Towards a Private-Public Synergy in Financing Climate Change Mitigation Projects

Energy Policy, Vol. 29, No. 15, pp. 1363-1378, 2001

Posted: 11 May 2002

See all articles by ZhongXiang Zhang

ZhongXiang Zhang

Tianjin University - Ma Yinchu School of Economics

Aki Maruyama

Institute for Global Environmental Strategies

Abstract

Funding for greenhouse gas mitigation projects in developing countries is crucial for addressing the global climate change problem. By examining current climate change-related financial mechanisms and their limitations, this paper indicates that their roles are limited in affecting developing countries' future emissions, and argues for the necessity of stronger private sector engagement in financing mitigation projects. In this regard, the clean development mechanism (CDM), one of the flexibility mechanisms incorporated into the Kyoto Protocol, could offer great potential in helping mobilize foreign direct investment towards climate mitigation, by providing commercial incentives for the private sector to invest in mitigation projects and internalizing externalities associated with mitigation projects. However, due to additional risks and barriers involved in CDM projects, we believe that appropriate public-private linkage would be necessary in order to bring the CDM into full play. To this end, we suggest that public funds could be used to complement private investment via the CDM, thus enhancing market functions of such an investment. Moreover, in so doing, we think that it would be necessary to examine a host of factors, such as risk sharing, private sector investment behaviour, types of technologies to be transferred, and coordination with the commonly practiced trade and investment rules.

Keywords: Clean development mechanism, Climate policy, Foreign direct investment, Kyoto Protocol, Official development assistance

JEL Classification: Q28, Q25, Q48, Q43

Suggested Citation

Zhang, ZhongXiang and Maruyama, Aki, Towards a Private-Public Synergy in Financing Climate Change Mitigation Projects. Energy Policy, Vol. 29, No. 15, pp. 1363-1378, 2001. Available at SSRN: https://ssrn.com/abstract=305352

ZhongXiang Zhang (Contact Author)

Tianjin University - Ma Yinchu School of Economics ( email )

92 Weijin Road, Nankai District
Tianjin 300072
China
+86 22 87370560 (Phone)

HOME PAGE: http://ideas.repec.org/f/pzh243.html

Aki Maruyama

Institute for Global Environmental Strategies ( email )

Kanagawa 240-0198
Japan

Register to save articles to
your library

Register

Paper statistics

Abstract Views
970
PlumX Metrics