Beyond the Politics of Climate Change
by Farhad Mahmud for AlalODulal.org

Now is probably a watershed moment for the climate change debate. A concise summary of a section of IPCC’s long awaited 5th Assessment Report came out end September of this year, asserting that scientists are 95% convinced humans are the ‘dominant cause’ of global warming since the 1950s. The Report makes that claim despite observing an inexplicable ‘pause’ in warming since 1998, which it conspicuously downplays. This has brought the pitched battle between the climate skeptics and the climate evangelists to a new crescendo. To put more fuel to the fire, there has been a sharper polarization of a new North and South divide on another popular debate; i.e., why should the most vulnerable countries in the South suffer because of the major polluters in the North. To make things even more interesting, everyone is watching China; the wild card that’s sure to tip the equilibrium in this geo-political posturing.

Amidst all this, the largest fully functioning Emission Trading Scheme in the world, the EU-ETS in Europe, has nearly collapsed with faint hope of any resurrection. This means the role of market mechanism in addressing carbon mitigation is again brought under scrutiny. The EU-ETS market was fraught with problems from the very inception because of its initial policy of ‘grandfathering’ the allocation of permits. Under that policy, major polluters in Europe were allocated free of costs (instead of through an auction) a certain number of permits to emit a specified number of tons of CO2 per year based on their past emission record. To emit more, they needed to buy ‘credits’ which mostly came from polluters emitting less than their allocated ‘caps’/permits. Thus a carbon trading market based on ‘cap-and-trade’ principle was created, known as EU-ETS.

The crisis in the EU-ETS was created by an over supply of carbon credits due to several reasons. The initial ‘caps’ allocated based on a ‘grandfathering’ scheme were deemed to be too generous by many. That led to a lower than anticipated emission of CO2 by companies, resulting in an oversupply of allowances in the market. The on-going recession in Europe and related underproduction across industries also accentuated the situation. Large corporations like Mittal Steel made windfall profits by selling the excess allowances granted to them. The price of carbon crashed to a record low of below Euro 3.00 /mtons beginning of this year after European parliament voted against a proposal to support the struggling market.

To take advantage of this market, international financing organizations had encouraged setting up of CDM (Clean Development Mechanism) projects in developing countries, whereby ventures that had the potential of ‘saving’ future emission of carbon di-oxide were also issued certificates (CERs) that could be traded in this market. Ideally meant for fund strapped developing countries like Bangladesh, the two countries China and India between them came to dominate this innovative financing scheme, accounting for more than 70% of all CDM projects to date.

Number of CDM projects by country

Ref: UNEP, 2013: http://cdmpipeline.org/cdm-projects-region.htm#7

Chart I

The backdrop:

What does this all mean for a low-income highly populous country like Bangladesh with development priorities at the very top of its policy agenda. A fundamental transformation of the economy from an agricultural base to a more industrialised economy would naturally push the country towards high carbon propensity industrial activities. Carbon mitigating strategies are therefore rarely comfortable for policy makers because of its implication of high costs in terms of restraining development. Ironic though it may seem, while Bangladesh is one of the countries most at risk from the adverse effects of climate change, its total contribution to global emission of anthropogenic carbon dioxide is all but negligible at less than 0.2 %, and the per capita carbon emission at 0.4 Mtons is in fact one of the lowest in the world (CDIAC, 2010). The question often posed in development circles among policy pundits is what global impact can Bangladesh have from a serious carbon mitigating strategy with a high cost burden on the country, both in real terms and in terms of restraining development, when its contribution to global carbon emission is so little ?

Although adaptation to the inevitable effects of climate change is of more immediate concern to policy makers in our country, Bangladesh’s strategic role in global mitigation efforts has equally, if not more, serious longer term significance for the future. The severe impact of climate change on Bangladesh because of its peculiar physiographic location on the globe is now an undeniable fact. This unfortunate and unenviable centre stage for the country in the unfolding climate change drama compels it to take a strategic role in global carbon mitigation efforts. To play this role effectively, both in terms of negotiating global limits on carbon emissions and for financing carbon neutral development initiatives, Bangladesh needs its own coherent mitigation strategy, however nominal its effect on a global template may be.

