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In the context of a rapidly evolving Clean Development Mechanism (CDM) market and increasing debate about the design of a future global climate regime, it is essential to understand which types of projects are undertaken along industrial value chains, and also the influence of company characteristics (e.g. size, raw material base, product type, ownership and location) on firms' CDM participation and choice of project type. The Indian pulp and paper industry was examined for its energy intensity and its diversity in terms of both mitigation opportunities and company characteristics. Large firms were found to be more likely than small firms to participate in CDM. Although CDM projects in large and small firms generate similar amounts of certified emission reductions (CERs), the type of technology implemented in those projects varies strongly with company size due to differing levels of capabilities and capital. Mill size and raw material base also affect participation and choice of project type. A structured approach is suggested for analysing how to engage different subsectors of an industry in mitigation efforts based on transnational sectoral approaches, domestic sectoral approaches, and programmatic CDM. Preliminary policy recommendations are offered for the Indian pulp and paper industry, as well as insights that are transferable to other countries. A one-size-fits-all sectoral approach is difficult to implement and a strategy for differentiated treatment based on company characteristics is required to reflect local development priorities. [ABSTRACT FROM AUTHOR]

Governments and international organizations are increasingly using public funds to mobilize and leverage private finance for climate projects in the Global South. An important international organization in the effort to mobilize the private sector for financing climate mitigation and adaptation in the Global South is the Green Climate Fund (GCF). The GCF was established under the UNFCCC in 2010 and is the world's largest dedicated multilateral climate fund. The GCF differs from other intergovernmental institutions through its fund-wide inclusion of the private sector, ranging from project design and financing to project implementation. In this paper, we investigate private sector involvement in the GCF through a qualitative exploratory research approach. We ask two main questions: Do private sector projects deliver on their ambitious goals? What are the tensions, if any, between private sector engagement and other principles of the GCF (most importantly the principles of country ownership, mitigation/adaptation balance, transparency, and civil society participation)? This paper argues that private sector involvement does not provide an easy way out of the financial constraints of public climate financing. We show that the GCF fails to deliver on its ambitious goals in private sector engagement for a number of reasons. First, private sector interest in GCF projects is thus far underwhelming. Second, there are strong tradeoffs between private sector projects and the Global Partnership for Effective Development Co-operation (GPEDC) principles of country ownership, transparency, and civil society participation. Third, private sector involvement is creating a mitigation bias within the GCF portfolio. Fourth, while the private sector portfolio is good at channeling funds to particularly vulnerable countries, it does so mostly through large multi-country projects with weak country ownership. Fifth, there is a danger that private climate financing based on loans and equity might add to the debt burden of developing countries, destabilize financial markets, and further increase dependency on the Global North. The main problem of GCF private sector engagement is lack of interest from the private sector. For now, the GCF will strongly rely on public funds for its mission; thus establishing a strong track record of high impact climate projects should take priority over the promises of mobilizing private financial resources. Given the strong mitigation bias of private sector projects, public sector financing needs to be even more focused on climate adaptation. The GCF needs to ensure that the private sector's short-term interests in profitability do not undermine its own long-term goal of transformational change and development. The GCF needs to make sure that private sector projects are compatible with Global Partnership for Effective Development Co-operation (GPEDC) principles and its own rules on country ownership, transparency, and civil society participation. The GCF needs to pay more attention to building a sound institutional framework to ensure that climate finance does not add to the already existing debt burden, economic dependency, and financial instability of partner countries. [ABSTRACT FROM AUTHOR]

This perspective paper explores the potential of climate finance to support Caribbean Small Island Developing States (SIDS) efforts in achieving their Nationally Determined Contributions (NDCs) under the 2015 Paris Climate Agreement. Through a content analysis of sixteen Caribbean countries NDCs, it provides, first, a comprehensive overview of SIDS countries' perspectives on climate financing needs for mitigation and adaptation activities in meeting their climate targets. Second, the paper examines whether Caribbean SIDS acknowledge a role for domestic financing and international and domestic fiscal policy reform within their NDCs, as a way to address climate change mitigation and adaption. The analysis of Caribbean SIDS NDCs reveals that only eight countries provide clear cost estimates for mitigation activities, five for adaptation and one with a combined cost. This gives a total of US$51.3 billion for the combination of Caribbean countries across their NDCs. The majority of climate change activities identified in the NDCs are conditional on the provision of international climate finance. While some countries discuss domestic sources of finance, few note the need for domestic fiscal policy reform to counteract direct and underlying drivers of greenhouse gas emissions and their reduction. The findings suggest that, while much attention is directed to inadequate quantities of international climate finance, fiscal policy and the use of domestic finances are important for realizing transformative change and yet receive little attention from in-country policymakers. Caribbean SIDS suffer from a significant climate finance gap. Caribbean countries cannot remain dependent on international climate finance and must pursue more innovation and diversified options to achieve climate goals. Caribbean countries struggle to use domestic policy and investment options to align finance and incentives to promote their climate goals. The region faces challenges inherent in aligning domestic fiscal policies and other economic and regulatory incentives, as well as private sector investment, to complement and augment international climate finance objectives. [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate how political and technical factors influence climate finance coordination in different country contexts. Emerging scholarly and policy literature calls for the improved coordination of climate finance to enhance the effectiveness of multiple sources of funding for adaptation and mitigation purposes, with country ownership over coordination emerging as a potential approach. However, few studies have examined how climate finance coordination unfolds at the national level in developing countries. This paper presents findings from a comparative assessment of climate finance coordination practices in Kenya and Zambia, drawing on semi-structured interviews, policy documents, and relevant literature. Specifically, the paper investigates how political and technical forces shape climate finance coordination in contexts with varying country ownership over the coordination process. We find that political factors relating to power dynamics, framings of climate finance, and vested interests play a strong role in shaping how actors interact, hampering coordination efforts within the climate finance landscape in both countries. This adds a new dimension to calls for greater country ownership, which we suggest needs to be paired with a critical examination of political struggles and contestation. Underlying political factors relating to conflicting vested interests, different framings and discourses, political will, and power dynamics play a substantive and overarching role in shaping climate finance coordination in Kenya and Zambia. These political factors limit the extent to which greater country ownership translates to better or more effective coordination of climate finance; as such, ownership needs to be examined in the context of political struggles and contestation. Instead of just aiming to improve coordination through more formalized coordination structures, capacity building and reduced fragmentation, countries also need to be more transparent and acknowledge the deep-seated interests within the climate finance landscape, to make visible the winners and losers of various coordination mechanisms and structures. [ABSTRACT FROM AUTHOR]

