Reducing climate risk: climate finance and carbon markets

The document outlines SEI's research on climate finance and carbon markets, arguing that adaptation finance priorities are political rather than scientific, and that private sector finance is unlikely to meet the primary needs of the poor and vulnerable. It also evaluates the Clean Development Mechanism (CDM), suggesting that excluding problematic project types, such as coal power, would improve carbon market efficiency.

• Adaptation finance priorities cannot be determined by objective scientific measurement because vulnerability to climate change is not objectively measurable; instead, these priorities must be established through a political process involving value judgements.
• Private sector finance is an unrealistic source for meeting long-term adaptation needs in developing countries, as historical investment patterns show it is unevenly distributed and often fails to address the most pressing needs of the poor and vulnerable.
• Research into Least Developed Countries (LDCs) in Africa indicates that foreign direct investment (FDI) is extremely low, representing less than 1.5% of global total FDI flows, and rarely aligns with adaptation priorities.
• The Clean Development Mechanism (CDM) has seen emissions reductions questioned and offset production exceed demand, with projects heavily concentrated in a few emerging economies like China and India.
• To improve the efficiency and integrity of carbon markets, SEI has advocated for the removal of certain project types from the CDM, specifically arguing against support for coal power and large-scale power projects.
• Transparency and accountability in climate finance are essential to prevent corruption and resolve mistrust between developed and developing nations, yet these functions depend on political choices and a clear definition of "climate finance" within the UNFCCC.

APA

Stockholm Environment Institute (2014). Reducing climate risk: climate finance and carbon markets. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-RSB-2014-Climate-finance-carbon-markets.pdf

Chicago

Stockholm Environment Institute. Reducing climate risk: climate finance and carbon markets. 2014. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-RSB-2014-Climate-finance-carbon-markets.pdf.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Reducing climate risk: climate finance and carbon markets |date=2014 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-RSB-2014-Climate-finance-carbon-markets.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2014reducing, author = {{Stockholm Environment Institute}}, title = {{Reducing climate risk: climate finance and carbon markets}}, institution = {Stockholm Environment Institute}, year = {2014}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-RSB-2014-Climate-finance-carbon-markets.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }