KEY MESSAGES

Demand for energy and transportation is growing rapidly in many developing countries. The investment that takes place in the next 10–20 years could lock in very high emissions for the next half-century, or present an opportunity to move the world onto a more sustainable path. Investment in energy efficiency can reduce demand growth, and low-carbon technologies can further reduce the impact on climate change.

The transfer of technologies to developing countries by the private sector can be accelerated through national action and international co-operation.

Energy price and taxation reform will play an important role in improving the conditions for investment in more efficient and low-carbon technologies, as they can support other development priorities and encourage co-benefits from mitigation policies, including energy security and improved air quality.

Carbon pricing is essential to influence investment decisions in low-carbon technologies, including renewable energy and carbon capture and storage. The Clean Development Mechanism is currently the main formal channel for supporting low-carbon investment in developing countries, but in its existing form it has significant limitations.

The incremental costs of low-carbon investments in developing countries are likely to be at least $20–30 billion per year.

A transformation in the scale of and incentives for international carbon finance flows is required to support cost-effective reductions. This will require mechanisms that link carbon finance to policies and programmes rather than to individual projects, working within a context of national, regional or sectoral objectives for emissions reductions.