Financial Engineering of Climate Investment in Developing Countries: Nationally Appropriate Mitigation Action and How to Finance It (Anthem Environment and Sustainability, Band 1) - Hardcover

Lütken, Søren E.

Hardcover

ISBN 10: 1783080183 ISBN 13: 9781783080182

Verlag: Anthem Press, 2014

Inhaltsangabe

This book applies past climate finance experience and a clear understanding of financing sources and techniques to the development of financial engineering strategies for the new Nationally Appropriate Mitigation Actions in developing countries.

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Søren E. Lütken

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Financial Engineering of Climate Investment in Developing Countries

Nationally Appropriate Mitigation Action and How to Finance It

By Søren E. Lütken

Wimbledon Publishing Company

Copyright © 2014 Søren E. Lütken
All rights reserved.

ISBN: 978-1-78308-018-2

Contents

List of Figures and Tables, ix, 
List of Abbreviations, xi, 
Foreword, xiii, 
Preface, xv, 
Chapter 1 Introduction, 1, 
Part I What Is, 
Chapter 2 Climate Change and Nationally Appropriate Mitigation Action, 9, 
Chapter 3 Learning from the CDM, 25, 
Chapter 4 Defining NAMA Finance, 39, 
Chapter 5 The Financing Tools ..., 51, 
Chapter 6 ... And the Financiers, 67, 
Chapter 7 Engineering and Leveraging the Finance, 81, 
Part II What Ought to Be, 
Chapter 8 Challenges to NAMA Finance – Mandates, Aggregation and Lack of Instruments, 101, 
Chapter 9 Roles of the Green Climate Fund, 117, 
Chapter 10 Conclusion, 137, 
Notes, 143, 
References, 147, 
Index, 149, 

CHAPTER 1

INTRODUCTION

The climatic consequences of the way we live may be the greatest challenge humanity has ever faced. The challenge does not necessarily lie in the immense actions that need to be concerted to confront it, but rather in how difficult it is to grasp. Although by now most have realized that something is wrong with the weather, the real consequences of the dramatic shifts in the climate, which are being warned against by climate scientists in ever more alarming phrasing, still seem like science fiction. Moreover, while we can calculate – and have calculated – the cost of inaction, and realize that it may be cheaper to prevent the problem, we are much better at accommodating the costs of natural disasters that require immediate relief, rather than replacing perfectly functional, even brilliantly engineered, technology that just is not compatible with a zero-emission future. In all likelihood, therefore, we may have to depend on our eminent adaptation skills when faced with the clear and present dangers – dangers that will only become clearer as emissions continue to grow.

Structured negotiations on meeting the climate challenge have been on-going since 1992. Compared to the amount of time it has taken to build the carbon-based economy, that is not very long – particularly when considering that what is fundamentally being negotiated is the dismantling of this carbon-based economy. With hydrocarbons deeply entrenched in the economic system, and promises of wealth still embedded in exploration in a growing number of developing countries, having 200 countries arrive at a consensus to forego such promises of wealth takes more than a science-fiction-like warning.

In this respect, negotiations have brought about a rather swift pricing of carbon emissions. The Kyoto Protocol in 1997 managed to set a cap on emissions, however limited, and allowed trading in emission allowances, thus effectively taxing hydrocarbons. The flagship of the Kyoto Protocol, the Clean Development Mechanism (CDM), even brought the carbon price to developing economies promising rents from developed countries' carbon market if emissions were reduced on a project-by-project basis. Project-based carbon accounting systems were established, trading models were developed, and a whole new industry was created in the process. In those 17 short years the global challenge was faced, a global architecture was established, a market mechanism was developed and operated – and wrecked. The CDM and the market that supported it rose and fell in a matter of 10 years. The carbon market crashed in 2012 for a number of reasons, including the international financial crisis, the expiry of the Kyoto Protocol's first commitment period, and because the Protocol's relevance had been eroded by global economic development. At its expiry, less than 13 per cent of global greenhouse gas emissions were under the constraint of the Protocol. Whatever the replacement emerging from negotiations, it will have to address expectations that a much larger share of global emissions have to come under some sort of constraint.

Attempts to establish a replacement for the Kyoto Protocol have been on-going in international climate negotiations for years, so far with astonishingly little progress in lieu of the calamities in store for humanity, and life on Earth as a whole, if the current emission trends are allowed to continue unrestrained. One of the founding principles of the Framework Convention is the division of labour expressed as 'common but differentiated responsibilities'. In short that means that developed countries should take the lead in mitigation efforts, assisting developing countries with technology, finance and capacity building to enable them to do their part while leaving sufficient room, in emission terms, for their continued development. During those negotiations, developed countries as a whole were still the larger emitter, but the balance has shifted rapidly leaving the developing economies as the largest emitter by far.

In May 2013 the concentration of carbon dioxide in the atmosphere reached 400 parts per million (ppm). This number was the first possible target mentioned as a desirable stabilization level for greenhouse gas concentration in the atmosphere during initial negotiations in the beginning of the 1990s, but was raised to 450 ppm. This increase is still somewhat compatible with the ambition – internationally agreed upon since 2010 – of keeping the average global temperature increase below 2 degrees centigrade as 450 ppm leaves about 50 per cent chance of meeting the target (see, e.g., OECD Environmental Outlook to 2050 (2011)). Currently, the average annual increase is about 2 ppm. By a layman's simple calculation this would give all the countries of the world 25 years to keep emitting carbon dioxide – and then after that stop entirely! There are many more advanced, and correct, ways of presenting these calculations – none of which improve the prospects of meeting the challenge.

The luxury of time enjoyed in the early days of climate change negotiations is over. The division of labour has ebbed out, slowly eroding the division between developed and developing countries' obligations – a division that in any case was more on paper than in action when observing the enormous renewable energy investments undertaken in many developing and transitional economies and how much emissions have been outsourced from developed economies into the unaccounted-for emissions accounts of low cost manufacturing regimes.

While these equalizing trends were greatly unintended during the drafting of the Convention and the Protocol, an intended equalization has slowly found its way into negotiation texts. This intention has been on the part of developed country parties that are increasingly realizing that whatever effort they might agree to would be in vain unless the rapidly growing economies in Asia and Latin America would constrain their growth in emissions – and begin to reduce these emissions in the near future. The fact is that from 1990 to 2010, the developed countries listed in Annex 1 to the UNFCCC reduced their emissions from 19 to 17 gigatonnes of CO2 equivalents (reasons untold), whereas the developing countries increased their emissions from 16 to 31 gigatonnes. Consequently, they became the source of the global increase in greenhouse gas emissions by 58 per cent over the 20 year period that preferably should have seen a change in the...

Details zur Ausgabe

• Verlag: Anthem Press
• Erscheinungsdatum: 2014
• Sprache: Englisch
• ISBN 10: 1783080183
• ISBN 13: 9781783080182
• Einband: Gebundene Ausgabe
• Anzahl der Seiten: 174
• Kontakt zum Hersteller: preigu GmbH & Co. KG; mail@preigu.de; ; Lengericher Landstr. 19; Osnabrück; Niedersachsen; 49078; Deutschland