In order to understand the role of multilateral institutions (MIs) in financing efficiency improvements and the mitigation of environmental degradation, we need to take a glimpse at some of the international instruments put into place for tackling these issues, namely, the 1992 Rio Earth Summit and the Agenda 21, and the United Nations (UN) Millennium Declaration in September 2000. Of the many items in the Rio agenda, those relevant to this section are the financing of the development process and its derivative—the involvement of a wider number of stakeholders. In 1992, it became evident that Overseas Development Assistance (ODA) programmes were no longer sufficient to stimulate external financing in middle-and low-income countries particularly in debt-ridden sub-Saharan Africa, despite the commitment made by the developing world to devote 0.7 per cent of their gross national product (GNP) to ODA. Although the June 2001 UN Summit on Finance for Development reiterated much of the items already touched upon in Rio, it is clear that the world has become more conscious of the fact that the involvement of various stakeholders such as planners, consultants and academics from government, development agencies, private companies and non-governmental organizations (NGOs) is essential in achieving sustainable development. These actors tend to link up if they think they have something to offer and to gain. However, it is only when they clearly see a common interest that they will commit themselves substantially to a partnership by contributing material or intellectual resources. The objectives of the partners may be very different, but there can be a common interest and objectives shared by the partners. For example, a public—private partnerships (PPPs)40 is a promising option for meeting EE research needs because they tie research closely to users' needs, provide opportunities to improve efficiency and can augment investments in research. This type of
40 The PPP is an agreement between the public and the private sector to assume co-responsibility and often co-ownership for service provision.
partnership can at best develop in a network of institutions whose activities in the energy chain are integrated. This is not the same as a privatization agreement, wherein a corporation takes full responsibility for specific services. Rather, a partnership combines the advantages of the corporate sector's dynamism, access to finances, knowledge of emerging technologies, managerial efficiency and entrepreneurial spirit—with the job generation and service delivery concerns of the public sector and local residents.
Another mechanism is the UN Millennium Declaration of September 2000. The quote below taken from this historic Declaration codifies the multiple level role of international stakeholders in future development of the world.
We resolve ... to ensure greater policy coherence and to improve better cooperation between the UN, its agencies, the Bretton Woods institutions and the World Trade Organisation (WTO), as well as other multi-lateral bodies, with a view to achieving a fully co-ordinated approach to the problems of peace and development.41
Summarizing the diverse activities of MIs, one may identify five strands of activities:
• Designing and implementing projects, which already have an economic and environmental rationale today, and which would receive an additional boost if emission reduction credits were available and tradable;
• Financing such projects and mobilizing cofinancing from public and private sources;
• Project brokering, facilitation and other intermediary mechanisms;
• Advising governments on the legal, policy regulatory changes required for greater EE and climate change mitigation and
• Providing technical assistance, research and training services.
Many multilateral institutions have a stake in the EE and climate arena. The UN administers the negotiations through its Climate Change Secretariat in Bonn, Germany. Various UN agencies develop projects related to climate change. The World Bank Group develops and cofinances projects and positions itself as a facilitator through initiatives like the Prototype Carbon Fund or Biocarbon Fund. The European Union (EU) funds climate projects and, unlike the other two multilateral groups, in addition has real leverage on the negotiation process as it represents a powerful group of countries.
The European Bank for Reconstruction and Development (EBRD) has a small but growing portfolio of climate change projects, in particular in the area of EE.
Regardless of the performance of multilateral institutions, without increased pressure from the business community and civil society organizations, there is a low probability that flexible mechanisms (such as Clean Development Mechanism [CDM]) will be implemented on a global level in the near future. Factors such as lack of scientific consensus regarding the design of these mechanisms as well as worries about economic impacts suggest that the adoption and implementation of a climate regime may be further delayed. With these delays, it seems likely that many countries will miss the Kyoto Targets agreed upon in 1997.
Despite the delays and setbacks, however, the policy debate shows no sign of abating, and there are still efforts to find consensus on the modalities of a global carbon trading system. On the national and international levels, there is a trend toward experimenting with flexible mechanisms. Corporate efforts to establish trading schemes and other responses to climate change are likely to continue regardless of the near-term negotiation outcomes. Likewise, an increasing number of governments support trial schemes in their home countries to test the feasibility of trading schemes and to gauge the support of participants and stakeholders for such instruments. Through trial and error, these corporate and government programmes provide the experience necessary to make carbon trading feasible on a larger scale.
In many countries, including China, India and Japan, policy initiatives are gradually establishing a legal and regulatory basis for trading greenhouse gas reduction credits. At the same time, new technologies are entering the marketplace, and existing ones are becoming better and cheaper. Taken together, increasing prevalence of corporate initiatives, technological advances and regulatory changes add up to a dynamic environment, to which institutions involved in EE and climate change mitigation must constantly adjust.
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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.