1. Beyond Kyoto Development and Climate: Engaging Developing Countries
Prepared for the Pew Center on Global Climate Change by
Thomas C. Heller
and
P.R. Shukla

2. Introduction
Rise in developing county emissions driven by development imperatives
and supported by current resource and technology flows
Both climate and development concern fundamental issues of energy, transport, land use and food security

3. Introduction
Climate most viably approached through development strategies whose climate benefits are ancillary to sustained economic growth

4. Climate Effort to Date
Regime architecture is climate-centric and flows from output to input
CDM holds only limited prospect of increased or redirected flows
No assurance of stable assistance from developed to developing countries

5. Shifting Context New “Hybrid” States
Transition from state- to market-centered economies is a semi-permanent state
Market reforms driven largely by need for new development capital
Patchwork of residual and “reformed” institutions and alliances

6. Shifting Context Rise in Private Flows
ODA declined while private flows grew five-fold
Shift in flows from bank lending to foreign direct investment (FDI)
10 countries receive 70 percent of FDI
Largest investments are in electricity, natural gas and telecom

7. New Investment Strategies
Shifting Context
New Investment Strategies
“Hybrid” states present new risk profiles
Conservative investors hedge by acquiring local partners – i.e. brownfield investment
Aggressive investors seek “market-making” alliances

8. Trends in Development Assistance
Shifting Context
Trends in Development Assistance
Characterized by pledges at Monterrey and Johannesburg:
Softer and more selective
Conditioned on “governance” reforms
Channeled through public-private partnerships

9. Principles Going Forward
From output to input
Policy must tilt development choices toward climate-friendly options
Operate at a scale large enough to alter emission trajectories
Rather than discrete projects, measured against business as usual, aim to fundamentally shift baselines

10. Principles Going Forward
Aligning Interests
Seek alliances of domestic firms/agencies, foreign investors, ODA providers
Targeting Assistance
Adaptation
Capacity for climate-favoring development
Creating Regional Models
Accelerate technology diffusion by targeting regional leaders

11. Options for a Future Architecture
Input-based goals
Sectoral goals
Intensity goals
Policies and measures
Programmatic climate cooperation
GHG credits for broad policy shifts
A climate bank?

12. For More Information