Adoption of a symbolic direct carbon tax at a rate as low as one-tenth of the standard tariff has been suggested in the updated climate fiscal framework (CFF) 2019.
The suggestion has been made as part of efforts to finance initiatives of mitigating any climate change effect.
Other suggestions in the CFF also include exploring the scope of introducing a climate bond to mobilise financing for climate-related investments.
It also proposes reformulation of the subsidy regime on fossil fuel to align the incentives in such a way that environment and climate-friendly energy production and consumption are encouraged.
"Existing subsidies on agriculture and export also should be reformulated in a way that conforms to environment and climate-related Sustainable Development Goal (SDG) objectives," the draft of the updated CFF says.
Instituted in 2014, the climate fiscal framework has been the key document to make sure the external and internal finances are used most effectively in addressing the climate change effect.
A presentation on the draft was made for policy stakeholders at a validation workshop on Climate Inclusive Macro-Economic Framework and Climate Fiscal Framework on Thursday in the city.
The UNDP and the Finance Division under the Ministry of Finance organised the event at the CIRDAP auditorium.
Project Manager for Inclusive Budgeting and Financing for Climate Resilience (IBFCR) Ranjit Kumar Chakraborty made the presentation on the update.
In his presentation, he said the updated CFF was different from the existing one as it elaborated the fiscal policy implications of climate change and covered lending and insurance policies.
It also elaborated the role of the private sector as well as non-government organisations (NGOs) and civil society organisations (CSOs) in climate financing and explored new and innovative ways of the financing, he added.
Since the inception, the CFF has been providing necessary guidelines for tracking climate-related expenditures, estimating potential costs of long-terms financing needs to combat effects of climate change and elaborate the role of the government of Bangladesh towards managing climate finances in order to attain sustainability.
But as the landscape of development in Bangladesh as well as abroad changed, updating the CFF was required most.
Speaking as the chief guest at the first session of the event, Comptroller and Auditor General of Bangladesh Mohammad Muslim Chowdhury said the whole-society approach was necessary for financing and ensuring transparency and accountability in using the climate funds.
He said as Bangladesh became the pioneer in formulating such a fiscal framework, "we can't stick to a static climate mitigation policy".
He said identifying the entry points for climate change issues was not a simple task, and one of the key issues in financing was prioritisation as resources were scarce.
Speaking as the special guest, Resident Representative of UNDP Bangladesh Sudipto Mukerjee said the CFF had a very clear focus on marginalised people who might be left behind.
"Updating the CFF will ensure the whole of society approach, including private sector, NGOs as well as the government bodies, in building resilience to climate change."
He also pledged the support of the UNDP for any initiative of the government in battling climate change in future.
Secretary of Finance Division Abdur Rouf Talukder said CFF was a living document and it needed updating periodically.
Earlier, Ramendra Nath Biswas, Additional Secretary, Finance Division, and National Project Director for IBFCR, in his welcome remarks said, "Bangladesh is on a development highway, but the growth rate is slowing down due to the adverse effects of climate change."
In this context, the Finance Division (FD) "is trying to manage fiscal inputs and other issues related to this project to enhance climate finance governance," he added.
In the afternoon session, speaking as the chief guest, Member (Senior Secretary) of General Economics Division at the Ministry of Planning Dr. Shamsul Alam said the updated model would help avoid supply disruptions due to climate change events and help understand the true economic cost of climatic impacts, which "will help design the right initiatives for attaining green growth".
He said it was essential to build capacity of bureaucrats, development practitioners, planners and civil society to be able to utilise the climate macro-economic model.
Speaking as the special guest, Executive Director of Policy Research Institute of Bangladesh (PRI) Dr. Ahsan H. Mansur said the magnitude of the economic losses due to climate change was sizeable and over time it would become a huge amount as the economy was growing.
"Moreover, generally macro model tends to understate the actual loss of income due to the impacts of climate change," he added.
He said it was a challenge for the Finance Division to develop the modeling skills as finance division officials were not generally trained in econometrics, but it was essential to do so for the model to stay dynamic and not turn obsolete.
"Models are not to be taken as the answer, but it gives a direction. So, the government needs to draw inferences from it regarding the impacts of climate change on the economy," he said.
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