What is Green Finance?
Green financing is the framework in which public
private partnership collaborate for the increase in the investment for green
technologies and sustainable natural resource based economies. Green Finance
plays important role in sustainable environmental friendly practices and process
improvements in terms of large investments. It helps to reduce the harmful
effects of activities on the environment and mitigate the climate change.
The role of Green loan or Green budgeting is related
to the Clean Technologies and use of renewable resources as energy which ensure
the environmental protection, compliance with environmental regulations,
pollution control and prevention, waste reduction and less emission of
pollutants.
What is Green Finance Initiative (GFI)?
Green Finance Initiative (GFI) was launched in London
(2016) to create awareness regarding Green Finance and advocate the specific
regulatory and policy plans for protection of environment. The world is already
experiencing the unpredictable consequences climate change like flash flood,
cyclones, wildfires, outbreak of diseases, extreme weather, increasing heat
waves and other disasters. The
participation of Asian
financial institutions in
sustainable finance initiatives
is still relatively low. Pakistan has been declared among the top ten countries
which is most influenced by climate change. Climate change has negative effects
on economic, social and political sector.
What
are the opportunities of Green financing in developing countries?
Necessary investments
in all developing countries for mitigation are estimated to be between $140
billion to $175 billion per year by 2030. However, adaptation cost estimates for
Asia and the Pacific are in the order of $40 billion per year between now and
2050.
Asian Development Bank seeks to help
its member countries become more resilient to the effects of disasters, while
it continues to provide assistance to support post-disaster recovery needs.
Between August 1987 and December 2018, ADB approved $10.3 billion for 222
disaster risk management projects that directly reduced disaster risks,
strengthened financial preparedness, and supported post-disaster recovery;
while a further 442 projects incorporated measures to strengthen disaster
resilience in their design. These have included flood control and integrated
water resource management projects, as well as programs supporting financial
preparedness for disasters in ADB’s developing member countries. ADB’s quick
response was also seen in the aftermath of disasters such as the Sulawesi
earthquake and tsunami in Indonesia, a tropical cyclone in Tonga, an earthquake
in Papua New Guinea, and increased volcanic activity of Mt. Manaro in Vanuatu,
which all happened in 2018.
The Climate Transparency
Report 2020 shows the Greenness of stimulus Index of different countries along
with per capita stimulus (USD/Capital) by European Foundation Center.
Through mechanisms such
as the Climate Investment Funds, multilateral development banks have mobilized
$6.5 billion for climate action in developing countries, with $2.5 billion
earmarked for Asia and the Pacific. For the massive financing required to
combat climate change, the key will be using limited public sector funds to
leverage significant amounts of private capital, and to get the right technologies
into the hands of as many partners and quickly as possible.
On climate adaptation, Pakistan remains a vulnerable
country without a choice. Our climate adaptation needs range from $7 billion to
$14 billion per annum, as we are compelled to undertake adaptation measures in
response to climate triggered disasters. The
State Bank of Pakistan has recently introduced green banking policies with an
aim to reduce the vulnerability and risks arising from the climate change, and
provide the financing to transform the economy to reduce the environmental
damage.
Green building
standards should be incorporated in the Naya Pakistan Housing Scheme which
could be expanded to cities like Gwadar. The Rs11.44 trillion ML-1 Project of
Pakistan Railways is an example of potential investment opportunities in
Pakistan.
Pakistan
signed a $188 million agreement with the World Bank for environmental
protection through forest regeneration and biodiversity conservation programmes
and boosting the country’s climate-resilience through enhanced disaster risk
management.
What are the project categories for Green
Financing?
Examples of climate
change mitigation projects would typically include, but not limited to the
following sectors:
·
Renewable Energy Sector
·
Sustainable Transport (excluding roads)
·
Urban public transport
·
Non-urban railway projects
·
Non-motorized transport Adaptation
·
Water and other Urban Infrastructure and Services
What are the goals of
Asian Development Bank for Green Financing?
Asia’s overall national infrastructure needs are estimated to be around
$26 trillion over 2016-2030 or approximately $1.7 trillion per year.
§ Of the total investment needs over 2016-2030, $14.7 trillion will be for
power and $8.4 trillion for transport.
§ ADB recognizes the importance of sustainable investments in the region
and have been investing over $2 billion in clean energy projects each year
since 2011.
§ In 2019, ADB reached its climate financing target of $6 billion by 2020
with $6.3 billion in approvals, of which $4.9 billion is for mitigation and
$1.4 billion for adaptation.
§ ADB will ensure that 75% of the number of its committed operations will
be supporting climate change mitigation and adaptation by 2030. Climate finance
from ADB’s own resources will reach $80 billion cumulatively from 2019 to 2030.
Green Financing provide funding and
technical support for disaster resilience and ecosystem restoration initiatives
through more reliable and timely weather forecasting. It will also help in improved
disaster risk management services as well as overall environmental
sustainability and achieving green growth targets of the country.
About
the Author: Saba
Yousafzai is doing MPhil from University of Gujrat in Environmental Science. She
is passionate to write articles related to Environment and explore the
different dimensions of Environment.
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