The 2019 Annual Meetings of the African Development Bank Group will be held from 11-14 June 2019, in Malabo, Republic of Equatorial Guinea. Find out more
A race against time
We live in a complicated interconnected world, on a continent experiencing considerable economic, social and environmental challenges. Among the most significant of the environmental challenges is climate change. In Africa, climate change threatens to derail the significant development gains that have been made over the last decades; climate change also threatens future growth and development. Read more
Results-based finance is a mechanism that enables an “off-taker” to pay a “project developer” for the delivery of specific results. For a results-based payment mechanism to work, four key elements are required
The challenge of the Paris Agreement is “to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century”. It’s a 50-year marathon, made up of successive five-year sprints, and we need to approach it as such.
In the run-up to 2015’s historic COP21, there was a lot of debate about the role carbon markets should play in the final negotiated Paris Agreement. Many, myself included, called for inclusion of carbon trading; and I recall a general sigh of relief when Article 6 of the Agreement was accepted, seemingly creating space for a new carbon market mechanism (Article 6.4) and transfer of International Mitigation Outcomes (ITMOs) (Article 6.2).
The imbalance in investment in adaptation and mitigation is both well documented and logical. The Multilateral Development Banks, for example, report that 80% of climate finance is tagged as mitigation whilst only 20% is adaptation, and that comes from institutions whose mandate is development. For the private sector, there is no obvious or easy return for investing in technologies that improve public health or air quality, or provide long term flood defenses or irrigation services to subsistence farmers. These are public goods that are traditionally provided by public funds.
Article 6 of the Paris Agreement makes provision for the development of both market and non-market mechanisms. While there is no formal definition of a market and a non-market mechanism, one may suppose that market and non-market mechanisms could share a common basis of how to methodologically determine baselines and estimate climate outcomes. The verification process could also be similar. The key difference could be that non-market mechanisms do not result in universal and internationally tradable units that could be re-sold and be subject to market price fluctuations and speculation. It may be assumed that non-market-based mechanisms is an umbrella for a variety of climate policies, measures and actions that could not be described as market mechanisms.