Thursday, December 2, 2010

COP16 Market Based Finance Mechanisms

Despite low expectations for a binding agreement on CO2 reductions this year, participants at COP16 can make progress on a market based mechanisms, as well as incentives to increase the flow of private sector capital. The private sector is crucial to the process as it represents almost 90% of all investment flows.

Although $30 billion of worth of climate financing has been pledged for the next 3-5 years, that is far short of what is needed. The UNFCCC estimates that between $250–380 billion will be needed by 2030 to address climate change.

A great deal can be achieved at Cancun including greater regulatory clarity, progress on new market mechanisms, market-based instruments to facilitate technology transfer, National Appropriate Mitigation Actions (NAMAs), and reforms to the Clean Development Mechanism (CDM) to allow for further up-scaling and efficiency improvements.

To spur innovative climate change solutions from the business community, participants at COP16 can foster confidence by developing the appropriate regulatory framework and associated instruments. These measures are also vital for the deployment of private sector capital.

Failure to provide regulatory frameworks and associated instruments at COP16 will prove costly. The longer we wait to undertake mitigation and adaptation activities the more it will cost.

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1 comment:

Anonymous said...

Nice post. Thanks