Sandrine Mathy

Clean development mechanism: Leverage for development?

The objective of this paper is to show that the investments through the clean development mechanism (CDM) can exert a leverage effect to (i) make attractive to developing countries non-binding commitments and the adoption of national policies and measures; this comes as a guarantee of non-conditionally of the mechanism to strictly environmental concerns and (ii) create a flow of additional investments and technological transfer from Annex B countries to non-Annex B countries. The Indian power sector has been chosen as an example of a sector where institutional barriers, market imperfections, and tariff distortions create a great space for Pareto improvements and leave an important potential for no-regret measures: technological transfer, air conditioned systems, transport infrastructures and removal of subsidies on consumption. This paper presents a micro-economic formalisation on (i) the evolution of profitability of current emitting technologies used in the power sector under the adoption of national policies and measures and (ii) the impact on renewable energy technologies competitiveness of emission credits in the context of CDM. This formalisation has been developed to enable quantitative simulation. A first exercise using the Markal model (used in 77 countries) on the electric sector in India enabled us to simulate the leverage effect of emission credits on additional incomes taken as a proxy for development.

Proposal for a poverty-adaptation-mitigation window within the Green Climate Fund

The stakes for alleviating poverty and avoiding unbridled climate change are inextricably linked. Climate change impacts will slow down and may even reverse trends in poverty reduction. The pathways consistent with global warming of no more than 2 °C require strategies for poverty alleviation to make allowance for the constraint of low-carbon development. Existing climate funds have failed to target poverty alleviation as a high-priority strategy for adaptation or as a component of low-carbon development. This article proposes a funding window as part of the Green Climate Fund in order to foster synergies targeting greater satisfaction of basic needs, while making allowance for adaptation and mitigation. This financial mechanism is based on indicators of the satisfaction of basic needs and could respond to the claims of the developing countries, which see alleviating poverty as the first priority in climate negotiations. It defines a country continuum, given that there are poor people everywhere; all developing countries are therefore eligible with a mechanism of this sort. Policy relevance The Intergovernmental Panel on Climate Change (IPCC) calls for substantial emissions reductions and adaptation strategies over the next decades to reduce the high risks of severe impacts of climate change over the 21st century. Industrialized countries and developing countries alike recognize the need to mitigate climate change and to adapt to it. But they face many challenges that lead to an ‘emissions gap’ between an emissions level consistent with the 2 °C increase limit and the voluntary pledges that they have made thus far in the climate negotiations (United Nations Environment Programme. (2014). The Emissions Gap Report 2014. A UNEP synthesis report). In this arena, many developing countries underline that their first domestic priority is the satisfaction of basic needs. In the run-up to the next climate negotiations at the 21st Conference of the Parties (COP 21) in Paris, the proposed poverty-adaptation-mitigation funding window could contribute to alleviate the conflict between development and climate goals in developing countries. In this sense, it could spur developing countries to integrate more ambitious emissions limitations pledges into their Intended Nationally Determined Contributions. This could in turn entice industrialized countries to act similarly. In the end, it could pave the way to an ambitious climate agreement in Paris at COP 21.