For this reason alone, commitment to a well-articulated carbon mitigation policy must form an integral part of the country’s overall development strategy. Take for example the case of electricity production for which there is a growing shortage in the country, considered by many economists as one of the foremost impediment to rapid industrial development. Because of the country’s large reserve of natural gas, an obvious compulsion would be to go for gas based electricity generation. Strategic foresight must be there to weigh out the options in such a way that economic justifications favour a more carbon neutral alternative (e.g., nuclear or renewable).

The country vulnerability:

Bangladesh’s topography situated at the interface of two very different environmental conditions of the Bay of Bengal to the south and the Himalayas to the north gives rise to not only life-saving monsoons but also catastrophic ravages of natural disasters. The potential adverse effects of climate change, particularly a rise in the sea levels, render the country especially vulnerable in this context (IPCCb, 2007). Once every 4 to 5 years there is a severe flooding that may cover over 60% of the country (GOB, 2009). Due to the unusual topography, it is expected that both inland flooding (from river/rain water) and coastal flooding (from sea and river water) will continue to rise throughout the next decade (IPCCb, 2007). This places Bangladesh as the sixth most vulnerable country to floods in an UNDP report.

Higher temperature will also result in more glacial melt, increasing runoff from the neighbouring Himalayas into the Ganges and Brahmapurta rivers. Given the altitude of the mountains and the enormous size of the glaciers, this problem will most likely continue over the century. The problem is of greater concern because evidence shows that temperatures in the northern latitudes, where the Himalayas are located, are rising at higher rates (ibid), thereby contributing to enhanced snow melt. The two large rivers of Bangladesh combined have a peak discharge in the flood season of 180,000 m3 /sec, which is the second highest in the world after the Amazon (GOB, 2008). This, compounded by the fact that Bangladesh is a large low lying delta, can cause small changes in run off to substantially increase flooding, as has been noticeable in the severity and frequency of floods in the last two decades. The 1998 flood alone caused 1,100 deaths, inundated nearly 100,000 sq km, rendered 30 million people homeless, damaged 500,000 homes and caused heavy loss to infrastructure (GOB, 2005).

Table 1: Source: UNDP, 2004 (cited in GOB, 2009)

On an average at least one severe cyclone hits Bangladesh every three years. The tropical cyclones in 1970 and 1991 are estimated to have killed 500,000 and 140,000 people respectively (GOB, 2008). The storm surges are higher in Bangladesh than in neighbouring countries because the Bay of Bengal narrows towards the north, where Bangladesh is located (Map 3). Storm surges also contribute to flooding and loss of life and livelihoods far beyond the coast (GOB, 2003). It is projected that there will be an increase in 10 to 20% in tropical cyclone intensities in Bangladesh for a rise in sea surface temperature of 2 to 4ºC (Knutson and Tuleya, 2004 cited in IPCCb, 2007). In UNDP’s global ranking, Bangladesh comes out at the very top in terms of the country’s vulnerability to this particular climate risk (UNDP, 2004).

There is no specific regional scenario for net sea level rise in Bangladesh, in part because the Ganges-Brahmapurta delta is still active and the morphology highly dynamic. Higher mean sea levels are likely to compound the enhanced storm surges expected to result from cyclones with higher intensity due to increased precipitation. Given that over two-third of the country is less than 5m above sea-level and densely populated, storm surges also contribute to flooding and loss of life and livelihoods far beyond the coast. Even in non cyclonic situations, higher mean sea levels are going to increase problems of coastal inundation and salinization in the low lying deltaic coast. All this is expected to happen with the globally agreed temperature rise of only 2°C.

Map 3: Source: CEGIS, Dhaka (cited in GOB, 2008)

With a population of nearly 155 million people in a relatively small area, Bangladesh has one of the highest population density in the world at 1,126 persons per sq km. Higher population density by itself increases the vulnerability to climate change with 75% of the population living in the rural areas with limited opportunities for migration within the country. Moreover, the very low per capita income of below $ 1,000 (World Bank, 2012) leaves the predominantly poor communities with limited adaptive capacities and more dependent on climate-sensitive resources such as local water and food supplies (IPCCb,). Much of this population live in remote or ecologically fragile part of the country, such as river islands (chars) and cyclone prone coastal belts, which are especially vulnerable to natural disasters. About one-quarter of the country’s GDP coming from agriculture also makes the country’s economy relatively sensitive to climate variability and change (World Bank, 2009).

