South Asia: climate risks, money and the green transition ^{CEFR B2}

South Asia is coping with acute climate impacts while trying to finance an energy transition and longer-term adaptation. Pakistan’s 2022 floods displaced more than 30 million people and caused damage equivalent to nearly one tenth of GDP. In Nepal, Himalayan glaciers are melting at their fastest recorded rate, threatening water supplies, raising the risk of glacial lake floods and contributing to more frequent landslides. Without new mitigation, Pakistan’s annual greenhouse gas emissions are projected to more than triple by 2030.

Most climate finance rules are set in wealthier capitals. The UN framework asks richer states to support low-income countries, and public funds such as the Global Environment Facility and the Adaptation Fund exist for resilience. Market tools — the Clean Development Mechanism, Article 6 carbon trading and the Voluntary Carbon Market — aim to mobilise private funds, alongside green bonds, blended finance and Just Energy Transition Partnerships. However, much financial value returns to institutions and firms in wealthy countries through interest, consultancy fees, technology imports or debt repayment; Laurie Parsons calls this a structural injustice and says poorer countries face a stark choice between cutting emissions or accumulating resources to protect themselves. “It is clear,” he argues, “that the world’s richest countries are choosing the second path.”

China is now a leading supplier of solar panels, batteries and hydropower engineering, making it central to the region’s green transition. The Voluntary Carbon Market concentrates many offset projects in the Global South while major registries that certify and sell credits are headquartered in the United States and Switzerland. A 2024 report by Corporate Accountability found that more than 47 million carbon credits linked to projects with identified environmental or social issues were retired in the voluntary market that year.

The Delta Blue Carbon Project in Pakistan’s Indus Delta, launched in 2015, aims to restore approximately 350,000 hectares of mangroves over sixty years. It is a partnership between the Sindh Forest Department and Indus Delta Capital and issues credits under the Verified Carbon Standard. Officials cite increased forest cover and jobs, while civil society and researchers raise concerns about transparency, revenue sharing, access to contracts and financial records, and the risks of monoculture planting. In 2021 Pakistan issued a USD 500 million Green Eurobond to finance the Diamer-Bhasha Dam and the Mohmand Dam; a UK-based agency certified the bond as “Medium Green.” Construction involves Chinese state-owned firms (China Power with Frontier Works Organization at Diamer-Bhasha, and China Gezhouba Group with Descon Engineering at Mohmand), and communities near the dams report land loss, uneven compensation, relocation to less fertile areas and disrupted village networks. Long-term ecological changes may affect downstream agriculture and fisheries. As Chen Zhibin noted, “There was once a broad consensus that the Global North should support the Global South in addressing climate change,” and later, “It is less about changing others and more about keeping the European market stable.” The region now faces the challenge of securing adaptation and energy finance without deepening dependency or reproducing older hierarchies.