Financing global climate change action

Combating climate change is a global challenge, yet the impacts will fall most heavily on poor and vulnerable populations. Consequently rich, developed nations have agreed to shoulder a proportion of the financial burden in order to help poor, developing states reduce their greenhouse gas emissions and adapt to climate change. At the Cancun climate negotiations in 2010, industrialised nations pledged to raise US$100 billion per year for this task, a significant proportion of which is earmarked for the Green Climate Fund. The next, more complex task will be to design this major financing scheme.

The Fund’s designers will need to determine a way of spending the money that achieves the most sustainable environmental benefit. Dr Lorrae van Kerkhoff and ANU colleagues examined other similar initiatives and provided recommendations for the development of the Fund. “Creating international and national institutions that provide expert advice and establish legal mandates to support local institutions within developing countries will be critical,” she explains.

Indeed, van Kerkhoff’s team found useful lessons in public-private financing from another sector: global health. The Global Alliance for Vaccines and Immunisation offers an example of how part of the Fund might operate. Since 2008, this scheme has raised more than US$3.6 billion as part of a long-term financing strategy to provide low-cost vaccines according to the needs of recipient countries. They propose that a similar approach could be used to fast-track the development and use of renewable energy technologies in developing countries.

The funding arrangements would also need to incorporate mechanisms and support for ongoing learning, according to van Kerkhoff. A theme that runs throughout the research is the need for global institutions to be flexible and adaptive to the ongoing challenges of sustainable development.

“Sustainability challenges are characterised by social, political, scientific and technical complexity,” van Kerkhoff says. “This means we can’t predict how people will respond to programs like the Green Climate Fund, nor the rate at which emission reduction or adaptation techniques will develop.” For the Fund to be successful, institutions will need to remain adaptive. The development of mechanisms to support this review, research and learning form a key element of van Kerkhoff’s recommendations.

It’s still early in the process but these decisions and the shape of the resulting schemes will form the basis for financing global climate change action in the years to come.