Leveraging carbon finance for sustainable development
In the past decade, a range of market-based instruments have emerged to address environmental issues, including the use of compliance and voluntary emission offsets in the area of climate change. The Kyoto Protocol, through the Clean Development Mechanism (CDM) and Joint Implementation, has spurred a rapidly expanding, multibillion-dollar international market in the compliance sector. Financial flows from emission offset markets could become a major source of financing for sustainable development. However, UNDP believes that much more needs to be done to direct carbon finance to a higher number of developing countries, as well as to a broader range of activities that can provide sustainable development benefits. UNDP seeks to help leverage the potentially significant benefits of carbon finance for the developing world:
- by establishing the MDG Carbon Facility, an innovative mechanism for the development and commercialization of emission reduction projects;
- through its role as a partner agency under the Nairobi Framework, which aims to improve the level of participation of developing countries in the CDM; and,
- through its capacity development activities, especially in sub-Saharan Africa, which build in-country capacity to engage with, and derive benefits from, the CDM.