Bangladesh’s Carbon Potential

Country’s GHG emission

It is ironic that the country often ranked at the topmost in terms of vulnerability to risks faced from climate change also happens to be the one of the bottommost in terms of CO2 emissions. At an annual emission of 41.61 million Mtons, Bangladesh’s contribution to global emission of 21.43 billion Mtons is barely 0.2%. Per capita emission is in fact the lowest in the world at 0.27 Mtons, against a global average of 4.6 Mtons per person (CDIAC, 2010). (Table to be inserted).

The above, however, will not remain unchanged with Bangladesh’s development priorities at its forefront and with the country on a high growth trajectory. What Bangladesh needs to look at is the projection of its carbon potential instead of its present rate of emission. To get a better sense of what that might be, it is useful to look at the country’s dominant sectors in terms of CO2 emissions:

Energy

Electricity generation contributes to one-third of the country’s total CO2 emissions and manufacturing/construction contributes to another one-third (WRI, 2010). Together the two sectors constitute 65% of the country’s total CO2 emissions. The electricity generation is primarily from gas, of which the country is endowed with large natural reserves. Bangladesh currently produces approximately 5000 MW of electricity, but has an ongoing demand of almost double the amount (Energy Bangla, 2010). If the future projected demand related with the government’s high growth target is taken into account, the country’s immediate electricity shortage could be as high as 5000 MW. Fulfilling this need entirely from gas based electricity generation could easily double the country’s total CO2 emission. A dilemma that development experts will face is that when gas is one of the few natural resources that Bangladesh is endowed with in abundance, can it afford to forego gas based electricity generation and instead choose a more clean energy path.

Manufacturing and construction

The other high CO2 emitting sector, manufacturing and construction, poses a different sort of problem. Bricks form the backbone of aggregate requirement of this sector in Bangladesh. Traditionally brick making in Bangladesh is a small-scale business mostly located in peri-urban areas. There are over 4,000 brick-making enterprises in the country producing over 12 billion bricks annually. Annual growth rate of the construction sector in Bangladesh has ranged from 8.1% to 8.9% in the last decade and this is expected to continue into the foreseeable future (UNDP, 2010).Traditional brick production, however, is one of the largest sources of GHG emissions in Bangladesh, estimated to be in the order of 6.0 million tons of CO2 per annum (ibid). Outmoded, inefficient and poorly constructed kilns and the use of substandard fuels such as high sulphur coals, old tires and wood energy in the kilns have all contributed to such high levels of GHG emissions. Unless interventions that will induce change in the mode of manufacturing are implemented, GHG emissions will continue to grow unabated. Combine this factor with massive deforestation and land degradation caused by the random sourcing of wood for these outmoded kilns, and we find Bangladesh attaining a carbon emission figure at par with most of its developing neighbors.

Mitigation Strategy

Background

The country is set on a course to rapidly develop its economy. Growth is bringing about pressures on its infrastructure which is still at a very low level of development compared to other neighbouring countries (see Table II). There is a chronic shortage of electricity, with demand far exceeding the supply for the last two decades. Power shortage is estimated at 2500MW to 3000 MW with the current power generation of 5,000 MW against the total demand of 7000 to 7500 MW. 85% of the country’s electricity is produced using gas, 2% was produced at hydroelectric power plants, 3% by coal, and the rest approx 10% by using liquid fuel (BPDB, 2012).
Table

Table II

Infrastructure in Bangladesh ranks among the worst in the world, securing only the 126th position in 133 nations, according to the Global Competitiveness Report 2009-10 released by the World Economic Forum in 2009 (WEF, 2009). Poor infrastructure, including yawning power and gas shortages, is hurting Bangladesh’s hopes of achieving double-digit economic growth and becoming a middle-income country by 2020. Bangladesh’s economy has grown by 5% to more than 6% each year over the past decade, but the country wants to raise GDP growth to 10% or more in the next 10 years to alleviate poverty (ibid).

