Financing climate change mitigation: towards a framework for measurement, reporting and verification

This paper focuses on North-South finance flows to explore how sources of mitigation support vary in terms of their relative size and importance to mitigation efforts, type and purpose. It states that financial support for greenhouse gas (GHG) mitigation in developing countries can be either mitigation specific or mitigation relevant, and it comes from both public and private sectors in developed and developing countries.

The review finds that:

• a significant amount of North-South finance is already flowing towards mitigation
• a large deficit still exists between what is available today and what will be needed to achieve ambitious climate mitigation goals in the future
• the majority of the flows are not targeted to lowering GHG emissions, meaning that they could be contributing to it instead
• private sources available for mitigation support are potentially much larger than public sources of support
• the sheer scale of private finance flows relative to public finance for mitigation suggests the need to use limited public finance to steer private finance towards mitigation.
  

The paper observes that the central challenge is to reform domestic policy frameworks to drive change and shift private investment patterns through policy instruments to favour low carbon development. In order to develop a measurable, reportable and verifiable (MRV) framework for mitigation support, the paper recommends the following.

• Parties should agree to develop a common reporting format and update national communication guidelines for both developed and developing countries.
• Developing a broad framework to monitor, report and verify mitigation support will require coordination across relevant UNFCCC and non-UNFCCC institutions through enhanced data and information sharing.
• Parties should consider how to develop verification of information on mitigation support since verification procedures are not included in the current UNFCCC monitoring system.
  

The review concludes that the framework for MRV of mitigation support could be further developed to strengthen assessment of the effectiveness of support, so that Parties can learn from their initial experiences in this area and continue to refine and improve delivery mechanisms for mitigation support.