The 21st Century climate challenge

3Avoiding dangerous climate change: strategies for mitigationUnder a programme-basedapproach, developingcountries could pledge toachieve a specified level ofemission reduction, eitherin a specific sector (suchas electricity generation) orfor the country as a wholeShifting the focus towards programmebasedapproaches could yield far more positiveoutcomes. Under a programme-based approach,developing countries could pledge to achieve aspecified level of emission reduction, either in aspecific sector (such as electricity generation) orfor the country as a whole. The target could beset against a specific benchmark either in termsof reductions from a business-as-usual referencescenario or in terms of absolute cuts. Developedcountries could support achievement of thetargets by agreeing to meet the incremental costsof new technologies and capacity building. Forexample, current energy plans in China and Indiacould be revisited to explore the potential and thecosts for reductions in CO 2emissions throughthe introduction of expanded programmes forrenewable energy and accelerated introductionof clean coal technologies.Negotiations on the post-2012 KyotoProtocol framework provide an opportunity toput in place an architecture for internationalcooperation that links climate changemitigation to sustainable energy financing. Oneoption would be the creation of an integratedClimate Change Mitigation Facility (CCMF).The CCMF would play a wide-ranging role. Itsoverarching objective would be to facilitate thedevelopment of low-carbon energy systems indeveloping countries. To that end, the aim wouldbe to provide through multilateral channelssupport in key areas, including financing,technology transfer and capacity-building.Operations would be geared towards theattainment of emission reduction targets agreedunder the post-2012 framework, with dialoguebased on nationally-owned energy strategies.Rules and governance mechanisms would haveto be developed to ensure that all parties deliveron commitments, with CCMF support gearedtowards well-defined quantitative goals anddelivered in a predictable fashion. The followingwould be among the core priorities:• The mobilization of finance. The CCMFwould mobilize the US$25–50 billion neededannually to cover the estimated incrementalcosts of facilitating access to low-carbontechnologies. Financing provisions wouldbe linked to the circumstances of countries.In middle-income countries—such asChina and South Africa—concessionaryfinance might be sufficient, whereas lowincomecountries might require grants.The development of a programme-basedCDM approach linking carbon markets inrich countries to mitigation in developingcountries would be another instrumentin the CCMF toolkit. One of the broadobjectives of the CCMF would be to leverageprivate investment, domestic and foreign.Public finance could be partly or whollygenerated through carbon taxation or levieson cap-and-trade permits.• Mitigating risks. Commercial risks associatedwith the introduction of new, low-carbontechnologies can act as a significant barrierto market entry. CCMF financing could beused to reduce risks through concessionalloans, along with partial or full risk guaranteeson loans for new technology—extending anapproach developed under the World Bank’sInternational Finance Corporation (IFC).• Building technological capabilities. TheCCMF could act as a focal point forwide-ranging cooperation on technologytransfer. The agenda would extend fromsupport for developing countries seekingfinancing for technology development, tothe strengthening of capacity in state andnon-state enterprises, strategies for sharingnew technologies, and support for thedevelopment of specialized training agenciesand centres of excellence in low-carbontechnology development.• Buying out intellectual property. It is not clearthat intellectual property rights are a majorbarrier to low-carbon technology transfer.In the event that transfers of breakthroughtechnology were constrained by intellectualproperty provisions, the CCMF could be usedto finance a structured buy-out of intellectualproperty rights, making climate-friendlytechnologies more widely accessible.• Expanding access to energy. Meeting the needsof populations lacking access to modernenergy services without fuelling dangerousclimate change is one of the greatest challengesin international cooperation. There156 HUMAN DEVELOPMENT REPORT 2007/2008