Financing Mitigation and Adaptation in Developing Countries: New options and mechanisms

The document assesses the financial requirements for climate mitigation and adaptation in developing countries, noting that current public funding is insufficient. It details specific investment needs for 2030, analyzes existing funds like the GEF and Adaptation Fund, and examines various proposals for new revenue streams, including GDP-based levies, carbon market expansions, and international transport levies. The paper emphasizes the need for a structured approach to technology innovation and a predictable, grant-based system for adaptation.

• To return global greenhouse gas emissions to 2005 levels by 2030, additional global investment and financial flows of US$200-210 billion will be required, with approximately US$75 billion of this needed in developing countries.
• Mitigation investment shifts by 2030 involve reducing fossil-fuel generation, transmission, and distribution spending by US$156 billion and redirecting approximately US$148 billion toward nuclear, carbon capture and storage (CCS), and renewables.
• Incremental investment and financial flows for adaptation in selected sectors are estimated at US$49 to 171 billion globally for 2030, with developing countries requiring between US$28 and 67 billion.
• Private finance for clean energy investments grew significantly from US$33.2 billion in 2004 to US$148.4 billion in 2007, though this investment is highly concentrated in China, India, and Brazil, which accounted for 82 per cent of such investment in 2007.
• Current UNFCCC funding for innovative mitigation technologies is significantly lower than funding from sources outside the Convention, with financial mechanisms under the Convention providing only US$0.22–0.32 billion annually compared to US$5–10 billion from other bilateral and multilateral sources.
• Proposed new funding sources include a GDP-based levy of 0.5 to 1.0 per cent on Annex I Parties (proposed by China), a World Climate Change Fund (proposed by Mexico), and an International Air Travel Adaptation Levy (IATAL) that could generate US$13 billion annually.
• Developing countries argue that adaptation funding should be provided as grants rather than loans, viewing it as compensation for damages caused by the historical emissions of developed countries.
• The World Resources Institute (WRI) proposes a 'new deal' for mitigation financing based on six criteria: accessibility, comprehensiveness, flexibility, leverage of commercial financing, adaptability to unique country circumstances, and verifiability.
• Proposed mechanisms for international transport emissions include the International Maritime Emission Reduction Scheme (IMERS), which could raise US$3 billion annually at a fee of US$10/tCO2, and the auctioning of allowances for international aviation, which could generate US$10-15 billion by 2020.

APA

Tirpak, D., & Parry, J.-E. (2009). Financing Mitigation and Adaptation in Developing Countries: New options and mechanisms. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/financing_mitigation_new_options.pdf

Chicago

Tirpak, Dennis, and Jo-Ellen Parry. Financing Mitigation and Adaptation in Developing Countries: New options and mechanisms. International Institute for Sustainable Development, 2009. https://www.iisd.org/system/files/publications/financing_mitigation_new_options.pdf.

Wikipedia

{{cite report |last1=Tirpak |first1=Dennis |last2=Parry |first2=Jo-Ellen |title=Financing Mitigation and Adaptation in Developing Countries: New options and mechanisms |publisher=International Institute for Sustainable Development |date=March 2009 |url=https://www.iisd.org/system/files/publications/financing_mitigation_new_options.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tirpak2009financing, author = {Tirpak, Dennis and Parry, Jo-Ellen}, title = {{Financing Mitigation and Adaptation in Developing Countries: New options and mechanisms}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = mar, url = {https://www.iisd.org/system/files/publications/financing_mitigation_new_options.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }