Climate Finance

Table of Contents

Acknowledgments xi

Foreword: NYU Abu Dhabi and the Sustainable Environment Mari?t Westermann Philip Kennedy xiii

Summary of Key Findings and Recommendations xv

About the Contributors xvii

Part I Climate Change and Mitigation: Overview and Key Themes

1 Climate Finance for Limiting Emissions and Promoting Green Development: Mechanisms, Regulation, and Governance Richard B. Stewart Benedict Kingsbury Bryce Rudyk 3

2 Understanding the Causes and Implications of Climate Change Michael Oppenheimer 35

3 The Climate Financing Problem: Funds Needed for Global Climate Change Mitigation Vastly Exceed Funds Currently Available Bert Metz 42

4 The Future of Climate Governance: Creating a More Flexible Architecture Daniel Bodansky 48

Part II Proposals for Climate Finance: Regulatory and Market Mechanisms and Incentives

A Trading or Taxes?

5 Cap-and-Trade Is Preferable to a Carbon Tax Nathaniel O. Keohane 57

B Reforming the Clean Development Mechanism (CDM)

6 Expectations and Reality of the Clean Development Mechanism: A Climate Finance Instrument between Accusation and Aspirations Charlotte Streck 67

C Sectoral Programs for Emissions Control and Crediting

7 Why a Successful Climate Change Agreement Needs Sectoral Elements Murray Ward 79

8 Sectoral Crediting: Getting the Incentives Right for Private Investors Rub?n Kraiem 85

9 Forest and Land Use Programs Must Be Given Financial Credit in Any Climate Change Agreement Eric C. Bettelheim 90

10 Stock-and-Flow Mechanisms to Reduce Land Use, Land Use Change, and Forestry Emissions: A Proposal from Brazil Israel Klabin 96

D Leveraging Trading to Maximize Climate Benefits

11 Mitigating Climate Change at Manageable Cost: The Catalyst Proposal Bert Metz 105

12 Engaging Developing Countries by Incentivizing Early Action Annie Petsonk Dan Dudek Alexander Golub Nathaniel O. Keohane James Wang Gernot Wagner Luke Winston 111

E Linking Trading Systems

13 Carbon Market Design: Beyond the EU Emissions Trading Scheme Henry Derwent 125

F Investor Perspectives

14 Incentivizing Private Investment in Climate Change Mitigation Marcel Brinkman 135

15 Investment Opportunities and Catalysts: Analysis and Proposals from the Climate Finance Industry on Funding Climate Mitigation Nick Robins Mark Fulton 143

Part III Bringing Developed and Developing Countries Together in Climate Finance Bargains: Trust, Governance, and Mutual Conditionality

A Meeting Developing Country Climate Finance Priorities

16 Developing Country Concerns about Climate Finance Proposals: Priorities, Trust, and the Credible Donor Problem Arunabha Ghosh Ngaire Woods 157

17 Developing Countries and a Proposal for Architecture and Governance of a Reformed UNFCCC Financial Mechanism Luis Gomez-Echeverri 165

18 Climate Change and Development: A Bottom-Up Approach to Mitigation for Developing Countries? Navroz K. Dubash 172

19 Operationalizing a Bottom-Up Regime: Registering and Crediting NAMAs Rae Kwon Chung 179

B Conditionality and Its Governance

20 From Coercive Conditionality to Agreed Conditions: The Only Future for Future Climate Finance Jacob Werksman 189

21 Getting Climate-Related Conditionality Right Kevin E. Davis Sarah Dadush 197

22 Making Climate Financing Work: What Might Climate Change Experts Learn from the Experience of Development Assistance? Ngaire Woods 206

Part IV National Policies: Implications for the Future Global Climate Finance Regime

23 Climate Legislation in the United States: Potential Framework and Prospects for International Carbon Finance Nathaniel O. Keohane 213

24 The EU ETS: Experience to Date and Lessons for the Future James Chapman 221

25 Greenhouse Gas Emissions and Mitigation Measures in China Jie Yu 228

26 Cities and GHG Emissions Reductions: An Opportunity We Cannot Afford to Miss Partha Mukhopadhyay 234

27 A Prototype for Strategy Change in Oil-Exporting MENA States? The Masdar Initiative in Abu Dhabi Sam Nader 241

Part V Climate Finance and World Trade Organization (WTO) Law and Policy

28 The WTO and Climate Finance: Overview of the Key Issues Gabrielle Marceau 247

29 Carbon Trading and the CDM in WTO Law Robert Howse Antonia Eliason 254

30 Countervailing Duties and Subsidies for Climate Mitigation: What Is, What Is Not, WTO-Compatible? Robert Howse Antonia Eliason 259

31 Border Climate Adjustment as Climate Policy Alexandra Khrebtukova 266

32 Enforcing Climate Rules with Trade Measures: Five Recommendations for Trade Policy Monitoring Arunabha Ghosh 272

33 Carbon Footprint Labeling in Climate Finance: Governance and Trade Challenges of Calculating Products' Carbon Content Sandra G. Mayson 281

Part VI Taxation of Carbon Markets

34 Fiscal Considerations in Curbing Climate Change Lily Batchelder 291

35 Tax and Efficiency under Global Cap-and-Trade Mitchell A. Kane 300

36 Tax Consequences of Carbon Cap-and-Trade Schemes: Free Permits and Auctioned Permits Yoram Margalioth 305

Afterword: Reflections on a Path to Effective Climate Change Mitigation Thomas Heller 311

Abbreviations 317

Index 321