Abstract
This chapter discusses the challenge of how to finance the various activities for a pathway for meeting climate and development goals in the timescale and at the necessary scale. This challenge is addressed by providing an overview of the overall finance needs estimates for climate change mitigation and adaptation as well as existing finance initiatives and pledged funding under the Cancun Agreements. The chapter then discusses experience with financing activities for realising development benefits, such as energy access for poor people. This is followed by an analysis of how finance initiatives for the purchase and modification of technologies being transferred for climate and development benefits can be scaled up, as well as how to scale up finance initiatives for technology acceleration actions as part of a strategy, such as policies, enforcement instruments, network building, training, supply chain development, etc. Finally, the chapter explores how, with the large number of private and public players identified, a finance strategy can be generated and integrated with the TNA & LEDS innovation strategies to maximise successful transfers.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
In addition to Official Development Assistance (ODA) and Clean Development Mechanism (CDM) funding.
- 2.
In terms of global GDP levels, this funding would amount to 0.3–0.5% or 1.1–1.7% when compared with global investment levels (UNFCCC2008).
- 3.
These countries are Costa Rica, Egypt, Ghana, Indonesia, Jordan, Lebanon, Maldives, Mali, Nigeria, Pakistan and the Philippines.
- 4.
Public finance could be defined as (a) domestic-fiscal measures, public subsidy schemes, export subsidies, import tariffs, production quota systems, etc.; (b) international, regional funds/programmes (bi- or multilateral), official development aid, etc. Private financial sources are, for instance, corporate (inter)national finance, private equity, (semi-)commercial loans (including micro-credit), market-based instruments (e.g., CDM, tradable certificates, eco-labels, etc.), philanthropy/charity, etc.
- 5.
In addition, the GEF is an operating entity of the Financial Mechanism of the Convention on Biological Diversity.
- 6.
Further information about the CIF can be found at http://www.climateinvestmentfunds.org/cif/. Accessed 28 September 2011.
- 7.
Further information about the Adaptation Fund can be found at http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php Accessed 28 September 2011.
- 8.
http://cdm.unfccc.int/Issuance/SOPByProjectsTable.html. Accessed 30 June 2011.
- 9.
GFCF is the value of acquisitions of new or existing fixed assets by private and public sector entities.
- 10.
http://www.oecd.org/dac/environment. Accessed 27 September 2011.
- 11.
At the project level, UNFCCC (2006) supports and guides developing countries in preparing technology transfer projects for financing. In addition, the CTI Private Financing Advisory Network (PFAN) offers supporting services for financing to developing countries (http://www.cti-pfan.net/, accessed 18 September 2011).
- 12.
Venture capital is equity capital with a focus on relatively early stage technologies; investors are willing to accept higher risks for a relatively high internal rate of return (50% or higher). Private equity has a stronger focus on more mature technologies with medium risk and internal rates of return of around 25%. Infrastructure funds focus mainly on infrastructural investments with long duration, steady, low risk and internal rates of return of around 15% (Nassiry and Wheeler 2011).
- 13.
http://geeref.com. Accessed 28 September 2011.
References
Action Aid (2009). Equitable adaptation finance: The case for an enhanced funding mechanism under the UN framework convention on climate change. Retrieved September 28, 2011 from http://actionaidusa.org/assets/pdfs/climate_change/equitable_adaptation_finance.pdf
Adaptation Fund (2011). TC Workshop on lessons learned from relevant funds and institutions for the design of the GCF: The Adaptation Fund Experience. 12 July 2011. Retrieved September 26, 2011 from http://unfccc.int/files/cancun_agreements/green_climate_fund/application/pdf/tc2_workshopadaptationfund.pdf
AGF (2010). Report of the Secretary General's High Level Advisory Group on Climate Change Financing. UN High-level Advisory Group on Climate Financing. 5 November 2010. Retrieved September 28, 2011 from http://www.un.org/wcm/webdav/site/climatechange/shared/Documents/AGF_reports/AGF%20Report.pdf
AGF Workstream 8 (2011). Carbon markets: Benefits to developing countries and options for expansion. UN High-level Advisory Group on Climate Financing. Retrieved September 28, 2011 from http://www.un.org/wcm/webdav/site/climatechange/shared/Documents/AGF_reports/Work_Stream_8_%20Carbon%20markets.pdf
Anderson, S. (2011). Climate change and poverty reduction. Climate & Development Knowledge Network (CDKN). Policy Brief, August 2011. Retrieved August 9, 2011 from http://cdkn.org/wp-content/uploads/2011/08/CDKN_poverty-reduction_FINAL.pdf
Bakker, S. J. A., Asselt, H. D. van, Gupta J., Haug, C., & Mar, S. (2009). Differentiation in the CDM: Options and impacts. Report 500102 023. ECN-B-09-009. Amsterdam, The Netherlands. Retrieved September 28, 2011 from http://www.pbl.nl/bibliotheek/rapporten/500102023.pdf
Bazilian, M., Nussbauer, P., Gualberti, G., Haites, E., Levi, M., Siegel, J., Kammen, D.M., & Fenhann, J. (2011). Informing the financing of universal energy access: An assessment of current flows. Nota di Lavoro. Fondazione Eni Enrico Mattei. 56.2011. Retrieved September 24, 2011 from http://www.feem.it/userfiles/attach/20117181213234NDL2011-056.pdf
Ellis, J. (2006). Issues related to a programme of activities under the CDM. OECD, COM/ENV/EPOC/IEA/SLT (2006)3. Retrieved September 28, 2011 from http://www.iea.org/papers/2006/CDMissues.pdf
ENB (2011). Summary of the UNFCCC workshop on technology needs assessments: 1–2 June 2011. Earth Negotiations Bulletin, 12(501). Retrieved September 27, 2011 from http://www.iisd.ca/download/pdf/enb12501e.pdf
ENTTRANS (2008). Promoting sustainable energy technology transfers through the CDM: Converting from a theoretical concept to practical action. European Union Sixth Framework Programme. Retrieved September 23, 2011 from http://jiqweb.org/images/stories/mifiles/downloads/jin/ENTTRANSd2.pdf
Fenhann, J. (2011). UNEP Risoe CDM/JI pipeline analysis and database. Retrieved September 1, 2011 from http://cdmpipeline.org/
GEF (2009). LDCF fact sheet. Retrieved September 28, 2011 from http://www.thegef.org/gef/sites/thegef.org/files/publication-/LDCF-factsheets09_0.pdf
GEF (2010a). Financing adaptation action. Retrieved September 28, 2011 from http://www.thegef.org/gef/sites/-thegef.org/files/publication/adaptationactions_0.pdf
GEF (2010b). GEF annual report 2009. Retrieved September 28, 2011 from http://www.thegef.org/gef/pubs/annual_report_2009
GEF (2011a). Implementing the Poznan Strategic Program on Technology Transfer. Retrieved September 28, 2011 from http://www.thegef.org/gef/sites/thegef.org/files/publication/TechTransfer_2010.pdf
GEF (2011b). Strategy on adaptation to climate change for the Least Developed Countries Fund (LDCF) and the Special Climate Change Fund (SCCF). Retrieved September 28, 2011 from http://www.thegef.org/gef/sites/thegef.org/files/publication/GEF-ADAPTION%20STRATEGIES.pdf
IEA (2009). World Energy Outlook 2008. International Energy Agency. OECD/IEA, Paris. Retrieved May 28, 2009 from http://www.iea.org/weo/
IEA (2010). Energy technology perspectives 2010: Scenarios and strategies to 2050. Paris: OECD/International Energy Agency.
IPCC (2007). Climate change 2007: Synthesis report. In Pachauri, R. K & Reisinger, A. (Eds.) Contribution of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva: IPCC.
Kerkhoff, L. van, Habib Ahmad, I., Pittock, J., & Steffen, L. (2011). Designing the Green Climate Fund: How to spend $100 billion sensibly. Retrieved September 17, 2011 from http://www.environmentmagazine.org/Archives/Back%20Issues/2011/May-June%202011/green-climate-fund-full.html
Nassiry, D., & Wheeler, D. (2011). A green venture fund to finance clean technology for developing countries. Working paper 245, Center for Global Development. Retrieved September 28, 2011 from http://www.cgdev.org/files/1424899_file_Nassiry_Wheeler_Green_Venture_Fund_FINAL.pdf
OECD (2005/2008). The Paris declaration on aid effectiveness and the Accra agenda for action. Retrieved September 28, 2011 from http://www.oecd.org/dataoecd/11/41/34428351.pdf
OECD (2011a). Defining and measuring green FDI: An exploratory review of existing work and evidence. OECD Working Papers on International Investment. No. 2011/2. Retrieved September 28, 2011 from http://www.oecd.org/dataoecd/26/8/48171454.pdf
OECD (2011b). Financing Climate Change. Better Policies for Better Lives. Organisation for Economic Cooperation and Development. Paris, France. Retrieved December 20, 2011 from http://www.oecd.org/env/cc/financing
Practical Action (2010). Poor people’s energy outlook 2010. Rugby, UK. Retrieved August 15, 2011 from http://practicalaction.org/ppeo2010
Project Catalyst (2010). From climate finance to financing green growth. Briefing paper, 23 November 2010. ClimateWorks Foundation and the European Climate Foundation. Retrieved September 28, 2011 from http://www.projectcatalyst.info/images/publications/101127_from_climate_finance_to_financing_green_growth_formated.pdf
SEC (2011). Commission staff working document: scaling up international finance after 2012. European Commission. Retrieved September 28, 2011 from http://ec.europa.eu/economy_finance/articles/financial_operations-/pdf/sec_2011_487_final_en.pdf
Stern, N. (2007). The economics of climate change: The Stern Review. Cambridge: Cambridge University Press.