Capacity-building is acknowledged as an essential requirement for addressing environmental and developmental challenges in developing countries. In particular, the capacity to manage technological change is an important prerequisite for climate change mitigation, adaptation and green growth. Despite the importance of such capacity, there are surprisingly few empirical accounts unpacking its different dimensions and exploring how it might be built in developing countries in the context of climate and sustainable development challenges. In this paper, we contribute to this sparse literature through an in-depth qualitative case study on energy efficiency in India. Specifically, we take a systemic and evolutionary perspective to investigate how the Bureau of Energy Efficiency developed and implemented its programs to promote energy efficiency in household appliances, light-emitting-diode lamps and energy-intensive industries – and how in doing so, both drew upon existing capacity within and outside the country, and also built new capacity, to achieve significant energy savings. Key policy insights Since the capacity to manage technological change is distributed among a range of actors, policymakers require the ability to understand capacity needs from multiple actors' perspectives. Policymakers need to respond to evolving capacity needs over the course of a program – from strategic program design, trust-building and resource mobilization in early stages, to administration in later stages. 'System operators/integrators' can play a crucial role during the early stages of a program by helping develop capacity and sustaining it by creating a demand for such capacity, as well as bringing together actors, enabling coordination, and building coalitions among them. Preliminary analysis suggests that the Bureau of Energy Efficiency programs investigated in this paper resulted in significant energy savings and CO2 emission reductions. [ABSTRACT FROM AUTHOR]

The Paris Agreement's nationally driven structure puts the spotlight on financing strategies at the national level. The role of national funding vehicles in mobilizing climate finance, however, has not received extensive attention. This paper remedies this gap by introducing a novel dataset of national climate funds established in developing countries. The database creates an inventory of national financing vehicles and tracks their major attributes, including scope, legal form, and the host, among others. We show that 39 countries have established national climate funds. These funds seek to access and mobilize finance from various sources, domestic and international. Most of these funds have broad mandates to tackle climate change, while a smaller share has a more targeted, sectoral focus. Funding sources vary from taxes to international aid. The funds offer a limited range of financial instruments, primarily awarding grants. The funds also differ in how integrated they are with overarching climate plans and strategies. We also find that most developing countries use existing budget lines to target finance towards climate change objectives. Only five countries track public expenditure on the basis of dedicated budget codes. This paper contributes to the literature by providing an empirical basis to pursue questions regarding the role and effectiveness of national climate funds. For policymakers, the limited range of instruments at the disposal of many of these national climate funds also suggests a need to ensure that the national climate funds have the design features they need to support the implementation of national policy goals. Key policy insights Systematic data on public climate finance are scarce. Most governments do not use climate change codes to track their expenditures related to climate change. Policymakers should adopt practices that will help instil transparency in public expenditure on climate change. Policymakers have to revisit the design features of national climate funds such as legal form and areas of operation as the wider operating context changes. Funds accredited with multilateral climate funds are underutilized by fund contributors. The Green Climate Fund's direct access modality offers one major avenue to foster synergies between national climate funds and multilateral climate funds. Policymakers have the opportunity to harvest lessons from existing funds and calibrate climate policies accordingly, especially as countries contemplate setting revenue-generating carbon prices. [ABSTRACT FROM AUTHOR]

