agreement was adopted by consensus on 12 December 2015. The Paris Agreement’s long-term goal is to keep the increase in global average temperature to well below 2 °C above pre-industrial levels and to limit the increase to 1.5 °C – this substantially can reduce risk and climate change.
Most of the public sector, private sector and government officials came to the conference with optimism and expected to contribute more for adaptation and mitigation purposes. It was an opportunity to share best practices and technological cooperation at the regional level and allowed engagement with interested stakeholder. This information is vital as we try to make Paris Climate Agreement goals successful by developing sustainably and giving a green comprehensive structure as a whole.
United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary, Patricia Espinosa stressed on to complete the implementation of the Paris Climate Agreement and dramatically accelerate climate ambition before 2020; she also added that this ambition should be reflected in the next round of National Determined Contributions (NDC).
“Climate Change is about more than just the weather or economy, of course. Climate Change is connected to almost every significant challenge humanity faces.”
She mentioned, all of us need to cooperate at all levels on which focusing on more integrated and coherent approaches to meet outlines in Sustainable Development Goals. The businesses can play a complementary role as same as what North-South cooperation respectively.
For me, the beauty of this year APCW event was the introduction of high level technologies that came in, especially blockchain technology. I believe that this is one of the game changer to enhance more on climate change action in 21st century business canvas. A part of climate change as one of the focus in business sector, green blockchain technology has introduced a promising mechanism in the midst of technology efficiency. As optimistic as it may sound, I believe that on cooperation with full confidence to integrate adaption and mitigation at this level looks promising.
Government has to make a realistic stand on their own National Determined Contributions (NDC) before 2020 heads up on Paris Agreement’s goals.I suggest a committee on green finance to be set up and filled in with every sectors including non-governmental organizations (NGO), youth participation, government officials and business organization to create a short plan for climate exchange, and to create a realistic approach upon “Climate Integrated Framework” in Malaysia context.
 UNFCCC Executive Secretary, Patricia Espinosa (2018), Workshop South-South and Tech Cooperation, Asia Pacific Climate Week 2018, Singapore
A realistic view on climate finance and carbon exchange
The main topics focused on during the Asia Pacific Climate Week 2018 in Singapore were Climate Finance and Carbon/Emission Trading. Most delegates and even the speakers noticed that the conference was set on mitigation rather than adaptation in the climate change context.
For those who aren’t familiar with these two terms; mitigation focuses on an action to reduce the intensity of climate change, generally through reducing Greenhouse Gas (GHG) emissions. Mitigation measures are long-term actions to reduce GHG emissions, and are not an immediate cure for climate change (IPCC, 2007), with even climate exchange leaning towards mitigation.
Meanwhile, adaptation is an action to help individuals, communities, organizations and natural systems to deal with the consequences of climate change that cannot be avoided. It involves taking practical actions to manage risks from climate impacts, protect communities and strengthen the resilience of the economy. Adaptation can take shape as a gradual transformation with many small steps over time, or as a major transformation with rapid change.
Green finance involves financing national, regional and international entities for climate change mitigation and adaptation projects, as well as programs. Under Green Finance, a framework known as the Kyoto Mechanism, involved legally under the Kyoto Protocol, has established an outcome concerning the introduction of three market-based mechanisms; joint implementation, clean development mechanism and international emissions trading.
International Emissions Trading goes through six entities;
- Carbon Emission/Greenhouse Gas (GHG) emissions as a product for exchange.
- Carbon Credit: a permit which allows a country or organization to produce a certain amount of carbon emissions of which can be traded if the full allowance is not used.
- Carbon Pricing: charges those who emit carbon dioxide (CO2) as part of their emissions or an amount that must be paid for the right to emit one tonne of CO2 into the atmosphere.
- Green Bond: represents debt obligations — therefore, is a form of long term borrowing to fund green projects (in layman’s terms). Just like normal bonds, it allow investors to earn interest and to receive their principal back at maturity. Types of green bonds include the securities bond, “use of proceeds” bond, revenue bond, project bond, covered bond, loans and other debt instruments.
- Carbon/Emission Trading: alsoknown as cap and trade;
The cap on greenhouse gas emissions is a limit backed by science. Companies pay penalties if they exceed the cap, which gets stricter over time.
The trade part is a market for companies to buy and sell allowances that permit them to a certain amount of emissions. Trading gives companies a strong incentive to save money by cutting emissions.
6. Carbon Exchange: a facility where brokers and traders are able to buy and sell carbon emissions, green bonds and other financial instruments. Stock exchanges may also provide facilities for the issue and redemption of such securities, instruments and capital events including the payment of income and dividends.
Three mechanisms introduced by the government for the industrial platform and social economics;
- Carbon Tax: a fee imposed on the burning of carbon-based fuels (coal, oil, gas). Carbon tax is a monetary policy to reduce and eliminate the use of fossil fuels, which as a byproduct of its combustion continues to destabilize and destroy our climate.
- Climate Fund: a fund governed by multiple national governments (multilateral climate funds) or companies (private climate funds) that works towards disbursing climate finance. The largest multilateral climate funds are the Green Climate Fund, Adaptation Fund, Climate Investment Funds and Global Environment Facility.
- Green Subsidies: a subsidy that contributes to reducing damage on the climate and environmental programs or by increasing the purchasing power for more green programs e.g. subsidies for public transportation.
Prior to the Asia Pacific Climate Week, I felt that the argument surrounding the event was baseless, while some points proved to be crucial. The involvement of a rating agency to assign ratings on the bonds and the market (especially the countries) was a good initiative – a precise move as it gave an advantage to the countries and companies to highlight their contributions towards combating climate change.
Although most of the climate warriors did not see this through, as it gravitates towards adaptation such as controlling livestock, adopting a vegan lifestyle in order to reduce meat consumption (because cows emit higher levels of methane), I believe that as a financier, my fellow finance colleagues worldwide have a right to take part in this process too.
The 2008 Global Financial Market was a catastrophic event to us all. At the same time, this event brought about a huge impact on carbon exchange, where the carbon exchange experienced a recession and decline, largely similar to the situation in the New York Stock Exchange.
In the midst of hardship, the monetary policy and public policy related to finance and climate change has evolved from time to time. As such, it has posed as a challenge for carbon exchange to rise from the abyss up until the last two years. The market itself has found its holy light again seeing as the market has started to be more active as of this year.
Frank Joshua from the Carbon Asset Group stated that;
Today’s market is getting stable despite it already being the year 2018 where the year should display a financial crisis according to the economic cycle, but yet again we are faced with a strong start over the past two years with most of the company seeing the value behind carbon exchange as compared to the year 2008.
Despite the carbon pricing in any carbon exchange beginning to increase rapidly, it does give confidence for the future climate change private budget in terms of loads of return earning investment. Financiers will start to see the value behind the new market that could benefit them as well as the social economical purposes.
I assume that the market will crash six years from now but by that period of time, the stock exchange worldwide would have recovered, thus allowing carbon exchange a fast recovery for the near future.
At the end of the day, carbon exchange and climate finance are not just for mitigation purposes. It helps to boost our circular economy and transform our social economics into more of a green coherent site while changing the pseudo-market into a more sustainable and yielding market.
Written by Shaqib
Edited by Varun and Renee