Catalyzing Low Carbon Growth in Developing Countries
"The total investment required to avoid dangerous climate change is more than USD 1 trillion per annum, according to the International Energy Agency (IEA). Half of this amount could be redirected from business-as-usual investment in conventional technologies to low-carbon alternatives. The remainder (USD 530 billion) is required in the form of additional investment.
The challenge can be met. USD 530 billion would represent less than 3 per cent of global investment in 2030. In 2007, energy subsidies were USD 300 billion per annum.
Developing countries will be most advantaged if public finance contributions are designed to maximise the leverage of additional private finance. Demands on public finance are acute, especially following the recent financial crisis. It is estimated that existing public contributions to developing world climate-change investment total around USD 9 billion per annum, less than 2 per cent of USD 475 billion. The World Economic Forum (WEF) estimates that the sum of climate-related public sector commitments currently under negotiation, even if delivered to their maximum ambition, totals around USD 110 billion. The shortfall is potentially more than USD 350 billion.
This report focuses on the kinds of public finance mechanisms needed to incentivise and scale up private sector investment."