The International Climate Architecture and Financial Flows for Climate Change

1
The International Climate Architecture and
Financial Flows for Climate Change

• Dr Charlotte Streck
• 29 September 2008
• Berlin

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Need for Funding
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Financing Mitigation

• Mitigation costs to reduce GHG concentrations
  in the atmosphere
• Cuts in GHG emissions
• Reducing demand for emissions-intensive goods
  and services
• Increased efficiency
• Action on non-energy emissions, such as REDD
• Switching to lower-carbon techn. for power,
  heat and transport
• Capturing/sequestering carbon in biomass or
  geological formations.
• Three essential elements
• carbon pricing
• technology policy, and
• removal of barriers to behavioural change.
• Reductions of emissions in dev countries not an
  option, but a necessity.
• Fair and equitable burden sharing essential.

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Mitigation Transfer of Funds

• ODA
• Total OECD/ODA average of 0.28 of GDP
• GEF and other environmental funds
• US250m/year for energy efficiency, renewable
  energies, and sustainable transportation.
• Carbon Markets
• CDM 2007 US7.5bn (CDM primary market).
  Potential to grow substantially. Depends on intl
  demand.

Need for innovative, robust and scalable
financial mechanisms
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Financing Adaptation
1/CP.13 adequate, predictable, new additional
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Adaptation Transfer of Funds

• 1/CP.13 adequate, predictable, new additional
• Current funding based on a number of env trust
  funds targeting adaptation.
• - LCFSCCF pledges of about US265m- Adaptation
  Fund US100m-500m per year- GEF
  US50mFunding requirements- UNFCCC 28bn-67bn
  by 2030- UNDP 86bn by 2015

Given the cross-cutting nature of adaptation,
fund model politically necessary but
insufficient real challenge is to mainstream
adaptation into general dev policies.
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Political Realities

• Mitigation needs to happen in industrialized and
  developing countries. No choice.
• Significant financial transfers have to support
  dev country action. Beyond current scale.
• Adaptation finance need to be distinct from
  mitigation and development finance while the
  actual financing needs/activities often converge.
  
• Technology transfer key.
• Essential
• International instruments
• Funding independent from budgetary cycles
• Pricing of carbon (fungible markets, intl taxes)

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Reforming the old

• Live up to ODA commitments
• Reform of GEF
• Reduce bureaucracy
• Enhance PPPs
• Link env objectives closer to SD challenges
• Reform existing carbon markets
• Reform CDM governance
• Expand programmatic approaches
• Define sectoral programmes for dev countries

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creating new mechanisms

• Expand and create new carbon markets
• Deepen Annex I commitments
• Link carbon markets
• Make units fully fungible
• Use of proceeds from auctioning allowances
• AAUs
• EU/US or other emission trading systems
• International taxes and levies on
• AAU transfers
• Fossil fuels (carbon tax / uniform global tax or
  domestic taxes)
• Bunker fuels
• Passenger flights (International Air Travel
  Adaptation Levy)

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Conclusions Summary
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Conclusions

• Overcome ideological barriers and entrenched
  positions!
• Review carefully which mechanism can supply what
  to whom.
• Analysis of existing mechanism review roles
  private and public sectors have to play/are best
  equipped to play
• Move beyond the financing of ssc renewable energy
  projects. Create bold investment frameworks
• Clean Coal Gas
• REDD
• Agriculture
• Transport

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More info

• Contacts
• Charlotte Streck
• e-mail c.streck_at_climatefocus.com
• Phone [phone]
• Web-site www.climatefocus.com