Energy

Maintaining U.S. leadership in the NATO Alliance and sustaining the critical relationship between the U.S. and the European Union will continue to be among the most vital strategic aims of the United States in the decade ahead. Both of our political parties and the great majority of Americans in recent public opinion polls support a continuation of American leadership in NATO. We should also continue to view the over 500 million people who live in the European Union as our allies, friends and economic partners.

New Harvard Kennedy School research finds that energy research, development, and demonstration (ERD&D) funding by governments and 100 percent government-owned enterprises in six major emerging economies appears larger than government spending on ERD&D in most industrialized countries combined. That makes the six so-called BRIMCS countries—Brazil, Russia, India, Mexico, China, and South Africa—major players in the development of new energy technologies. It also suggests there could be opportunities for cooperation on energy technology development among countries.

With regard to developing a new international framework, developed countries should acknowledge how grave the consequences would be to easily give in to a Kyoto extension. Merely extending the Kyoto Protocol would surely delay mitigation actions on the part of developing countries and discourage the U.S. from making serious efforts to reduce its large energy consumption. In other words, no country should end up being a "climate-killer" in its attempts to avoid being called a "Kyoto-killer."

Climate finance is fundamental to curbing anthropogenic climate change. Compared, however, to the negotiations over emissions reduction timetables, commitments, and architectures, climate finance issues have received only limited and belated attention. Assuring delivery and appropriate use of the financial resources needed to achieve emissions reductions and secure adaptation to climate change, particularly in developing countries, is as vital as agreement on emission caps. Yet, a comprehensive framework on financing for mitigation and adaptation is not in sight. Developed and developing countries cannot agree on even the fundamentals of what should be included (e.g. should private finance through carbon markets be included?), let alone the level and terms of financing commitments, regulatory and other mechanisms, or governance structures.

The finance of climate mitigation and adaptation in developing countries represents a key challenge in the negotiations on a post-2012 international climate agreement. Finance mechanisms are important because stabilizing the climate will require significant emissions reductions in both the developed and the developing worlds, and therefore large-scale investments in energy infrastructure. The current state of climate finance has been criticized for its insufficient scale, relatively low share of private-sector investment, and insufficient institutional framework. This policy brief presents options for improving and expanding climate finance.