Indeed, EE financing of climate change projects in the next decade or so through various funding mechanisms is an issue dominating regional and international debates. There are many issues that are to be discussed, that need more inputs and clarity, if this proposal has to be implemented in future.

When considering the inclusion of an innovative financing mechanism in a project, the primary concerns of the financial institution include currency risk, the quality and suitability of the local financial partners and the profitability of the project. Given the complexity of setting up innovative financing mechanisms in developing countries, these institutions generally offer selected innovative financing modalities that have been designed already and are well tested.

Projects should strive to work with institutions or groups that already have experience with innovative financing mechanisms thereby using existing capacity and allowing for training and capacity building under the project to help ensure future success. Since all countries do not have the existing capacity to deal with innovative financing mechanisms, it is not appropriate to require an innovative financing element in every project. Further, by making use of available knowledge, contacts, and close monitoring and evaluation capabilities, the financial institutions can continue to make use of innovative financing to provide outstanding support for projects that protect the environment and promote sustainable development.

Energy efficiency technologies differ from other capital equipment. Because the money saved by installing energy efficiency equipment can be used to pay for its financing, this technology can be installed without having to increase operating costs or use precious capital budget. In fact, as long as the finance payments are lower than the monthly energy bills saved, a positive cash flow is created that can be used for other projects. Extending the repayment terms will reduce the monthly payment, improving the cash flow even more. In today's economy of tight budgets and rising energy prices, a good energy efficiency policy is a necessary condition. As stewards of significant assets, public sector facilities and finance managers must aggressively manage all costs and maintain effective cash management programmes. Accelerating the diffusion of energy efficient technologies will improve both the services as well as the environment.

It is not possible for countries, particularly from the developing world. to tackle and solve energy problems unless adequate funding is provided for environment and development. This means that the material basis for providing funding must first be safeguarded on a long-term basis, an aim that cannot be achieved with voluntary ad-hoc payments alone. It is important, therefore, that binding contributions should be specified by applying the normal UN rates, since the amount paid by each state should be in proportion to its economic strength. In addition, innovative steering and financing mechanisms should be implemented at the international level. If steering mechanisms are to induce the desired effects, it is imperative to internalize external costs, for example, by levying charges or issuing certificates. It is also necessary to provide additional funds to finance projects aimed at reducing the damage inflicted upon poor countries by global environmental change and help them to adapt accordingly.

Besides the innovative financing mechanisms discussed here, a welcome move would be for the industrialized countries to honour their commitment, made at the Earth Summit in 1992, to increase substantially the level of financial support they provide to developing countries. It is precisely the poorest countries of the world that are worst affected by global change and its impacts. In this light, there is a need for a substantial increase in development of cooperation funding.

The success of the EE programmes is critically dependent on how the funding is used for strategic initiatives. Given the burgeoning of interrelationships and mutual inter-dependencies in the world, it is in the interest of developed countries that the risks inherent in global change be warded off by preventive and curative strategies and programmes implemented by the international community. The developed world cannot achieve a high level of security, sustained prosperity and social stability unless it is prepared to cooperate closely on policy making at the international level. Of course, strategies for surmounting the problems that exist have a price. The politicians, business community and population must accept the fact that international efforts will require higher levels of funding than has hitherto been the case. The industrialized countries must accept the justified demands of developing countries for structural reforms at the global level and for greater transfer of resources. This seems to be a crucial prerequisite for success of EE projects. This is a rare opportunity to achieve key milestones in international environment and development policy. That opportunity must be exploited.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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