LAHORE: Governor State Bank of Pakistan, Jameel Ahmad on Saturday said developing countries like Pakistan face significant challenges in transitioning to green energy, including funding shortages and macroeconomic instability. To address this, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have expressed support for climate funding.
He was speaking at the Asia Energy Summit organised by Lahore University of Management Sciences.
In response to the 2022 floods that exacerbated Pakistan’s economic challenges, the State Bank and government have worked to stabilize the economy, with initiatives like revised financing schemes for renewable energy and environmental risk management manuals.
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Jameel Ahmad said for this purpose, SBP has taken a number of initiative in this regard, in 2016 we introduced a revised financing scheme for renewable energy with a total of 104 billion rupees and it also issued the environmental and social mismanagement manual in 2022 for the banking sector to facilitate the environmental risk, he said adding that SBP also introduced Green finance taxonomy in collaboration with the World Bank.
He also said Pakistan which is ranked among the top ten countries vulnerable to climate change, has pledged to reduce its carbon footprint by 15% by 2030, with an additional 35% reduction conditional on external climate financing. This commitment was made by Governor State Bank of Pakistan, Jameel Ahmad, who emphasized the importance of adopting policies to reduce carbon footprints for the country’s future.
The country plans to achieve this goal by generating 60% of its energy from renewable sources, leveraging natural resources like solar, hydro power, and wind. Despite facing significant macroeconomic challenges, Pakistan has made progress in sustainable energy, outperforming other Asian countries. The share of fossil fuels in Pakistan’s energy consumption has declined by 4.8% since 2019.
Ali Cheema Vice Chancellor LUMS in his opening remarks said that the issue of climate change defines the future not only of Pakistan but of South Asia and of the entire world. He added that climate change outline lays three crisis including regional, un-affordability and environment vulnerability.
Ali Cheema added, “The crisis of access to energy is a regional crisis, which is affecting India and Bangladesh. The second big issue is the environmental vulnerability and it will lead to droughts and other adverse effects. There is a third dimension, which affecting Pakistan and that is of course un-affordability. Pakistan has a cost this challenge and I think what is needed is a finance structure. and we also need to improve the infrastructure and plan of our cities. We need to bring the regularity in the structure of our cities, unless the regularity cannot be made the change cannot be happened.”
Haysam Azhar, Analyst, Climate Policy Initiative (CPI) in his keynote address said that East Asia is the highest recipient and are sources of climate change funding, followed by the Europe and the US as these regions also account for 84% of total global climate finance.
He added that our findings indicate that there’s an urgent need to work towards mobilizing finance and regions where capital is lacking particularly Asia, discussing China, as well as sectors where the progress is lacking to meet planet targets. “So the average annual plan climate finance flows and I mentioned before it reached almost 1.3 trillion dollars, which means if nearly double compared to four years ago, so we’ve seen a lot. This large update was primarily driven by an acceleration in mitigation finance by 440 billion annual average in 2019 and 2020,” he added.
Haysam added that increase of finance is great news, however, you know, there’s a still a significant gap between the current flows and what’s needed for a low carbon and climate resilient development. At least, 5.9 trillion dollars in annual investment is required by 2030 and the figure is close to $9 trillion in the average scenario.
He said that it’s very important to note that the need for climate finance in South Asia is far greater than the flows that were seen. Public finance was the main source so most sub regions in Asia and the Pacific, except South Asian, which relied almost equally on the finance.
Talking about Pakistan he said that Pakistan is the growing example, where concerns about corruption and inability to meet standards of the multinational climate funds keeps finance away from going into the country, I find it really fascinating that micro risks or risks at the project level are quite similar across the global specially in the north of the globe. Therefore CPI recommends that there is dire need to transform the financial system for climate change and a bridge is needed between climate and developments, he added.
Speakers at Asia Energy Summit urged to transform the climate change funding for the developing countries like Pakistan.
The two day Summit was kicked off on Saturday which was hosted by LUMS Energy Institute (LEI). The event will serve as a platform for dialogue on the critical steps needed to transition toward a cleaner and more sustainable energy future. It will also highlight Asia’s heightened exposure to climate-related disasters such as heat-waves, droughts, and floods, which disproportionately affect vulnerable communities.
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