Although there is pressing demand to improve its index on several social-economic fronts, Bangladesh cannot be oblivious to the ramifications of global climate change playing out on its shores. This means climate change as an issue must come out of being an environmental problem to take centre stage as a major development problem. As the country grows over the coming decades, policymakers must develop low carbon development options and incorporate not only strategies to build climate resilience into the economy but also evolve mitigation measures for a low carbon development pathway.

The following should be considered urgently:

Develop a strategic energy plan to ensure national energy security along with lower GHG emissions:

Being a low energy-consuming but energy starved country, Bangladesh is unable to meet its present demand for energy despite the low level of energy use. This demand is likely to rise at least 50 % faster than GDP per capita in coming years (ADB, 2009). Energy security being a fundamental issue of development in Bangladesh, the country has to develop a low GHG emission or carbon neutral energy path, by emphasizing energy efficiency as well as renewable energy development. Although there is abundant natural gas, the growing energy gap in Bangladesh is too large to be covered by gas based power generation within a short period of time. Economies of scale of a single nuclear power station can outweigh the cost-benefit ratio of several gas based plants and thereby close the energy gap quickly and efficiently by fewer one-time capital investments.

Renewables face a supply chain and distribution problem in a country where access to the national grid is the major limiting factor. The country needs to look more at distributed energy solutions and build on a value chain based on energy storage options in the case of renewables.

Develop synergy between adaptation and mitigation:

The inherent inter-relationship between the two apparently disparate areas of Adaptation and Mitigation had urged IPCC to add an additional chapter in the 4th Assessment Report to explore the trade-off and synergies, the optimal balance and combination, the criteria to gauge outcomes, and to understand when these two areas become substitutes or compliments.

But the choices are not always easy. IPCC itself notes “at a national level, mitigation and adaptation are often cast as competing priorities for policy makers (Cohen et al., 1998; Michaelowa, 2001). In other words, interest groups will fight about the limited funds available in a country for addressing climate change, providing analyses of how countries might then make optimal decisions about the appropriate adaptation-mitigation mix”.

The alternative would be to find synergies between the two areas of activities. Bangladesh produced its ‘Climate Change Strategy and Action Plan’ in 2009 treating strategies for mitigation and adaptation separately with understandable emphasis on the later. Bangladesh may gain from a more holistic approach by mainstreaming mitigation into its development agenda along with adaptation. This may involve a greater involvement of the private sector and a deeper understanding of financing instruments and markets than there has been until now.

Developments in China present new opportunities:

New financing instruments may evolve with the emergence of a new nexus of emission trading schemes, previously located in the West and now moving more to the East, and in China more precisely. China launched its first emission trading program last June. This development is potentially a milestone in the country’s efforts to reduce greenhouse gas (GHG) emissions and coincides with the dramatic decline of the EU-ETS market. Policymakers in government as well as entrepreneurs in the private sector may do well to watch this space carefully. For the scheme to have global relevance, China too will look towards the developing world to find possible synergies with adaptation programmes in those countries, which may provide the underpinnings of a new alternative to CDM (Clean Development Mechanism) financing of projects.

At present China is the world’s largest carbon polluter and burns the equivalent amount of coal as the rest of the world’s countries combined. However it is currently undertaking significant steps to reduce its contribution to global warming. The Shenzhen Emissions Trading Scheme (ETS) program launched in June of this year will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot GHG cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year. The potential of Bangladesh linking on to such a scheme is enormous, whereas in the past most of its climate finance activities had its nexus in the West.

Expand the ‘greenbelt’ coastal afforestation programme:

The southwestern part of the country is covered by the Sundarbans, the largest mangrove forest of the world. The mangrove forests act as deterrents to the furiousness of tropical cyclones and storm surges. Together with the afforestation programme of mangrove planting along the shoreline, the social forestry programme on government and community lands can be expanded throughout the country, thus improving the net carbon uptake. At the same time, serious measures must be taken against random deforestation which is often the result of ad hoc construction activities fueled by outmoded and old-fashioned wood fired brick making furnaces/kilns. The annual deforestation rate in Bangladesh is 3.3% compared to 0.6 % in South Asia (IUCN, 2006). Massive afforestation schemes must be undertaken to compensate for this massive loss of forestland.

