Cost is a Key Obstacle to Green Innovation
With a lack of appropriate pricing on greenhouse gas emissions, many green technologies still cost more than emission-intensive production methods and are therefore greatly under-used, especially in developing countries. Poor utilization also undermines upstream incentives to invest in R&D. We must address this problem to promote successful global technology development and adoption.
Immediate Goal: Green Impact Fund for Technology (GIFT) Pilot in Africa
One or more high-income countries would offer a reward of up to $25 per ton of CO2e emissions averted by the deployment of green technologies in Africa. The pilot would be limited in scope, with each participant earning rewards based on the assessed emissions reductions over three years. Total payments would be capped so that if the projects over-performed, there would be an equiproportionate reduction in payments for each participant. Additionality would be an essential criterion for payments.Developing countries lag in deploying advanced green technologies. Absent strong environmental regulations, substantial taxes on emissions and green subsidies, there is little motivation to invest in overcoming the challenges posed by patents and technical know-how. Better incentives are needed to intensify the development of green innovations suitable for the developing world and their rapid and wide deployment.
Principal Goal: the GIFT as a Permanent Institution
Financed by a coalition of states, the GIFT would create an option for users in LMICs to earn impact rewards on the deployment of green technologies. The GIFT would pay up to $25 per ton of CO2e emissions averted, with a cap on total payments. (The reward per ton could increase over time.) In case total rewards exceeded the cap, there would be an equiproportionate reduction in rewards. Payment would be limited to projects achieving verified emissions reduction in developing countries. Each registered technology would be eligible to participate in six annual GIFT disbursements.
Advantages of the GIFT
Efficiency: Creates strong incentives to deploy green technologies for maximum impact for money.
Performance: Issues rewards strictly on the basis of actual emission reductions.
Cost control: Limits cost by means of a fixed annual budget and secures cost-effectiveness through competition among a wide variety of green projects.
Fairness: Funded by wealthy countries that have historically benefited from greenhouse gas emissions to support green transformation in developing countries, while ensuring ample rewards for advancing this transformation.
Flexibility: The GIFT is designed to support deployment of a variety of green technologies in many different areas of technology and industries.
Consonance with SDGs: The GIFT advances sustainable industrial and technological development in low-income countries (SDG9), could immediately mitigate emissions to reduce climate change (SDG13), including through helping to support access to clean energy (SDG7) while strengthening international partnership (SDG17).
A fuller discussion of the GIFT.
A statement by the German technology assessment agency TÜV SÜD on the feasibility of assessing emission reductions, as required in the GIFT’s operation
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A one-page summary of the GIFT proposal in English.
GIFT Team Members