An in-depth conversation with an expert

It’s a sunny afternoon and I’m on videocall with Kashmala Kakakhel from Islamabad, trying to understand the subtleties of climate finance in Pakistan. Kashmala is a Climate Finance Expert. If anyone is an Encyclopedia Britannica on the subject, she is. She has rushed in from another meeting and we both adjust our phones to ensure our faces are not blurred. Then begins our conversation. “Think of climate finance as a subset of development or sustainable finance. While the latter is a broad category that includes support to social, economic, and governance issues, climate finance is niche support for specific outcomes,” she says when I ask her to describe climate finance to me. She goes on to elaborate that climate finance, “is money you use to do basically three things: address the main cause of climate change by reducing levels of carbon emissions (mitigation), minimize the impacts caused by climate change (adaptation), and address the remaining damages after a disaster has happened (loss and damage).”

Where does this money come from? Multiple sources, she tells me. Broadly speaking we can categorize international support, and then domestic resources also, if they are allocated for any type of climate action. “The international support comes from the argument that developed countries have contributed most to causing climate change, and therefore are responsible for supporting developing countries.” She explains the second category in a way that catches my attention. “The domestic resource allocation comes from common sense that disasters won’t wait for the international support and therefore we need to also fend for ourselves with our own resources, regardless of all the other competing demands on the limited cash at hand.”   

I ask her to explain to me how Pakistan can do this in a smart manner. First things first, she says. Pakistan is vulnerable to almost all impacts of climate change; floods, droughts, glacial outbursts, sea level rise. The super floods last year are estimated to have cost the economy up to US$30 billion. We simply cannot afford such hits to our fragile economy every now and then. We must protect ourselves first.

Protection comes in the shape of layers. Risk layers. There are broadly three layers. First is risk “retention” for which we identify the severity and frequency of a disaster that the country can absorb itself. This layer includes setting aside disaster reserves, or considering tax relief to farmers or others that may be impacted. The second is risk “transfer”, which considers larger severity and disaster, which can be done through insurance schemes and catastrophe bonds for example. The last risk is the “residual” risk which is for disasters that are so severe that go beyond the management capacity of the first two layers. For this tier, then you seek international assistance. In Pakistan’s case, layers one and two are the weakest links. We like to consider all risk as residual risk and not protect ourselves as we ought to, ending up scrapping the bottom of the barrel each time, after we have been hit by a disaster.   

Then we discuss mitigation and renewable energy projects. Kashmala responds, “This is where it gets interesting. Our survival depends on keeping the average global temperature rise below 1.5 degrees by 2050. For that to happen, global emissions must fall 43% by 2030. These data points are non-negotiable with nature – else, the impacts we see now will pale in comparison in the coming years. To get to that point, economies must transition to clean energy.” 

But isn’t cleaner energy expensive? I ask. “Times are changing” she says, “Thanks to the R&D invested in technologies by energy giants like China, solar power schemes now offer cheaper electricity than coal and gas in most major countries. Mitigation is no longer just a climate case, but a business case. An opportunity that Pakistan needs to position itself for, so that it can reduce its energy costs, ultimately contributing to a stronger GDP. 

The opportunity is not only in declining costs of clean energy, but also utilizing climate finance for these projects. Considering the international support that developed countries “owe” us, it can be used smartly to create partnerships, not continue to see ourselves perpetually as grant recipients. 

We discuss the hypocrisy of climate, perhaps the world, I’d say. Kashmala informs me that as part of the ongoing negotiations, in 2021, all countries agreed to a Glasgow Climate Pact. The pact is the first climate agreement that explicitly planned to reduce unabated coal usage by all countries. However, after exactly a few months, an extremely worried Europe quickly dusted off its coal power plants when gas flows reduced from Russia. One of the dirtiest ways to produce energy, Europe told the world climate can wait, they need to keep their people warm with quick, cheap energy supply. She smiled, “it’s fascinating to hear the same argument that developing countries have been making about needing to address immediate needs of our people first, we need financial support to transition our economies.” Ironic! 

When I ask her the question as to which is needed more adaptation or mitigation, she throws it back at me, “you tell me?” I reply, “I suppose both are needed to go forward.” “That’s right,” she says, “Let’s not debate which is better or worse, we need to do both. Adaptation to protect ourselves. And mitigation because clean energy is where the world is transitioning towards, and Pakistan must take the early mover advantage, wherever and however possible.”

We end our rather long conversation, I thank her, she says, “It’s always a pleasure to discuss how climate finance can help leapfrog our economy. We need more hands on deck!” Whether you’re on the adaptation or mitigation side of the debate, I’m sure you’ll agree that Pakistan needs more strong, resilient and hardworking women such as Kashmala Kakakhel in the climate finance sector if we’re going to survive our in-coming natural disasters in a coordinated and organized manner. 

Kashmala Sahab Kakakhel is an expert on international policy on climate finance – ensuring alignment to needs and requirements of developing countries. She also specializes in developing bankable projects for accessing international funding. 

Meezan Zahra Khwaja is the author of ‘Mad, Not Stupid’ the first book on bipolar disorder from Pakistan. She has worked in the development sector for the past two decades, including SDPI, PCP, Save the Children, World Bank, UNDP and The Ali Faateh Foundation. She has also taught at Comsats University.