Financing climate change mitigation and adaptation in Asia is critical for its population and economies but also for those of the world. This editorial provides a commentary and overview of ten articles within this special issue of Climate Policy on 'Green Finance in Asia'. Contributions are diverse in terms of focus and methods. Most of the articles focus on managing transition risk with six of the articles having an energy focus; the dominant themes are the risk of stranded coal assets in China; the role of export finance by China and Japan for fossil fuel-fired power generation assets within Asia; and investment in renewable power generation and the policies to support such investment. The remaining four articles explore various policies in specific country contexts: the effects of green bond policies in China; the greening of monetary policy in China; the governance of sustainable finance in Indonesia; and policies to support investment and finance of off-grid electricity access in Bangladesh. Most of the ten contributions come from researchers in developed countries and principally from non-Asian countries, suggesting there is a need to develop green finance research capability and capacity across Asia. Despite being withing scope of the special issue, this collection does not contain papers on physical risk or adaptation finance. We highlight these as important gaps and priorities for future research. Key policy insights This editorial provides a commentary and overview of ten articles within this special issue of Climate Policy on 'Green Finance in Asia'. Most of the ten contributions come from researchers in developed countries and principally from non-Asian countries. There is a need to develop green finance research capability and capacity across Asia. Most contributions were focussed on transition risk, with limited or no focus on physical risk and adaptation finance. This likely reflects the multiple resource and expertise challenges faced when conducting physical risks assessments. [ABSTRACT FROM AUTHOR]

After decades of growth, the Bangladesh Solar Home Systems (SHS) programme, the world's largest domestic solar off-grid electrification scheme which has frequently been heralded as a model for other developing countries, is in danger of collapsing as end user support and installation levels have plummeted. This paper explores the reasons behind this development, tracing the programme run by the Infrastructure Development Company Limited (IDCOL) from its early expansion employing pioneering partnership and financing models, to its more recent decline. It finds that the government's simultaneous implementation of several competing on- and off-grid energy access projects and lack of regulatory oversight alongside significant subsidy decreases which made SHS uncompetitive, led customers to abandon the programme. This, in turn, is putting at risk Bangladesh's objective of achieving Sustainable Development Goal (SDG) 7 – affordable, reliable, sustainable and modern energy for all – by 2030. KEY POLICY INSIGHTS: The intended maturation of the market for off-grid solar did not occur alongside the gradual reduction of the SHS programme's subsidy scheme. This resulted in a lack of service and technology providers and continued high system prices, unattainable to poor households in rural Bangladesh. The Government of Bangladesh's unexpected grid expansion into SHS areas and introduction of free solar energy systems in 2015 further undermined the programme because it led to: o customer's turning away from SHS and defaulting on their loan payments, leading to financial problems for IDCOL's partner organizations. o entry of unregulated sub-standard panels into the market, resulting in a lack of confidence and distrust in the SHS by end-users. • A key role of the government is to ensure the sound quality of the systems and services from the outset to instil customer confidence in the product. • The creation of successful long-term energy access requires a comprehensive, integrated approach to coordinate stakeholders and oversee market development over time, ensuring that markets for new technologies and services such as SHS have an opportunity to succeed. [ABSTRACT FROM AUTHOR]

This paper discusses options to increase mitigation ambition in crediting mechanisms that serve the Paris Agreement (PA), such as the Article 6.4 mechanism. Under the Clean Development Mechanism and other crediting mechanisms, baselines have been specified in the form of greenhouse gas (GHG) intensity factors and linked to business-as-usual developments. This means that with increasing production of goods and services through carbon market activities, absolute emissions may increase or fall only slowly. At a global level, such an approach widens the 'emissions gap'. To enable continued use of emissions intensity baselines in crediting mechanisms while being in line with the PA's goal to pursue efforts to limit temperature rise to 1.5°C, we propose to apply an 'ambition coefficient' to emissions intensities of technologies when establishing the baseline. This coefficient would decrease to reflect increasing ambition over time, and reach zero when a country needs to reach net zero emissions. Due to the principle of common but differentiated responsibilities and respective capabilities, the coefficient would fall more quickly for developed than for developing countries. The latter would be able to generate emission reduction credits well beyond 2050, while for the former, crediting would stop around 2035 or before. An ambition coefficient approach would generate certainty for carbon market investors and preserve trust in international carbon markets that operate in line with the agreed, long-term ambition of the international climate regime. An ambition coefficient can help to align carbon market activities with net zero GHG emission pathways at country level, and ensure that carbon markets will not lead to a lock-in of emissions in participating countries. The ambition coefficient approach can serve as a 'bridging proposal' for the operationalization of PA carbon markets. It may resolve negotiation gridlock between those who want to increase stringency in carbon market instruments and those who think mitigation ambition should be generated through more stringent NDCs, facilitated by cost savings and increased financial resources generated by international carbon markets. The use of an ambition coefficient can enable the alignment of existing methodologies with necessary ambition levels to implement the PA, while also keeping transaction costs low. [ABSTRACT FROM AUTHOR]

