Drivers and Challenges for Climate Compatible Development

This research paper by the Climate and Development Knowledge Network (CDKN) examines the drivers and challenges associated with Climate Compatible Development (CCD), defined as a "development first" approach that minimizes climate harm while maximizing human development opportunities in a low-emissions, resilient future. Drawing on experience from over 40 countries, the paper identifies key sociopolitical drivers—such as national resilience needs, energy security, and economic opportunities—and outlines significant barriers, including high implementation costs, political resistance, and institutional capacity gaps.

• There are five primary sociopolitical drivers for Climate Compatible Development (CCD): the national need for climate adaptation to protect growth and poverty reduction; the pursuit of energy security and natural resource efficiency; the desire to leverage new green economic opportunities; the goal of increasing access to international climate finance and aid; and the presence of strong government leadership.
• Climate change poses severe economic risks to developing nations, acting as a major driver for CCD. For instance, a drought in Kenya between 1998 and 2000 caused an annual GDP reduction of 16%, and it is projected that extreme weather could reduce Kenya's GDP by approximately 3% annually by 2030. In Ethiopia, the absence of a green, climate-resilient economy could result in potential economic growth being halved by 2025.
• Energy security and resource scarcity drive CCD strategies, particularly for net oil importers and fast-growing nations. China's 12th Five-Year Plan emphasizes resource efficiency because its economic development has been constrained by the scarcity of per capita resources. In the Caribbean, some countries spend 30-40% of their foreign exchange earnings on fossil fuels, making the transition to low-carbon energy a key priority.
• CCD can create significant employment opportunities in green sectors. A study on China indicated the potential for 30 million new jobs by 2020 across the energy, forestry, and industry sectors. In Germany, green growth sectors employed an estimated 2 million people in 2006, with a projection of 1 million additional jobs by 2020.
• High costs and opportunity costs are major barriers to CCD. Adaptation costs for Least Developed Countries are estimated to average nearly 13% of GDP by 2030. Opportunity costs are particularly high for countries with fossil fuel or forestry assets; for example, Guyana estimates the Economic Value to the Nation (EVN) of its rainforests—if harvested for highest-value use—to be between US$4.3 billion and US$23.4 billion.
• Political economy challenges, specifically fossil fuel subsidies, undermine green investment. In 2010, global spending on fossil fuel subsidies reached US$409 billion, yet only 8% of this benefited the poorest 20% of the global population. Removing these subsidies is politically difficult as it is unpopular with both big business and the public.
• Institutional and capacity constraints frequently hinder the implementation of CCD policies. A review of 10 Latin American countries found that while policies existed, implementation was "disturbingly low"; in Chile, only 25% of recommended actions from the 2008 National Action Plan on Climate Change were implemented.
• Technological uncertainty and the high cost of immature low-carbon technologies discourage investment. To counter this, India's Jawaharlal Nehru National Solar Mission established 25-year Power Purchase Agreements and a guarantee fund to protect developers from state utility defaults, creating a secure investment environment for solar energy.

APA

Ellis, K., Cambray, A., & Lemma, A. (2013). Drivers and Challenges for Climate Compatible Development. Climate and Development Knowledge Network. https://cdkn.org/wp-content/uploads/2013/02/CDKN_Working_Paper-Climate_Compatible_Development_final.pdf

Chicago

Ellis, Karen, Ali Cambray, and Alberto Lemma. Drivers and Challenges for Climate Compatible Development. Climate and Development Knowledge Network, 2013. https://cdkn.org/wp-content/uploads/2013/02/CDKN_Working_Paper-Climate_Compatible_Development_final.pdf.

Wikipedia

{{cite report |last1=Ellis |first1=Karen |last2=Cambray |first2=Ali |last3=Lemma |first3=Alberto |title=Drivers and Challenges for Climate Compatible Development |publisher=Climate and Development Knowledge Network |date=February 2013 |url=https://cdkn.org/wp-content/uploads/2013/02/CDKN_Working_Paper-Climate_Compatible_Development_final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ellis2013drivers, author = {Ellis, Karen and Cambray, Ali and Lemma, Alberto}, title = {{Drivers and Challenges for Climate Compatible Development}}, institution = {Climate and Development Knowledge Network}, year = {2013}, month = feb, url = {https://cdkn.org/wp-content/uploads/2013/02/CDKN_Working_Paper-Climate_Compatible_Development_final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }