To tackle climate change and to successfully implement the Paris Agreement, we need to recognise and own up to the reason behind the slow pace of action to date: the long-term and global nature of climate change conflicts with the priorities of decision makers, which are dominated by the short-term and by self-interest. Inaction is not for lack of the necessary technology and resources. Nor for lack of a compelling economic and moral case. The issue is that, with the exceptio

In other entries and pages of the site, I discussed the costs and financing need of the proposed plan. It is important, however, to keep in mind the difference between the financial and economic costs. The proposed scheme’s financial costs are the payments that are made to participants by the Fund to incentivize them to curb emissions. These payments need to be financed by raising capital from private investors who will require a return, which adds to these financial costs. O

Let us examine the financing sources and uses of the Fund and the incentives of participating countries through an example. The following three-country example is based on the following assumptions. (For a discussion of the financing related issues please see this blog entry ). The agreement comes into effect and the Fund starts operations in 2017. The price of carbon is set at USD 50 per ton of CO2e in 2017 prices. All figures in the example are in 2017 real values. The thr

Attracting sufficient, low-cost private capital to finance the annual payments of the Fund to member countries will be critical for the success of the proposed mechanism. This entry discusses how this can be achieved. StartFragment The Fund will have to have a strong credit quality based on the financial backing of participating countries. This requires a robust political and legal framework as well as the financial strength of participants. Further, it might be optimal for p