Mobilizing the Private Sector: Quantity-Performance Instruments for Public Climate Funds

Abstract

In recent years, public sector funding, in general, and for the support of activities in developing countries, in particular, has become more and more “results” and “performance” oriented. There are different methods by which performance can be “indicated” (or even “measured”). The focus of this brief is on activities that are associated with quantitative performance indicators, i.e., performance assessed in terms of measured quantities — such as tonnes (of carbon), kilowatt-hours, or hectares — as carried out by the private sector. The aim of this brief is to review options for the use of such Quantity-Performance (QP) instruments as a way of channeling public funds to mitigate greenhouse gas emissions in a cost-effective way. QP instruments reward quantified mitigation performance, typically measured in tonnes of carbon dioxide-equivalent of achieved emissions reductions. As such, they imply exactly the kind of results monitoring that the current trend in public funding demands. They could be used by governments or multilateral funds, such as the Green Climate Fund, to mobilize the private sector and private sector finance for mitigation activities in developing countries.