The objective of the Paris Agreement is to constrain the global temperature increase to well below 2°C and to pursue efforts to limit it to 1.5°C above pre-industrial levels. It is undisputed that the collective mitigation actions proposed by Parties are largely insufficient to meet this objective. All Parties are expected to revise their Nationally Determined Contributions (NDC) prior to the 26th Conference of the Parties (COP 26) with the aim of increasing levels of mitigation ambition. This paper focuses on Mauritius which has no climate mitigation policy and no strategy for low-carbon development. In this context, a number of policy issues are considered, and propositions are made on how the level of ambition of its updated NDC can be increased. For this, energy-related emissions pathways to 2050 are used to argue for an equity-based, effort-sharing approach to CO2 emissions reductions by capitalizing on a developing country's ability to propose a combination of unconditional and conditional mitigation contributions. Such a proactive approach will place Small Island Developing States (SIDS) and developing countries in a better position to justify and attract technology transfer, capacity building and climate finance. Further, the energy-climate mitigation nexus is examined to highlight the co-benefits of increasing mitigation ambition. It is shown that, all else being equal, increasing the percentage share of renewables in the electricity mix is necessary but not sufficient for increasing the ambition of mitigation contributions. The insights in this paper are expected to be valuable for other SIDS and small developing countries. Key policy insights A multi-criteria approach is more appropriate for assessing the level of ambition of SIDS and other small emitters than absolute share of global emissions or the percentage share of renewable energies in the energy mix. Based on this approach, the climate change mitigation policy orientation of Mauritius is not ambitious. As Mauritius updates its NDC, it should apply a systemic approach to investigate emission reduction scenarios across sectors and covering time horizons up to at least 2050, in order to better link national climate change mitigation and sustainable development goals. [ABSTRACT FROM AUTHOR]

Enhancing the Nationally Determined Contributions (NDCs) is an important exercise to achieve the long-term goals of the Paris Agreement. The Paris Agreement also recognizes that support to developing countries in this regard will help them to aim for higher climate ambition. The role of international support programmes in the NDC enhancement process is crucial but is not often covered in scientific research. Consequently, the factors driving a country's decision to apply for NDC-related assistance have also not yet been fully explored. Acknowledging the research gap, this paper framed and tested multiple hypotheses to evaluate the impact of potential factors on the likelihood of a country applying for assistance to enhance its NDCs. For this, a logistic regression method was employed. Data from the two initiatives coordinating the technical and financial assistance worldwide, namely the Climate Action Enhancement Package (CAEP) and Climate Promise, were reviewed for this purpose. The CAEP program is financially supported by Denmark, Germany, Netherlands, Norway, Sweden and the UK. This study identifies the level of socio-economic development and the population's exposure to air pollution as key factors which influence the likelihood of applying for assistance under CAEP and Climate Promise in developing countries. Further, the presence of democratic aspects in the form of governance may also influence this choice. Finally, this study discusses the results and associated policy implications for countries receiving assistance to enhance their NDCs. Developing countries with relatively low socio-economic development are more likely to apply for assistance to enhance their NDCs. The assistance is designed to help them to build capacities to develop and implement future climate policies. Air pollution and climate change issues are interconnected. Exposure to air pollution is a potential indicator that can influence the NDC enhancement process in developing countries. The assistance for enhancing NDCs will lead to NDC targets that are well-informed and are aligned with national and sub-national development priorities with realistic prospects of implementation. Climate vulnerability and net trade do not influence the decision-making process to apply for NDC enhancement assistance. [ABSTRACT FROM AUTHOR]

This paper investigates the roles of national development banks (NDBs) in mobilizing climate finance for domestic renewable energy deployment by conducting a comparative analysis based on a developed country and two developing countries with NDBs, namely Germany with KfW, China with CDB, and India with IREDA. The research argues that, besides working as a direct financier and catalytic mobilizer for climate finance, NDBs can serve as a policy coordinator to amplify the effectiveness of climate policies as countries are scaling up finance for climate related programmes. NDBs play this policy coordination role through three mechanisms: 1) providing expertise and channelling market information/feedbacks to the policymaking process to advance renewable energy designs and refinement; 2) mitigating policy gaps or barriers that cannot be, or can only partially be, alleviated by existing renewable energy policies; and 3) providing a coherent and holistic basket of financial services to concentrate resources behind national priorities. The coordinator role is enabled by NDBs' state-ownership, proximity to local markets and local contexts, and information and expertise. This study also identifies the differences of NDBs' roles in supporting renewable energy finance between developed and developing countries. The research contributes to the existing literature by conducting a comparative analysis of NDBs in climate finance between developed and developing countries and by clarifying the role that NDBs have in empowering climate policies to facilitate investment in renewable energy. Governments should focus on a stable and well-designed policy framework to scale up climate finance. NDBs can then serve in a policy coordinator role to amplify the impacts of climate policies. NDBs can provide expertise and channel market information/feedbacks to advance design of climate finance policies. NDBs can mitigate barriers that cannot be, or can only partially be, alleviated by existing climate policies. NDBs can provide a coherent and holistic basket of financial services to concentrate resources behind national priorities. [ABSTRACT FROM AUTHOR]

