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Finance

North to South finance issues underly nearly all of of the major areas under negotiation for the post-2012 climate protection regime. Under the FCCC signed in Rio in 1992, in recognition of their responsibility for the vast majority of the global warming pollution in the atmosphere, developed countries committed to provide financial support to the developing countries to address both adaptation costs and the incremental costs of their low carbon development¹, a commitment that has not been met from the perspective of developing countries.  Under the 2007 Bali Action Plan that framed the mandate for negotiations in Copenhagen, developed countries again agreed that developing country actions were to be enabled and supported by finance provided by developed countries.

Developing countries maintain that significant new and additional sources of financial support are essential to cover the costs of climate adaptation, forest protection, and mitigation activities to help put developing countries onto a low carbon development path, through renewable energy deployment and more efficient technologies. Estimates of the scale of the need vary significantly, though is estimated to be well in excess of $150B/year to support both emissions mitigation and adaptation efforts.

The scale of need and form of financial support being put on the table by developed countries represents not only a substantial negotiating point for Copenhagen, but would have significant real world impact on how much emissions growth occurs in the coming decade. With approximately 75% of the growth in global energy demand estimated to come from developing countries over the next 20 years, developing countries will continue to make substantial investments in their energy infrastructure.  Without adequate financing, many developing countries could become “locked-in” to much higher carbon development path.

Key finance questions on the table for Copenhagen:

• Scale of financial support needed;
• Amount of new support being committed and timetable (including “fast-start” support);
• Where the support is coming from (Public vs. Private; Special Assessments);
• Who should contribute (Developed vs. Developing Countries)
• What mechanism or institution is managing and deciding what activities are funded.

Financing Climate Protection