Climate Finance: A Major Player of Climate Change

You might think that Climate Finance is a dry topic, but it was made captivating by Dr Gary Theseira who is secretly considered as a heartthrob among climate change enthusiasts here in Malaysia!

On the 21st July 2018, the Malaysian Youth Delegation held its 6th Training Series at the Kuala Lumpur Teaching Centre of the University of Nottingham, Malaysia Campus. The session was conducted by Dr Gary Theseira, the Deputy Under Secretary of the Environmental Management and Climate Change Division, Ministry of Natural Resources and Environment.

Dr Gary started off the session by saying that there is no single definition of climate finance. This means that there has been no consensus on the term as it’s a diverse concept that needs to be adjusted to different situations around the world.

The closest definition one could find is stated by the UNFCCC Standing Committee on Finance that defines climate finance as:

“Finance that aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing the vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts.”

That’s a mouthful!

THE BIGGER PICTURE

Dr Gary showed us how climate finance played out in real life situations by going through 3 major events that happened in July. He showed us how there’s a common thread weaving through all these events.

Extreme weather in Japan

There was a historic heavy rain in July Heisei 30 that lasted 10 days and covered a stretch of 800 km, which is the length of Peninsular Malaysia. Households were without water and the Japanese residents had to essentially go back to “third” world conditions. This heavy rain was followed by a heatwave.

There was a $429 million in machinery and agricultural damages as a result of this phenomenon. The damages included cars and solar panels, which means that mitigation measures could not be considered. However, as an Annex I country, much of the damages are insured. The situation cannot be adapted so Japan needs to use domestic budgets from the private sector and capital markets. 

(Note: When UNFCCC was adopted, countries were classed into 3 basic groups i.e. Annex I countries, Annex II countries, and countries that were not listed in any of both annexes (the so-called “non-Annex I” countries). Annex I includes industrialised countries as well as many states of the former Soviet Union (the Economies in Transition, or EIT). Annex II is a further subset of Annex I: it includes only countries that were members of the OECD at that time. Thus, non-Annex I countries, which are the large majority, mostly correspond to developing countries.)

Status of Turkey under UNFCCC

Turkey is an Annex I country but the Turkish government wishes to be reclassified and removed from being an Annex I country. They claim that they could address climate change issues more effectively as a non-Annex I country, as a top-down approach can be adopted as well. However, no other country is keen to open Annexes for renegotiation.

Dr Gary then compared Turkey to Malaysia and said that we are similar in terms of population number, per capita GDP, religion and currency strength. The major difference is that Malaysia emits twice as much greenhouse gases per capita.

As an Annex I country, Turkey has no obligation to provide financial support, unlike Annex II countries. So if Turkey sheds their Annex I status, this would enable them to access resources that are not available to Annex I countries.

When trying to figure out who’s responsible for what, Dr Gary reminded us to get back to the source i.e. the Convention, specifically Article 4, as it highlights the different roles and commitments of Annex I & II Parties.

B20 of the GCF

The Green Climate Fund held the 20th Meeting of the Board on the 4th of July to discuss financial planning among other agenda. Dr Gary just talked about the main outcomes of the meeting:

  1. GCF was unable to decide on the funding of 11 proposals valued at $1 billion.
  2. US owes $2.8 billion and they are undecided on how to replenish this
  3. GCF executive director Mr Howard Ramsey resigned

It wasn’t clear to me how significant the last event actually is but Dr Gary wanted to show us that all three events point to the relevance and importance of climate finance with competing interests and objectives. Mitigation and adaptation plans may not be able to be mobilised if there isn’t any financial support. Dr Gary believes that climate finance should work on various areas of life and not be treated as isolated cases.

Written by Diyana

Edited by Jasmin

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