TRADE & ECONOMIC DEVELOPMENT029priorities and a means to address these, will helpfacilitate and coordinate support and also acceleratethe flow of finance to support action. To be effective,adaptation needs to be integrated into developmentpolicy-making and planning, including in the contextof national plans, such as Poverty ReductionStrategies. Likewise, many development activities canalso contribute to building resilience to climatechange. OECD work is highlighting what can already beaccomplished through existing channels, through workon Integrating Adaptation to Climate Change intoDevelopment Co-operation (OECD, 2009).Action on both mitigation and adaptation is closely tiedto climate change finance - one will not happenwithout the other. The Copenhagen Accord included aninitial commitment by advanced countries to deliverfast-start finance of US$30 billion for 2010-2012 anda longer-term goal to mobilise US$100 billion per year by 2020 from public and private sources.Governments also committed to create a CopenhagenGreen Climate Fund. Making this happen will becritical to building trust and co-operation betweendeveloped and developing countries. A challenge willbe to enhance the measurement, reporting andverification (MRV) of climate finance, building on theexisting information systems such as the OECDCreditor Reporting System that already tracks officialdevelopment assistance targeting climate changemitigation and, as of 2009, also for adaptation. Moregenerally, MRV of targets, actions and finance, isessential nationally to track policies and assess their effectiveness and internationally, to ensuretransparency and accountability amongst countries onclimate change, including fulfillment of internationalcommitments.Beyond an international climate agreement, tacklingclimate change requires an appropriate policy mix tocorrectly price GHG emissions. An important start is toreform environmentally harmful subsidies to fossilfuel. OECD analysis found that removing subsidies tofossil fuel consumption alone could reduce global GHG emissions by 10 per cent in 2050 compared with business-as-usual. It would also make theseeconomies more efficient, reduce the burden ongovernment budgets, and alleviatethe potentially distortiveeffects of subsidies oncompetition. In parallelwith efforts to pricecarbon, competitivenessconcerns have led to callsby some developed countriesfor border tax adjustments(BTAs) - taxes on imports fromcountries that do not face carbonconstraints. While recognising the importantchallenge that governments face in addressingthese concerns, OECD analysis has found that BTAsare a tool that come with other costs: they can slow the?
economy, be costly to implement, and may createtrade problems. In these uncertain times, the threat ofBTAs is likely to remain, yet the real focus of efforts toaddress competitiveness concerns should be to exploremore effective policy options to level the playing field.Climate policies are also needed to accelerate thedevelopment and diffusion of clean technologies.OECD analysis of innovation in clean technologiesindicates that business and other innovators needlong-term, predictable and strong policy signals. Forexample, the adoption of the Kyoto Protocol in 1997coincided with a sharp increase in the rate ofinnovation in climate-friendly technologies. However,much of this innovation is concentrated in OECDcountries. So what are the key factors that encouragedevelopment and diffusion of green technologies indeveloping countries? OECD work shows that countrieswith high domestic technological and absorptivecapacity are more likely to both develop and to importclean technologies. These capacities are driven bylocal policies in developing countries as well as byparticipation in targeted international researchprogrammes. A key priority for international climatesupport should be to further strengthen local02040CHART 1: THE IMPACT OF DIFFERENT OFFSET LIMITS INANNEX I COUNTRIES IN 2020Source: OECD (2010), "Costs, revenues, and effectiveness of the CopenhagenAccord emission pledges for 2020", Environment Working Paper 22,www.oecd.org/env/cc/econ.2.01.81.61.41.21.00.80.60.40.20.01.41.60.4GDP impact and fiscal revenues in %0.41.11.20.22.214.171.124.20.2Limit on offsets in %Low & FragmentedHigh & LinkedFiscal revenues (% of GDP)GDP impact (% change from BAU)Fiscal revenues (% of GDP)GDP impact (% change from BAU)