Explore voluntary markets and develop Clean Development Mechanism (CDM) projects to finance sectorial development:

Currently Bangladesh has only a handful of approved CDM projects concerned with solar energy, waste management improved brick manufacturing and energy efficient bulbs, whereas India has 1413 approved projects and Sri Lanka 300 (UNFCC, 2013). New carbon mitigating technologies can be implemented in different carbon emitting industries such as afforestation and conservation of forests, methane tapping and better use of methane waste, use of electrical vehicles, CFL lamps, etc., through emission reduction purchase agreements (ERPA) financed by the global Community Development Carbon Fund (CDCF). The CDCF supports projects that combine community development attributes with emission reductions to create “development plus carbon” credits, which will significantly improve the lives of the poor and their local environment (CDCF web site). With the recent skepticism with the CDM scheme, Bangladesh could look towards new Emission Trading Schemes developing in China and the voluntary markets, both of which have remained largely untapped.

Strengthen human resource capacity:

Due to a lack of expertise Bangladesh has been unable to grasp opportunities to effectively use new global financial instruments to finance its mitigation efforts. Also, international climate change negotiations have now entered a phase where Bangladesh as the country most at risk must play a pivotal role in negotiating caps on major carbon emitters. Recent COPs, both in Copenhagen and in Doha, have failed to reach a consensus on a coherent and realistic global policy on climate change. The level of reduction of global emission will influence the magnitude of climate change impacts for countries most at risk like Bangladesh. Bangladesh should become a more active participant in the international efforts addressing the underlying causes of climate change and encourage countries to agree to binding targets for reduction of GHG emissions. For this to happen effectively, the country not only needs to have its own robust carbon mitigation strategy, but also enhance its human resource capacity within and outside the government by training at home and abroad.

Bangladesh could also rely more on a non-conventional carbon free route to economic development by enhancing its human resource potential in the service industry. This can be done by investing significantly more on education and developing IT and other service industries to take up a larger share in its GDP. By leveraging knowledge capital in combating climate change, Bangladesh will be able to develop its own edge in effectively utilizing the cap-and-trade markets, tariffs, regulatory framework, low-carbon technology innovations and energy conservation schemes to its maximum advantage.

Reference:

Agrawala, S., Ota, T., Ahmed, A. U., Smith, J and Aalst, M. (2003). “Development and Climate Change in Bangladesh: Focus on Coastal Flooding and Sundarbans”. Organisation for Economic Co-operation and Development (OECD)

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Carbon Dioxide Information Analysis Center (CDIAC). (2010), Report to United Nations

Community Development Carbon Fund (CDCF website). The World bank Carbon Finance Unit
http://wbcarbonfinance.org/Router.cfm?Page=CDCF

Energy Bangla. (2013). http://www.energybangla.com

Flood Forecasting and Warning Centre (FFWC). http://www.ffwc.gov.bd

Government of Bangladesh (GOB). (2009). Bangladesh Climate Change Strategy and Action Plan

Government of Bangladesh (GOB). (2005). Ministry of Environment and Forest, National Adaptation Programme of Action

Koudstaal, R., Werners, S.E., and Ahmed, A. U. (1999). “Considering Adaptation to Climate Change Towards a Sustainable Development of Bangladesh”. The World Bank, South Asia Region

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The World Bank (2009). Country Profile – Bangladesh

United Nations Development Programme (UNDP). (2004). A Global Report: Reducing Disaster Risk: A Challenge for Development

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http://www.undp.org.bd/info/events.php?d=8&newsid=542&t=In%20News

World Economic Forum (WEF). (2009). Global Competitiveness Report 2009-10

World Resources Institute (WRI). (2010). Environmental Information. Climate and Atmosphere, Country Profile – Bangladesh