Firstly, for agreement on a common global emissions target, requisite and predictable provision of subsidies to developing countries by shifting down the marginal cost of abatement curve is sine qua non. The existing technology is neither cost effective nor easily accessible. However, over the next few years, some key technologies for reducing (and/or sequestering) emissions could become affordable. Innovation and diffusion in this area will have to be viewed as global public goods. Secondly, developing countries will also be able to determine the quantum of emissions that have actually been cut by the wealthier countries. Has this been commensurate with the excitement and urgency (some would say alarmist talk) engendered by, for example, NGOs, the Stern Review and the EU Emissions Trading System? Thus far, this has not been the case. Given this, developing countries will have to build credible, comprehensive systems for monitoring emissions. Given the obvious scope for gaming, it would be naive to rely solely on developed country monitoring agencies.

The incremental costs of low-carbon investments in developing countries could be in the range of $20-30 billion/year. Subsidies could be based on Technology Needs Assessment of individual countries. Supporting the reduction in costs of low greenhouse gas emitting technologies is critical, and it is estimated that the Global Environment Facility (GEF) would require a ten-fold increase in funding to accomplish this (since inception in 1991, the GEF has provided $6.2 billion in grants). The extent of relaxing the intellectual property right (IPR) regime as part of a multi-pronged strategy will, in part, be determined by the availability of subsidy for diffusing technologies. Conceptually, a pure fully financed subsidy mechanism may be superior to relaxation of IPRs, as the latter entails some blunting of incentive of the innovator.

... contd.