"The study shows us that a conscious effort to shift from traditional investment to more climate-friendly alternatives will require governments to adopt new policies and change the way they use their funds," said UNFCCC executive secretary Yvo de Boer. "The required shift in future investment and financial flows needs a combination of actions by the intergovernmental process under the UNFCCC and national governments."
The study is based on an analysis of existing and future investment and financial flows relevant to developing an international solution to the problem of climate change. Another important finding is that an additional investment of about $210 bn will be needed in 2030 to return greenhouse gas emissions to today's levels.
The report also predicts that developing countries will need a larger share of the funds in 2030 - up to 46% of the global figure. This would help ensure that emissions from these countries account for around 68% of global emission reductions. Moreover, countries that already depend highly on external support from developed countries in areas such as health, for example, will require additional funding. This support could amount to several tens of billions of dollars.
"Developing countries will require a large share of investment and financial flows because of their expected rapid economic growth," explained de Boer.
The report proposes several ways of increasing funding, one of which is to exploit the carbon market, put forward by the Kyoto Protocol. For example, the Protocol's Clean Development Mechanism (CDM) already generated an estimated investment of around $25 bn in 2006. The CDM allows industrialized countries to invest in sustainable development projects in developing countries and so generate tradable emission credits.
"This is indicative of how quickly investment flows can respond to changes in policies and incentives," said the UN's top climate change official. "A long-term international agreement on climate change will broaden the range of mitigation measures that are attractive investments and could allow the expansion of existing market mechanisms to a market of $100 bn per year."
The report was presented at the Vienna Climate Change Talks 2007 at the end of August - a meeting that brought together participants from 191 countries with representatives from governments, business, industry, environmental organisations and research institutions. The report was aimed at helping the delegates prepare for the UN Climate Change Conference in Bali this December. This conference will concentrate on the carbon market and on finding financial solutions to the problem of climate change after the Kyoto Protocol expires in 2012.
The UNFCCC is the parent treaty of the 1997 Kyoto Protocol, which has 175 member parties to date. Under the Protocol, 36 states, which include highly industrialized countries and those undergoing the transition to a market economy, are legally bound to limit and reduce their greenhouse gas emissions. The ultimate aim is to stabilize emissions to levels that will not cause dangerous climate change.