Dr Charlotte Streck 29 September 2008 Berlin The International Climate Architecture and Financial Flows for Climate Change Dr Charlotte Streck 29 September 2008 Berlin

Need for Funding

Mitigation: Transfer of Funds ODA Total OECD/ODA: average of 0.28% of GDP GEF and other environmental funds US$250m/year for energy efficiency, renewable energies, and sustainable transportation. Carbon Markets CDM: 2007: US$7.5bn (CDM primary market). Potential to grow substantially. Depends on intl demand. Need for innovative, robust and scalable financial mechanisms

Adaptation: Transfer of Funds 1/CP.13: adequate, predictable, new & additional Current funding based on a number of env trust funds targeting adaptation. - LCF+SCCF: pledges of about US$265m - Adaptation Fund: US$100m-$500m per year - GEF: US$50m Funding 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.

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)

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

…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)

Conclusions & Summary

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

More info Contacts: Charlotte Streck e-mail c.streck@climatefocus.com Phone +31 10 217 59 94 Web-site www.climatefocus.com