Governance Challenges in Financing Green and Sustainable Energy Policies

On April 21, the Global Economy and Development program at Brookings and the Friederich-Ebert-Stiftung Foundation hosted a roundtable discussion on the key issues surrounding the global governance of financing green and sustainable global development. Approximately 30 participants attended, including experts from the World Bank, IMF, United Nations system, academia, think tanks, trade unions and the private sector. The full-day roundtable event followed Chatham House Rule and was divided into three sessions. Participants in each session engaged in lively discussion and debate on how to advance the global climate change agenda post-Copenhagen while simultaneously confronting the needs of countries recovering from the 2008-2009 global financial crisis and ensuring sustainable green growth for the future.

The first panel focused on the state of the debate surrounding financing green and sustainable energy policies, including the sources of and methods for climate finance. Participants discussed the pros and cons of tax and transfer policies, a carbon tax, and the reliance on an international-level mechanism to create liquidity for a new pool of climate resources. Participants underscored the particular challenges that come with international coordination and the negotiation process, and many agreed that to successfully reach an international agreement it will be necessary to go beyond the issues of climate change and include international monetary governance.

Participants also argued that the only way for an international agreement to be reached is if the more delicate and complicated policy challenges of energy access and technology transfer are included in the negotiation process. Others emphasized the key role of research and development on the success of combating climate change, and these participants warned that innovation in this area has, so far, failed to meet the challenge of addressing climate change. Many felt it was essential to impose more pressure on the private sector to ramp up these efforts.

The second panel provided participants the opportunity to further discuss and debate the governance challenges surrounding climate change and climate finance. The United Nations Framework Convention on Climate Change (UNFCCC) Copenhagen conference in December 2009 demonstrated that the current channels for climate change governance are ineffective in many ways and that additional avenues for policymaking and communication are necessary. Participants suggested that the UNFCCC was in the past considered the “silver bullet” mechanism for addressing the climate change challenge, but it is now clear that in addition to the UNFCCC meetings, climate negotiations within bilateral and regional groupings and private sector partnerships should be pursued. Some participants argued that the current instruments in place to provide climate financing, namely the international financial institutions (IFIs) and the private sector, should be improved upon, rather than attempting to create additional institutions to manage and disburse climate funding. Participants suggested that this would take a substantial amount of time that the global community does not really have if it wants to prevent the irreversible damages of climate change.

The last panel focused on national responses to climate change. The panel discussed the tools that are currently employed to finance national sustainable energy policies and the major impediments at the country level to financing energy efficient and sustainable growth. Many participants noted a “shift” towards greater acknowledgement by developing and emerging economies that sustainable energy policies are the most effective way to ensure long-lasting, high-level growth for their countries. Responding effectively to climate change ultimately relies on the effectiveness of national policies, and participants underscored this seemingly obvious but often omitted point.

For more details on this roundtable, please see the agenda and list of participants.