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Climate Finance xv Summary of Key Findings and Recommendations Meeting the imperative of achieving major reduction in greenhouse gas emissions in developing as well as developed countries, without sacrificing urgently needed development, requires far greater attention to the emerging subject of climate finance than it has yet received. To achieve the necessary mitigation of climate change in developing countries, additional investments of €55–80 billion each year during the period 2010–2020 may be required, rising to USD 92–96 billion per year by 2030. Carbon markets are part, but only part, of the solution. Innovative financing, regulation , and governance are essential. The following strategies are proposed: • A variety of new arrangements to generate public and private climate finance and engage developing countries in mitigation are needed; a single uniform design is neither feasible nor desirable. Ideally, they should be designed to support and not retard the future adoption by major developing countries of emissions caps. • A suite of revised or new market-based mechanisms must be developed to mobilize very large increases in private investment in developing country mitigation. These include a reformed Clean Development Mechanism (CDM) and credit offset trading systems established pursuant to domestic cap-and-trade climate regulation by developed countries. • These mechanisms must leverage private investment in order to achieve net climate benefits and secure long-term low carbon development . • Carbon markets cannot be autonomous; they must be structured, regulated with developing as well as developed country involvement in their design and governance. Governance arrangements should be transparent and provide for appropriate mechanisms for account- xvi Summary of Key Findings and Recommendations ability to non-state actors, including investors and non-governmental organizations. • Linkages among national and regional regulatory/trading systems through allowance trading and transfers of offset credits will play a key role; achieving them will require coordination among governments . • Governance arrangements and the determination of conditions on official development assistance (ODA) must be changed significantly to enhance developing countries’ roles, build trust, and assure climate-sustainable development. Greater integration or coordination of international ODA mechanisms is also needed. • The new arrangements for both private investment and ODA must be structured to match with the different types and costs of mitigation opportunities available in developing countries. • New institutional arrangements are needed to recognize, facilitate, and coordinate the diversity of decentralized climate initiatives among both developing and developed countries. • World Trade Organization (WTO) trade rules need to be interpreted and applied to accommodate domestic climate-related regulatory measures, including border carbon adjustments to deal with competitiveness and leakage issues and mitigation technology subsidies, so long as they are non-discriminatory and not protectionist. • The WTO and developing countries need to develop additional capacities to monitor and respond to adoption of climate-related domestic measures that impact trade in potentially distortionary or protectionist ways. • Changes in tax laws, including a degree of harmonization among national tax systems, are needed in order to avoid creating market distortions and regulatory inefficiencies in trading-based climate regulatory systems. ...

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