# **6. CONCLUSION**

The gradual and incremental approach that has been outlined above is the “path of least resistance” to the next iteration of financial mechanisms for long-term (2013 and beyond) mitigation. As we continue with the international negotiations for the future climate regime, options that can be agreed to by all nations are constrained by the current political constellation. Some industrialized countries have been actively engaged in mitigation efforts over that past ten years, others with even more responsibility have been remarkably absent. The science requires both groups to reach a level of comparable effort of deep reductions, and to do so in a manner that is within the environmentally determined time urgencies. Developing countries are united in their expectations of leadership on the part of industrialized countries but are differentiated in terms of their own capacity to contribute to the solution. At a time in which rapidly emerging countries are focused on economic growth, the science requires them to initiate efforts to deviate from uncontrolled emissions, and to soon impose some type of emission growth restrictions. However, neither the North nor the South is racing to respond appropriately to the scientific evidence of climate change. Entrenched in their traditional defensive positions that reflect a deep lack of trust of the other side, both sides are currently only willing to contribute to a solution that represents the minimum common denominator, and is at best gradual and incremental. It would therefore not be surprising that the financial mechanisms which are devised for the immediate post 2012 mitigation in developing countries would reflect the incremental nature of engagement.

There is however one factor that could substantially alter the path forward, and that is the global financial crisis. A traditional interpretation of the crisis would foresee even less engagement on climate given the dwindling availability of capital. Ironically, it is also possible that this is precisely the pressure that is needed to radically shift the course of events. Over that past six months governments and public opinion have been convinced that the financial crisis is real, and that a solution is urgent. This conviction has unleashed unprecedented levels of public sector capital. The Bush administration invested USD 2.6 trillion, and the Obama administration added a stimulus program of USD 850 billion. These public expenditures are curative in nature and do not necessarily contribute to more sustainable financial structures.

In contrast, the financial flows study of the UNFCCC (2007) estimates that climate stabilization could be achieved for USD 200 billion/year, but those investments would substantially contribute not only to facing the climate challenge but also to long term energy security for all. There is a striking difference between the willingness to rapidly invest in the financial system and the willingness to invest, even in a gradual manner, in energy systems. It is not so much the profound implications of the impending climate crisis (the last three years have largely dispelled the myth that climate change is not real) but rather the lack of a conviction of urgency. Despite the increased level of discourse on the veracity of the situation, the challenge is still assessed for its long-term implications and not in its need for immediate changes in behavior and investment.

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