LOOKING TO DURBAN127Above right:Angel Gurría,Secretary-General,Organisation forEconomic Co-Operationand Development (OECD)CHART 2. WHAT IS DRIVING TECHNOLOGY TRANSFER? THECASE FOR WIND POWERSource: The histogram shows the relative importance of different determinantsof transfer of wind power technologies, from Annex I to non-Annex I countries.Source: Hascic, Ivan and Nick Johnstone "The Clean Development Mechanismand International Technology Transfer: Empirical Evidence on Wind Power UsingPatent Data." in Climate Policy (forthcoming 2011).0.500.400.300.200.100.00-0.1-0.2Contempora-neous effectof CDM'Stock' effectof CDMSupply of Inventionsfrom SourceCountriesAbsorptiveCapacity ofRecipientCountriesTotal Transfer (control)0.0438-0.10850.43130.20780.0535balanced portfolio of issues: mitigation action,adaptation, climate finance, competitiveness impacts,and innovation in cleaner technologies. A robust systemfor reporting and verifying mitigation action and financeflows will also be essential to build trust. On GHG mitigation and costs, it is promising that manycountries are willing to commit to specific targets oractions. However, OECD analysis suggests that eventhe most ambitious targets declared by industrialisedcountries would reduce their emissions collectively byat most 17 per cent by 2020 compared with 1990levels, and this falls short of the 25-40 per centreduction suggested by IPCC for a pathway to limitglobal average temperature increase to 2°C. The costsof action are small when compared to expectedeconomic growth and substantially less than mostestimates of the costs of inaction; the OECD estimatesthe costs of achieving the current declared targets tobe around 0.3 per cent of global GDP in 2020.The use of market-based approaches, such asemissions trading schemes and carbon taxes, will becritical to keep the costs of action affordable and tobuild-up a global carbon market. OECD analysis showsthat carbon offsets also have an important role to play,allowing the cheapest mitigation options to beexploited first no matter where they are (Chart 1). Atthe same time however, the more offsets that are used,the less potential there is for a country to raisedomestic fiscal revenues. We also need to move quickly to enhance action onadaptation through international cooperation anddomestic action at national, sectoral and local levels.The negative impacts of climate change will hit poorpeople and countries disproportionately. Broadagreement on adaptation priorities and a means toaddress these, will help facilitate and co-ordinatesupport and also accelerate the flow of finance tosupport action. To be effective, adaptation needs to beintegrated into development policy-making andplanning, including in the context of national plans,such as Poverty Reduction Strategies. Likewise, manydevelopment activities can also contribute to buildingresilience to climate change. OECD work ishighlighting what can already be accomplishedthrough existing channels, through work on IntegratingAdaptation to Climate Change into Development Co-operation (OECD, 2009) and on harnessing theinnovative potential of the private sector in forging newsolutions to manage climate risks.Action on both mitigation and adaptation is closely tiedto climate change finance - one will not happenwithout the other. The Cancun Agreements included acommitment by developed countries to deliver fast-start finance of US$30bn for 2010-2012 and alonger-term goal to mobilise US$100bn per year by2020 from public and private sources. Governmentsalso committed to create a Green Climate Fund.Delivering on these financial and institutionalcommitments will be critical to building trust and co-operation between countries at different levels ofdevelopment. A challenge will be to enhance themeasurement, reporting and verification (MRV) ofclimate finance, building on the existing informationsystems such as the OECD Creditor Reporting Systemthat already tracks official development assistancetargeting climate change mitigation and adaptation.More generally, MRV of targets, actions and finance, isessential nationally to track policies and assess their effectiveness and internationally, to ensuretransparency and accountability amongst countries on climate change, including fulfillment ofinternational commitments. OECD is working on?

enhanced reporting of climate responses, includingfinancing, in order to increase the transparency andconsistency of country information. Beyond an international climate agreement, tacklingclimate change requires an appropriate policy mix tocorrectly price GHG emissions. An important start is toreform environmentally harmful subsidies that supportfossil fuel consumption or production. OECD analysisfound that removing subsidies to fossil fuelconsumption alone could reduce global GHG emissionsby 10 per cent in 2050 compared with business-as-usual. It would also make the economies undertakingthe reforms more efficient, reduce the burden on scarcegovernment budgets, and alleviate the potentiallydistortive effects of subsidies on competition. Providing clear price signals to consumers is critical toraise awareness, empower choices and encouragehouseholds to save energy and limit emissions. Resultsfrom a survey of over 10,000 households across tenOECD countries confirm the impact of economicincentives on household behaviour. Respondents whoare charged for the energy that they actually use aremore likely to save energy.The results of the survey also confirm the importantcomplementary role played by information-basedmeasures such as energy efficiency labelling ofappliances and housing. Climate policies are also needed to stimulateenvironmental innovation and accelerate thedevelopment and diffusion of cleaner technologies.OECD analysis of innovation in cleaner technologiesindicates that business and other innovators need long-term, predictable and strong policy signals. Beyond theuse of economic policy instruments to price carbon,other demand-side policies may also be central toadvance environmental innovation, including greenpublic procurement, awareness raising campaigns, orthe use of performance standards. Some progress hasbeen made in this regard. For example, the adoption ofthe Kyoto Protocol in 1997 coincided with a sharpincrease in the rate of innovation in climate-friendlytechnologies (Chart 2). However, much of thisinnovation is still concentrated in advanced economieswhich directly regulate greenhouse gas emissions. There are many policies that would encouragedevelopment and diffusion of cleaner technologies indeveloping countries. OECD work shows that countrieswith high domestic technological and absorptivecapacity are more likely to both develop and to benefitfrom cleaner technologies available on internationalmarkets. These capacities are driven by local policiesin developing countries as well as by participation intargeted international research programmes. A keypriority for international climate support should be tofurther strengthen local technological capacity indeveloping countries. International co-operation in128LOOKING TO DURBAN""POLICY MAKERS NEED TO MOVE FORWARD ON A BALANCED PORTFOLIO OF ISSUESPhoto: UN Photo/R Kollarresearch programmes on climate change mitigation isone means of developing such capacity, and the OECDis currently examining how this can be encouraged. The OECD will continue to provide fact-based analysisand present policy options on how to reconcileenvironmental concerns with economic and socialgoals. Besides the work mentioned above, the OECDwill deliver its Green Growth Strategy in May 2011 andwill continue to work on a number of issues relevant for the fight against climate change, includinggovernance, finance and development co-operation.Climate change is the greatest challenge facing