How Is The World Going To Pay For Global Warming Mitigation?

Almost 200 nations are meeting in Copenhagen right now to develop a follow up treaty to the Kyoto Protocol. Trillions of dollars will have to be spent to build more efficient energy deliver platforms and vehicles. At the same time societies will need to retrofit current infrastructure to reduce carbon footprints. Poorer countries insist there will be no environmental agreement unless wealthy countries help them adapt to the possible effects of global warming. Where is this money going to come from? The Center would like to see more defense spending monies directed to climate change mitigation (see Energy Defense Reservations)

Currently, the main source of support for vulnerable developing nations under the Kyoto Protocol is the Adaptation Fund. It is a levy on emission-reduction projects under the international carbon-trading program set up by the Kyoto Protocol. The levy gives 2% of the emission-reduction credits generated by, say, a new wind farm or a reforestation project to the Adaptation Fund, which then can sell the credits on the secondary market. It doesn't appear that an agreement will be reached in Copenhagen, but maybe a similar funding mechanism will be incorporated in Mexico in 2010. A Mexico Protocol should extend the Adaptation Fund.

The Adaptation Fund was established to finance concrete adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change. The Adaptation Fund is financed from the share of proceeds on the clean development mechanism project activities and other sources of funding. The share of proceeds amounts to 2% of certified emission reductions (CERs) issued for a CDM project activity. The Adaptation Fund is supervised and managed by the Adaptation Fund Board (AFB). The AFB is composed of 16 members and 16 alternates and meets at least twice a year. Upon invitation from Parties, the Global Environment Facility (GEF) provides secretariat services to the AFB and the World Bank serves as trustee of the Adaptation Fund. (WSJ, 12/7/09)