Financing Climate Change

The idea of a global budget for carbon and its corresponding financing stems from the objective of stabilising the GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. There has already been a 0.8 degree C increase in global mean temperature. It is widely believed that we are fast approaching the 2 degree C temperature rise within which the global community is striving to limit itself. This indicates that only a small and fast closing window of opportunity exists for the international community to take actions and ensure that we avoid reaching this point.

Yet the question remains that how to finance actions to achieve this target. A UNFCCC paper (2007) estimated a requirement of US$ 200-210 billion in additional annual investment in 2030 to return GHG emissions to current levels. Further, additional investment needed worldwide for adaptation was estimated to be annual US$ 60-182 billion in 2030. However, with the passage of time and inadequate action, these estimates are being revised upwards. Most recent estimates presented at the UNFCCC's workshop on Long-term Finance (July 2012), point to an even more enormous scale of funds, in the range of  $ 600- $1500 billion a year, that would be needed by developing countries for mitigation and adaptation. This amount is at least 5-10 times the prospective financing flows of US$ 100 billion per year by 2020 agreed upon as the goal under the UNFCCC. Representatives from the International Energy Agency reported ar this workshop that annual global investments for power generation alone, in a 2 degree C temperature rise scenario, would involve #370 billion from 2010 to 2020; $630 billion between 2020 and 2030; and $760 billion between 2030 and 2050.
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