Carbon Finance for the Millennium Development GoalsClimate change has emerged as one of the most important issues facing the global community in the 21st century. It will pose a serious threat to development and poverty reduction, and the effects will be felt most strongly by the poorest people in the least developed countries, who rely on the natural environment for their livelihoods. Indeed, climate change threatens to significantly undermine efforts to achieve the Millennium Development Goals. Assisting developing countries with their efforts to cope with the impacts of global climate change and to create more sustainable, less greenhouse gas intensive development paths is an important focus for UNDP. Major new investments will be needed over the next 15 years to tackle a wide range of environmental issues that are central to developing countries’ ability to eliminate poverty and reach the MDGs. A recent report commissioned by the Poverty-Environment Partnership - a network of more than 30 international development and environment organizations - estimates that US $60–90 billion per year will be required to address the environmental issues that bear most directly on poverty reduction in developing countries. Historically, sustainable energy and environment-related activities have constituted only a few percent of total official development assistance, or around US $3–5 billion per year in recent years. Clearly, additional financing mechanisms will be needed to fill the gap. CARBON FINANCE IN DEVELOPING COUNTRIESA range of market-based instruments to address environmental issues has emerged in the past decade, including the use of compliance and voluntary emission offsets in the area of climate change. In the compliance sector, the Kyoto Protocol, through the Clean Development Mechanism (“CDM”) and Joint Implementation (“JI”), has, in a very short time, spurred a rapidly expanding, multibillion-dollar international market. Financial flows from emission offset markets could become a major source of financing for sustainable development. In its design the CDM was intended to offer significant benefits for developing countries in terms of increased capital flows, additional technology transfers and reduced costs of achieving sustainable development objectives. However, early signs indicate that the CDM is unlikely to deliver the broad-based benefits that many expected it would, at least in the near to medium term. The diversity of project types and sectors currently encompassed by CDM
has been limited, with the majority of offsets to date flowing from ‘end
of pipe’ interventions that generate few or no sustainable development
benefits. Similarly, geographic coverage of the CDM has been narrowly
distributed, with the large developing countries dominating the number
of registered projects to date, while the least developed countries have
had minimal participation. 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 real sustainable
development benefits. |
UNDP and the MDGs
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