In the recent Asia Clean Energy Forum (ACEF) organized by the Asian Development Bank (ADB), it was emphasized that seven of the 10 countries most vulnerable to the adverse impacts of climate change are in Asia.

The region, says ADB Vice President Lakshmi Venkatachalam, has more people at risk than in any other part of the world. “The energy transport industry and land sector of developing Asia now represent the world’s fastest growing sources of new greenhouse gas emissions,” she says, adding, “this is clearly a time of much uncertainty and transition for international climate change financing.”

With the country’s recent history of extreme weather events, it isn’t surprising to find the Philippines included in the roster of countries significantly affected by climate change. “We’re considered one of the more vulnerable countries—top three, top six in whatever survey you want to look at; we’re always at the top 10, and it’s not very encouraging to always be in the top 10 of a very nasty list,” shares Secretary Mary Ann Lucille Sering of the Climate Change Commission, Philippines, calling attention to the fact that the Philippines is very weak in infrastructure. “One of the most striking parts of all this is that the Philippines is very exposed to risk—we’re sensitive to risk, our population continues to grow, and our infrastructure cannot really respond to that,” Sering adds.

Money Matters

According to Venkatachalam, there have been stimulating discussions on various aspects of clean energy which brings to the forefront the fact that there are plenty of opportunities in developing countries in the Asia Pacific region towards climate-smart development that reduces carbon intensity and improves development capacity. The critical factor in achieving this, she says, would be the sourcing and deployment of financial resources. “This is why the future of the global financial architecture for climate change is a topic of great interest to an institution like the ADB,” Venkatachalam says.

She further shares that at the United Nations Climate Change Conference, a mechanism, called the Green Climate Fund (GCF), was approved to catalyze $100 billion per year for climate change-related activities by 2020. Twelve countries have pledged to substantially increase their financial contributions for developing climate-related actions. “Most analytical studies today show that developed countries are roughly on track to meet their ‘fast-start’ financing pledges,” reports Venkatachalam, stressing that the GCF is poised to become a significant source of public international financing for developing countries.

A moot point, however, is the case wherein the pledges will get translated to real flows. “This uncertainty is exacerbated given the current dimensions of the Eurozone crisis. It’s still too early to say if the developed countries are on track to reach the 2020 target of organizing $100 billion annually but,” she says with more optimism, “recent analysis find that the climate policy initiative shows that global financial flows for climate-related investments in developed countries already approach $100B per year. The majority of financing for climate-related investments is due to the private sector and is mostly supporting clean energy investments.”

She further adds that the GCF will initially have two thematic funding channels, “supporting mitigation and adaptation action,” she informs, adding that “it will also have a private sector facility that is specifically meant to show that we have to mobilize private capital and know-how.”

International Aid

Clearly, the case for urgent action to shift to a low carbon growth in Asia has never been stronger. In the Philippines, Secretary Sering reports that the government has already made anticipatory moves domestically. “We passed the Climate Change Act, and recently, we also passed the People Survival Fund, which will finance our adaptation initiatives,” she shares.

“We have government optimism moving forward,” Sering assures, “but if we’re talking about technology, this is where the Philippines gets left behind. We are clearly not yet ready to provide technology to address these mitigation actions so we’re looking at the international arena to provide these technologies.”

According to Matt Spannagle, senior climate finance advisor of the Climate Change and Environment Branch, Australian Agency for International Development, there is a need for real transformation, and not mere incremental changes. “It’s not easy to plan for transformation because it means not doing what you’ve been doing under business-as-usual, and transforming to do something new, by definition, involves taking risks,” Spannagle says. “And where all the capital is—the private sector—they don’t like taking risks, unknown risks. It doesn’t like to be the first mover, and it doesn’t like to be in a country that doesn’t have experience. It doesn’t like to do new technologies in new countries with new private sector partners. And those things are hard to finance if you’re in a capital market; so the future of climate change finance is a tricky one,” he asserts.

Sering concurs, “We know that there’s big push in the private sector and I completely agree that they should be part of this solution to the problem. It doesn’t make sense to leave it to government alone. There is a need to balance private and public investments.” More important, Sering asserts, is the need for a new economic model that will promote inclusiveness. “We’ve seen our economy increase, but our poverty has increased as well. So if we’re looking at a shift to a green economic model, it should promote inclusiveness; this is where all this discussion on clean energy should really be addressed, so that it would really go down to our poor,” she concludes.

Published June 25,2012 in the Business Agenda section of Manila Bulletin.