Delivering emission reductions consistent with a 1.5°C trajectory will require innovative public financial instruments designed to mobilize trillions of dollars of low-carbon private investment. Traditional public subsidy instruments such as grants and concessional loans, while critical to supporting nascent technologies or high-capital-cost projects, do not provide the price signals required to shift private investments towards low-carbon alternatives at a scale. Programmes that underwrite the value of emission reductions using auctioned price floors provide price certainty over long time horizons, thus improving the cost-effectiveness of limited public funds while also catalysing private investment.
Taking lessons from the World Bank’s Pilot Auction Facility, which supports methane and nitrous oxide mitigation projects, and the United Kingdom’s Contracts for Difference programme, which supports renewable energy deployment, we show that auctioned price floors can be applied to a variety of sectors with greater efficiency and scalability than traditional subsidy instruments. We explore how this new class of instrument can enhance the cost-effectiveness of carbon pricing and complementary policies needed to achieve a 1.5°C outcome, including through large-scale adoption by the Green Climate Fund and other international and domestic climate finance vehicles.
Key policy insights
- Traditional public climate finance interventions such as grants and concessional loans have not mobilized private capital at the scale needed to decarbonize the world economy consistent with the 2°C target, much less 1.5°C, and will likely face ongoing constraints in the future.
- Auctioned price floors – subsidies that offer a guaranteed price for future emission reductions – maximize climate impact per public dollar while incentivizing private investment in low-carbon technologies.
- This new subsidy instrument, if applied at scale via the Green Climate Fund and other domestic and international climate finance vehicles, can promote private sector competition to bring down technology costs and drive innovation, thereby supporting a longer term transition to regulation and sector- or economy-wide carbon markets.
- To facilitate the transition from public subsidy to the market-based support of climate mitigation, auctioned price floors should work in tandem with carbon pricing and complementary policies, using the same accounting and monitoring, reporting and verification toolkits.
Solar geoengineering is no substitute for cutting emissions, but could nevertheless help reduce the atmospheric carbon burden. In the extreme, if solar geoengineering were used to hold radiative forcing constant under RCP8.5, the carbon burden may be reduced by ~100 GTC, equivalent to 12–26% of twenty-first-century emissions at a cost of under US$0.5 per tCO2.
Global warming potentials (GWPs) have become an essential element of climate policy and are built into legal structures that regulate greenhouse gas emissions. This is in spite of a well-known shortcoming: GWP hides trade-offs between short- and long-term policy objectives inside a single time scale of 100 or 20 years (1). The most common form, GWP100, focuses on the climate impact of a pulse emission over 100 years, diluting near-term effects and misleadingly implying that short-lived climate pollutants exert forcings in the long-term, long after they are removed from the atmosphere (2). Meanwhile, GWP20 ignores climate effects after 20 years. We propose that these time scales be ubiquitously reported as an inseparable pair, much like systolic-diastolic blood pressure and city-highway vehicle fuel economy, to make the climate effect of using one or the other time scale explicit. Policy-makers often treat a GWP as a value-neutral measure, but the time-scale choice is central to achieving specific objectives (2–4).
Despite a growing literature on the climate response to solar geoengineering—proposals to cool the planet by increasing the planetary albedo—there has been little published on the impacts of solar geoengineering on natural and human systems such as agriculture, health, water resources, and ecosystems. An understanding of the impacts of diﬀerent scenarios of solar geoengineering deployment will be crucial for informing decisions on whether and how to deploy it. Here we review the current stateof knowledge about impacts of a solar-geoengineered climate and identify the major research gaps. We suggest that a thorough assessment of the climate impacts of a range of scenarios of solar geoengineering deployment is needed and can be built upon existing frameworks. However, solar geoengineering poses a novel challenge for climate impacts research as the manner of deployment could be tailored to pursue diﬀerent objectives making possible a wide range of climate outcomes. We present a number of ideas for approaches to extend the survey of climate impacts beyond standard scenarios of solargeoengineering deployment to address this challenge. Reducing the impacts of climate change is the fundamental motivator for emissions reductions and for considering whether and how to deploy solargeoengineering. This means that the active engagement of the climate impacts research community will be important for improving the overall understanding of the opportunities, challenges, and risks presented by solar geoengineering.