Five Components of a New Financial Agreement under the Convention
Paying for Mitigation Technology
This paper focuses on what should be included in a new financial agreement under the UNFCCC; more specifically it proposes five specific components of a “new deal” to address technology barriers in developing countries. The paper reflects on ideas on technology and finance as put forth by countries in submissions to the UNFCCC secretariat as summarized in UNFCCC 2008. These submissions are summarized in a complementary WRI discussion paper titled From Position to Agreement: Technology and Finance at the UNFCCC (WRI 2008). We have also considered two UNFCCC documents that synthesize information on technology needs and financial barriers faced by non Annex 1 Parties to the Convention.
Funding needs for climate change mitigation technology deployment are significant. In August, 2007 the UNFCCC Secretariat published a Technical Paper on Investment and Financial Flows to Address Climate Change. It estimated that USD $200 to $210 billion in mitigation investments will be required annually by 2030 to stabilize and begin to reduce global GHG emissions. The Technical Paper concludes that the vast majority of this investment will need to come from the private sector, but that substantial additional public funding will need to be mobilized as well. This paper was quickly followed by a number of proposals from Parties on how to raise new funds (UNFCCC 2008). In the interim, The World Bank, in cooperation with other multilateral development banks, has moved forward and created a Clean Technology Fund1 which aims to provide incentives to demonstrate low carbon technologies through public and private sector investments in programs and projects that are embedded in national plans. However, the new World Bank fund, while commendable in several ways, responds to only a part of the technology innovation chain and some of the barriers to the development and deployment of technology.