UNCTAD (2010). World Investment Report 2010: Investing in a low-carbon economy. United Nations Conference on Trade and Development. Retrieved September 28, 2011 from http://www.unctad.org/en/docs/wir2010_en.pdf
UNDP (2007). Development Report 2007/2008. New York, New York. Retrieved January 28, 2011 from http://hdr.undp.org/en/media/HDR_20072008_EN_Complete.pdf
UNDP (2010). Handbook for conducting technology needs assessment for climate change. Retrieved September 23, 2011 from http://unfccc.int/ttclear/pdf/TNA%20HANDBOOK%20EN%2020101115.pdf
UNDP (2011). Catalysing climate finance: A guidebook on policy and financing options to support green, low-emission and climate-resilient development. New York, NY. Retrieved September 28, 2011 from http://content.undp.org/go/cms-service/download/publication/?version=live&id=3267712
UNEP (2010). Bilateral finance institutions and climate change: A mapping of 2009 climate financial flows to developing countries. Retrieved September 28, 2011 from http://www.unep.org/pdf/dtie/BilateralFinanceInstitutionsCC.pdf
UNFCCC (1992). United Nations Framework Convention on Climate Change, FCCC/INFORMAL/84. Retrieved May 23, 2011 from http://unfccc.int/resource/docs/convkp/conveng.pdf
UNFCCC (1998). Kyoto Protocol to the United Nations Framework Convention on Climate Change. Retrieved May 23, 2011 from http://unfccc.int/resource/docs/convkp/kpeng.pdf
UNFCCC (2002). Report of the Conference of the Parties on its seventh session: Addendum part two: Actions taken by conference of the parties, FCCC/CP/2001/13/Add.1, Decision 7/CP.7. Retrieved September 28, 2011 from http://unfccc.int/resource/docs/cop7/13a01.pdf#page=22
UNFCCC (2006). Preparing and presenting proposals: A guidebook on preparing technology transfer projects for financing. Issued by the Climate Change Secretariat (UNFCCC) Bonn, Germany. Retrieved September 27, 2011 from http://unfccc.int/ttclear/pdf/PG/EN/UNFCCC_guidebook.pdf
UNFCCC (2007). Investment and financial flows to address climate change. Retrieved September 28, 2011 from http://unfccc.int/files/cooperation_and_support/financial_mechanism/application/pdf/background_paper.pdf
UNFCCC (2008). Development and transfer of technologies. Decision 2/CP.14, FCCC/CP/2008/7/Add.1. Retrieved September 21, 2011 from http://unfccc.int/resource/docs/2008/cop14/eng/07a01.pdf#page=3
UNFCCC (2010). The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention. Decision 1/CP.16. FCCC/CP/2010/7/Add.1. Retrieved July 17, 2011 from http://unfccc.int/resource/docs/2010/cop16/eng/07a01.pdf#page=2
UNFCCC (2011a). Synthesis report on the national economic, environment and development study (NEEDS) for climate change project. FCCC/SBI/2010/INF. Retrieved September 28, 2011 from http://unfccc.int/resource/docs/2010/sbi/eng/inf07.pdf
UNFCCC (2011b). Enhancing the implementation of the results of TNAs. Background Paper II for UNFCCC workshop on technology needs assessments, Bonn, Germany, 1–2 June 2011. Retrieved June 3, 2011 from http://unfccc.int/ttclear/pdf/Workshops/Bonn%202011/BG%20paper%20II-implementing%20TNAs.pdf
Wathne, C., & Hedger, E. (2010). What does an effective multilateral donor look Like? Project Briefing, No. 40. Overseas Development Institute. Retrieved September 16, 2011 from http://www.odi.org.uk/resources/download/4800.pdf
WRI (2011). Summary of developed country ‘fast-start’ climate finance pledge. World Resources Institute. Retrieved September 29, 2011 from http://www.wri.org/publication/summary-of-developed-country-fast-start-climate-finance-pledges
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2012 Springer-Verlag London
About this chapter
Cite this chapter
van der Gaast, W., Begg, K. (2012). Challenge 5: Financing Technologies and Actions for Climate and Development. In: Challenges and Solutions for Climate Change. Green Energy and Technology. Springer, London. https://doi.org/10.1007/978-1-84996-399-2_5
Download citation
DOI: https://doi.org/10.1007/978-1-84996-399-2_5
Published:
Publisher Name: Springer, London
Print ISBN: 978-1-84996-398-5
Online ISBN: 978-1-84996-399-2
eBook Packages: EngineeringEngineering (R0)