Economics behind financing of low-carbon initiatives

Abstract

Today, climate change is solely the biggest concern affecting all the countries, both developed and developing alike. Both its causes and outcomes are global in nature, which calls for a collective international action. Only working together towards overcoming a challenge of such scale will ensure efficiency, equitability and effectiveness. It requires an abstruse collaboration between nations in areas like creation of carbon markets and pricing strategies, research and technology transfer, building infrastructure and capabilities in under developed world. It is not an overstatement to say that climate change has been one of the biggest market failures this world has seen. The economics behind it deal with long time horizons, subject to high risks and uncertainty, all for a possibility of critical and non-marginal changei . The current study focuses around 20 biggest and most prominent funds established for this purpose. Some of these funds are driven by the GEF, UN and World Bank and others by the developed nations; multilateral and bilateral in nature, in order to overcome this challenge by ways of mitigation or adaptation or both. In the current study, these funds are explored in terms of economic and financing depth. It specifically examines the size of loans, focus of funding, projects undertaken to classify these funds. Any co-relation between donors, co-financers, leverage and governance structure is also looked at. This study attempts to draw patterns wherever possible to differentiate and establish strengths and weaknesses of specific funds.