Calls for transformative adaptation to climate change require attention to the type of capacity building that can support it. Community-level capacity building can help to ensure ownership and legitimacy of longer-term interventions. Given that marginalized communities are highly vulnerable to climate risk, it is important to build their capacity to adapt locally and to integrate their perspectives into higher-level adaptation measures. Current adaptation policy does not pay sufficient attention to this. Using a Cape Town-based project on water governance in low-income urban settlements, this paper explores how a transdisciplinary research project supported capacity building. Our findings suggest that knowledge co-creation at the community level is central to the capacity building that is needed in order to inform transformative adaptation. The collaborative methodology used is also important; we illustrate how a transdisciplinary approach can contribute to transformative adaptation where knowledge is co-produced to empower community-level actors and organizations to assert their perspectives with greater confidence and legitimacy. We argue that if capacity building processes shift from the top-down transferal of existing knowledge to the co-creation of contextual understandings, they have the potential to deliver more transformative adaptation. By considering diverse sources of knowledge and knowledge systems, capacity building can start to confront inequalities and shift dominant power dynamics. Adaptation policy could provide more guidance and support for community-level transdisciplinary processes that can enable this type of transformative adaptation. Key policy insights To address equity and justice issues as well as climate risk, adaptation policy needs to better support transformative adaptation. Community-level capacity building, called for by developing countries, will benefit from more attention to bottom-up approaches as a complement to top-down ones. Community-led research that draws on a diversity of knowledge systems can effectively inform the development of transformative adaptation interventions. Transdisciplinary research methods present a promising pedagogical approach to building transformative adaptation capacity. Adaptation policy for capacity building would benefit from a broader understanding of governance that includes local participation and values bottom-up contributions. A priority for capacity building is getting previously excluded actors a spot at the negotiating table as well as skills to substantiate their arguments. [ABSTRACT FROM AUTHOR]

Capacity building is defined as a process by which stakeholders increase their knowledge, skills and resources in order to improve their ability to adapt in a fast-changing world. Universities play a key role in the promotion of sustainability and implementation of the 2030 United Nations Sustainable Development Goals (SDGs) through capacity building. However, universities in developing countries face significant challenges in the implementation of capacity building programmes for sustainability given the lack of procedures that facilitate the systematic integration of multiple stakeholderś epistemologies, methodologies and objectives. In this paper, we present a capacity building approach as a problem-focused process that follows a multi-domain/multi-stakeholder scheme, and provides alignment with the functions and responsibilities of different sectors of society. The approach involves the use of a decision-support tool for sustainability that enables stakeholders to actively participate in decision-making processes. We illustrate the implementation of the capacity building approach through two case studies and show how general and specific capacities tailored to the different stakeholders can be developed. Our approach to capacity building accentuates the role of universities in Mexico, Central America and the Caribbean as research and innovation hubs that could help design and implement flexible, transparent and robust strategies towards achievement of sustainability in the region. Key policy insights Capacity building to address the sustainable development goals should aim to develop sets of interlinked capacities for sustainability across stakeholder groups. Capacity building should take into account the regional institutional contexts in which universities in Mexico, Central America and the Caribbean are embedded. Effective implementation of capacity building must be tailored to the different roles and functions of the actors involved. Thematic, technical, evaluative and procedural domains provide a comprehensive framework to build capacities, which can be continuously adapted according to the functions and responsibilities of the actors. Capacity building approaches to address climate change vulnerability require decision-support tools to inform policy-making. [ABSTRACT FROM AUTHOR]

'Losses and damages' refer to impacts of climate change that have not been, or cannot be, avoided through mitigation and adaptation efforts. After the establishment of the Warsaw International Mechanism for Loss and Damage (WIM), Loss and Damage is now considered the third pillar – besides mitigation and adaptation – of climate action under the United Nations Framework Convention on Climate Change (UNFCCC). This paper studies what the Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC WGII AR5) has to say about this emerging topic. We use qualitative data analysis software (text mining) to assess which climatic stressors, impact sectors and regions the report primarily associates with losses and damages, and compare this with the focus areas of the WIM. The study reveals that IPCC WGII AR5 primarily associates losses and damages with extreme weather events and economic impacts, and treats it primarily as a future risk. Present-day losses and damages from slow-onset processes and non-economic losses receive much less attention. Also, surprisingly, AR5 has more to say about losses and damages in high-income regions than in regions that are most at risk, such as small island states and least developed countries. The paper concludes with recommendations to the IPCC for its 6th Assessment Report (AR6) to include more evidence on losses and damages from slow-onset processes, non-economic losses and damages and losses and damages in vulnerable countries. Key policy insights IPCC WGII AR5 discusses evidence about losses and damages predominantly in relation to sudden-onset disasters and economic costs. More research is needed on losses and damages from slow-onset processes and non-economic loss and damage, particularly in vulnerable countries in the Global South. Funding agencies should support research in these areas and IPCC WGII AR6 should pay more attention to these topics. Losses and damages are not only a future risk, but already a present-day reality for vulnerable people in climate hotspots. People-centred research by social scientists is crucial for enhancing understanding of what losses and damages mean in the real world. [ABSTRACT FROM AUTHOR]

Article 8 of the 2015 Paris Agreement calls on the parties to cooperate to address 'loss and damage' associated with the adverse effects of climate change. Insurance is one of the solutions that the provision points to in this respect. This paper examines whether so-called parametric risk pooling may provide a useful tool to this end by examining lessons from three multi-country parametric risk pooling schemes. The examination shows that parametric risk pooling schemes require careful design in order to work optimally and that even then, they do not represent a miracle solution. In particular, the paper points out that the three schemes only provide a limited response in the period directly after a devastating hazard has struck. Therefore, the ensuing support required must come from other sources. The paper concludes that parametric risk pooling may provide a valuable tool for addressing loss and damage, but must be complemented by a range of other tools to comprehensively address the loss and damage challenges posed by climate change. Key policy insights Parametric insurance schemes can provide a useful tool to respond to natural hazards caused by climate change in developing countries. Parametric insurance schemes require careful design and only provide interim coverage between the time when a natural hazard occurs and when classic humanitarian aid arrives. Due to continued financial limitations on the part of the insurance-takers, parametric insurance in developing countries is dependent upon donor assistance. [ABSTRACT FROM AUTHOR]

In this paper, we examine how to trigger a wave of low-carbon investments compatible with the well-below 2°C target of the Paris Agreement in the current post-pandemic context of increasing private and public debt. We argue that one major obstacle to catalysing global excess savings at sufficient scale and speed on climate mitigation, and to 'greening' economic recovery packages, lies in the up-front risks of low-carbon investment. We then explain why public guarantees should be the preferred risk-sharing instrument to overcome that obstacle. We outline the basic principles of a multilateral sovereign guarantee mechanism able to maximize the leverage effect of public funds and massively redirect global savings towards low-carbon investments, with the double benefit of bridging the infrastructure investment gap in developing countries and reducing tension between developed and developing countries around accelerated funding for low-carbon transitions. We carry out numerical simulations demonstrating how the use of guarantees from AAA-rated sovereigns, calibrated on an agreed-upon 'social value of carbon', is compatible with public-budget constraints of developed countries. In summary, the use of such guarantee mechanisms provides a new form of 'where flexibility', which could turn real-world heterogeneity into a source of reciprocal gains for both developed and developing countries, and contribute to meeting the USD 100 billion + pledge of the Paris Agreement. Catalysing excess world savings through low-carbon investments (LCIs) would secure a safer and fairer economic recovery from the COVID-19 crisis and avoid locking developing countries into carbon-intensive pathways. Public policy instruments focused on the creation of public guarantees can reduce the up-front financial risks associated with LCIs, mobilize private money and increase the leverage of public finance. A multi-sovereign guarantee mechanism would yield financial support from developed to developing countries in cash grant equivalent and equity inflows two to four times higher than the 'USD 100 billion and more' commitment of the Paris Agreement, and provide greater confidence in meeting this commitment equitably and effectively with benefits for all. [ABSTRACT FROM AUTHOR]

Reducing Emissions from Deforestation and forest Degradation (REDD+) has emerged as a promising climate change mitigation mechanism in developing countries. In order to identify the enabling conditions for achieving progress in the implementation of an effective, efficient and equitable REDD+, this paper examines national policy settings in a comparative analysis across 13 countries with a focus on both institutional context and the actual setting of the policy arena. The evaluation of REDD+ revealed that countries across Africa, Asia and Latin America are showing some progress, but some face backlashes in realizing the necessary transformational change to tackle deforestation and forest degradation. A Qualitative Comparative Analysis (QCA) undertaken as part of the research project showed two enabling institutional configurations facilitating progress: (1) the presence of already initiated policy change; and (2) scarcity of forest resources combined with an absence of any effective forestry framework and policies. When these were analysed alongside policy arena conditions, the paper finds that the presence of powerful transformational coalitions combined with strong ownership and leadership, and performance-based funding, can both work as a strong incentive for achieving REDD+ goals. Key policy insights The positive push of already existing policy change, or the negative stress of resource scarcity together with lack of effective policies, represents institutional conditions that can support REDD+ progress. Progress also requires the presence of powerful transformational coalitions and strong ownership and leadership. In the absence of these internal drivers, performance-based funding can work as a strong incentive. When comparing three assessments (2012, 2014, 2016) of REDD+ enabling conditions, some progress in establishing processes of change can be observed over time; however, the overall fluctuation in progress of most countries reveals the difficulty in changing the deforestation trajectory away from business as usual. [ABSTRACT FROM AUTHOR]

Developing countries have generally been overlooked in downstream carbon trading-based policy research. This can be attributed to the greater responsibility of developed economies for climate change, and the greater socio-demographic, political and technological challenges faced by their less-developed counterparts. This paper attempts to address this gap by examining the practicality of implementing Personal Carbon Trading (PCT) for personal road transport in Kenya. PCT is investigated with a focus on political considerations, potential system operation and the distributional impact of quota allocation to motorists. Three quota allocation methods are modelled using data from a survey of 500 motor vehicle owners in Nairobi and Mombasa counties. Equal per-capita, equal per-vehicle and needs-based allocation methods are modelled and assessed to determine the distributional impact on various groups of interest. Emissions were found to be highly correlated to vehicle engine size and the number of dependents per vehicle, but not to area of residence or income levels. None of the three allocation methods disproportionately imposed burdens on vulnerable groups, and all exhibited progressive tendencies. The proposed system is intended to add new insight into the possibility of PCT becoming a globally inclusive policy option. Key Policy Insights Despite PCT being a bold policy proposal even for developed countries, less developed counterparts can meet the political, institutional and technological requirements to implement it. The wealth of functionality available through SIM card features on cheap and abundant mobile phones may unlock a simple and cost-effective, globally-applicable PCT system. Public resistance to fuel price increases stems from the lower income demographic which is, conversely, rewarded with surpluses under PCT. Equal-per capita allocation remains the most progressive method. Needs-based allocation is highly progressive and may be worth considering when more stringent targets are deemed necessary. [ABSTRACT FROM AUTHOR]

One of the main challenges faced by climate policy makers today is to design and implement policies capable of transferring climate policy goals into sectoral actions towards transformational pathways. Hence, climate policies need to be of cross-cutting character, lead to coherence with sectoral goals and reconcile diverging sectoral interests. Against this background, Mexico has undertaken significant efforts to reform its energy sector, including goals for clean energy and energy efficiency, and the adoption of implementation mechanisms via the Law for Energy Transition of 2015. Furthermore, Mexico has introduced a complex climate governance system, including ambitious mitigation goals. In this paper, we applied concepts of climate policy integration to analyse whether integration between the policy subsystems of energy and climate change occurred in Mexico in terms of political discourse and negotiation, policy goals and instruments, and implementation; as well as the factors at work that lead to climate policy integration. We find that on the level of political discourse and negotiation, an integration process between the energy and climate subsystems occurred, influenced by the availability and market maturity of clean energy, mitigation scenarios and external events, such as the 2015 Paris Climate Change Conference. However, a combination of decisions on integrated climate-energy policy outputs, and preparing the public administration system for the implementation of integrated policies, is needed to enable appropriate institutional mandates, budgets and instruments and avoid institutional fragmentation. Omitting to take these decisions was identified as a major shortcoming in the political-administrative system, preventing higher levels of climate policy integration. Key policy insights The Mexican Energy Transition Law shows that policy windows can be used by policy makers to attain integrated energy-climate policy outputs and to advance national mitigation and energy sector goals. In order to make full use of integrated policy decisions, the administrative system has to follow suit by also introducing mandates, budgets and policy instruments of an integrative character. Climate policy integration in practice implies identifying and using the full potential of policy windows in order to ensure the raising of ambition under the Paris Agreement as well as achievement of sectoral policy objectives. [ABSTRACT FROM AUTHOR]

While current policies aiming at a reduction of greenhouse gas emissions seem to be successful from the territorial perspective of industrialized countries, emissions are still increasing at the global level. The term weak carbon leakage describes a situation where an increase in consumption in developed countries leads to growing emissions in less developed countries. This effect is strongly related to phenomena like globalization and outsourcing of production. As a consequence, a large part of daily consumed products are imported and include embodied emissions (i.e. direct and indirect emissions that occur in the regions of production). For the development of effective policy instruments addressing consumption-based-emissions (CBE) embodied in these international products and processes, it is essential to apply a consumption-based approach (CBA), including both consumer-oriented policies, focusing on final demand, and producer-oriented policies, focusing on industry. Since a considerable share of consumption behaviour is performed by routines, habits and within social practices (cooking, working or shopping), CBE due to consumer behaviour are analysed in this paper by applying the social practices (SP) approach to the case of Austria. Based on this approach the development of effective policy instruments addressing a reduction of CBE by three types of interventions (re-crafting, substituting and interlocking) are discussed for the main hotspots of Austria's CBE: construction and mobility. Key policy insights An SP perspective enriches the development of CBE policy instruments by shifting the focus of interventions from individual motivations (conscious consumption) towards the constitutional frame and the particular practice-setting which determines consumer behaviour. Consumption sectors such as construction and mobility are most often embedded in behavioural interlocking (e.g. commuting), calling for practical policy mixes to address this complex interplay of practices. The SP approach demonstrates that CBE can be addressed also by single instruments (e.g. changing a regulation, favouring the avoidance of certain practices or materials offered/used) only. [ABSTRACT FROM AUTHOR]

The number of carbon pricing mechanisms implemented in developing countries is increasing. Even though there is regional fragmentation in terms of climate change strategies in Latin America, market-based initiatives are taking shape also in this region. Post-2020, combining these efforts towards carbon integration via an Emissions Trading Scheme (ETS) could be an option for Latin America to adhere to more cohesive and ambitious climate policy actions. Given the lack of quantitative studies, this paper aims to provide preliminary evidence on the appropriateness of this mitigation policy, highlighting potential environmental and economic outcomes in Latin America, as well as identifying trade patterns and the effects of revenue recycling for the region. Using a dynamic-recursive computable equilibrium model, a hypothetical Latin American ETS regulates only carbon emissions from the electricity generation and energy-intensive sectors. Regional carbon-integration among developing countries in this way demonstrates that it is possible to curb emissions at minimum cost. The distributional effect of linking shows a financial flow from Brazil and Mexico to the rest of Latin America, comprising a wider abatement effort within a shared carbon price. There are opportunities from revenue-recycling, which plays an important role in alleviating the additional costs from the policy. The advantage of this approach is to culminate in broad participation where competitiveness concerns may be addressed along with transformations of the energy system. However, to effectively address climate change, additional sectors should be considered for inclusion in the proposed ETS, in line with the region's energy and economic profiles. Key policy insights A regional carbon policy based on emissions trading in Latin America would expand opportunities for mitigation at lower cost. Brazil and Mexico would import allowances more cost-effectively from the rest of Latin America in the linked scenario. Further energy substitution towards low-carbon sources would be achieved with revenue recycling. A linked ETS system should include land use and forestry-related emissions. [ABSTRACT FROM AUTHOR]

Climate policy across the world is proceeding at a highly variable pace, with some places very committed to decarbonizing their economies and others just beginning. Emerging nations are generally just starting along this journey. However, among the few nation states that have pledged to achieve carbon neutrality, is Bhutan, a least developed country. Carbon neutrality is an ambitious climate policy that is increasingly being recognized as necessary in order to stabilize global temperature rise at 1.5°C. However, Bhutan is likely to face significant challenges in maintaining this status as the country balances its desire to grow in economic opportunities (GDP) and in human happiness (GNH). Little research has been conducted inside the policy processes to better understand how Bhutan will maintain carbon neutrality. Through open-ended, semi-structured interviews with key stakeholders, this study provides an inside view on the current situation and future challenges that Bhutan may face, along with the complexities associated with implementing and maintaining an ambitious carbon neutral policy. The paper highlights Bhutan's story and how it could be useful for policy learning and knowledge sharing, especially in the context of emerging nations' climate governance. [ABSTRACT FROM AUTHOR]

Worldwide carbon dioxide emissions continue to increase driven by fossil fuel consumption and industrial discharges. Progress on carbon emission reduction requires firms to adopt clean technologies which minimize material and energy consumption. Technological change is particularly required in developing countries, where industrial emissions often lead to chronic urban pollution problems. In this study, we explore the antecedents of clean technology strategy by firms in developing countries. We combine the contingent natural resource-based view with the relational view to examine how network embeddedness, market incentives and slack resources influence adoption of clean technology. The empirical support for our hypotheses comes from data obtained from 342 firms that operated in the carbon-offset market during the years 2007 to 2009. We find that a firm's relational network structure influences adoption of clean technologies, particularly when market incentives are low. Contrary to one of the hypotheses, the results of our paper suggest a negative relationship between a firm's slack resources and its clean technology strategy. Our study highlights the benefits of networks in fostering adoption of clean technology in developing countries. Furthermore, we find that high market incentives (carbon price) decrease the probability of clean technology adoption, so adding to the view that firms respond to carbon-offset rules to realize high carbon revenues at the lowest cost. Key policy insights High market incentives (carbon price) decrease the probability that firms in developing countries will adopt clean technology. This adds to concerns about the capability of the Clean Development Mechanism to deliver sustainable development. Even where market incentives are low, firms in developing countries are more likely to adopt clean technologies when they are embedded in a closed network of connected partners. To stimulate adoption of clean technology in developing countries, policy makers should focus on initiatives to facilitate partnerships between organizations operating in the carbon market and create opportunities for knowledge sharing and learning. By changing the policy focus to networks of organizations, the carbon market can bring about positive change in terms of shifting the firm behaviour. [ABSTRACT FROM AUTHOR]

It is clear that developing countries will have to be part of the global mitigation effort to avoid ‘dangerous climate change’, and, indeed, many of them are already undertaking significant actions on multiple fronts to help address this problem, even if they have not yet taken on legally binding commitment under the United Nations Framework Convention on Climate Change (UNFCCC). Since the deployment of GHG-mitigating technologies is already a significant part of this effort and likely to be even more so in the future, drawing lessons from existing programmes can help accelerate and enhance the effectiveness of this deployment process. Accordingly, this article aims to examine the deployment of wind and solar power in India, paying specific attention to the role of public policy in incentivizing and facilitating this deployment, how these policies have evolved over time, what has shaped this evolution, and what the learning has been over this period. Through this analysis, the intention is to draw out key lessons from India's experience with deployment policies and programmes in these two sectors and highlight the issues that will need to be given particular consideration in the design of future domestic policies and international cooperation programmes to enhance the move towards climate-compatible development in India. Many of these lessons should also be relevant for other developing countries that are attempting to balance their climate and developmental priorities through the deployment of renewable energy technologies. [ABSTRACT FROM AUTHOR]

This paper suggests a two-tiered climate insurance strategy that would support developing country adaptation to the risks of climate variability and meet the intent of Article 4.8 of the United Nations Framework Convention on Climate Change (UNFCCC). The core of this strategy is the establishment of a climate insurance programme specialized in supporting developing country insurance-related initiatives for sudden- and slow-onset weather- related disasters. This programme could take many institutional forms, including an independent facility, a facility in partnership with other institutions of the donor community, or as part of a multi-purpose disaster management facility operated outside of the climate regime. Its main purpose would be to enable the establishment of public-private safety nets for climate-related shocks by assisting the development of (sometimes novel) insurance-related instruments that are affordable to the poor and coupled with actions and incentives for pro-active preventive measures. A second tier could provide disaster relief contingent on countries making credible efforts to manage their risks. Since it would be based on precedents of donor-supported insurance systems in developing countries, a main advantage of this proposed climate insurance strategy is its demonstrated feasibility. Other advantages include its potential for linking with related donor initiatives, providing incentives for loss reduction and targeting the most vulnerable. Many details and issues are left unresolved, and it is hoped that this suggested strategy will facilitate needed discussion on practical options for supporting adaptation to climate change in developing countries. [ABSTRACT FROM AUTHOR]