How To Generate Financial Resources for Adaptation to Climate Change

How Can SIDS Generate Financial Resources for Adaptation to Climate Change through the Energy Sector and How would SIDS DOCK Help?

GHG from the SIDS energy sector is estimated at 38 million tons of carbon annually. Based on projected carbon price of USD 20 per ton, a 25 percent reduction in carbon emissions by SIDS traded on the global carbon market would be equivalent to USD160 million per year. Acting collectively, it would be possible for SIDS to derive a significant amount of these financial flows, compared to acting individually. The main role of SIDS DOCK would be to organize the documentation and processing of the avoided carbon emission to have them certified and marketable. As many projects will be small in scale, SIDS DOCK would have to do a bundling exercise in order to reach the necessary transaction threshold.

The high level of dependence on costly petroleum fuels to provide energy services represents the major source of economic vulnerability for the majority of small islands States. In many cases, the cost of imported petroleum is more than 25 percent of foreign exchange earnings. Member States of AOSIS consume in excess of 220 million barrels of petroleum. Depending on the price of petroleum, this cost SIDS billions or tens of billions of foreign exchange each year. Minimizing dependence on petroleum fuels by increasing energy efficiency and development of the vast renewable energy sources will make SIDS less vulnerable and generate significant employment. The expansion in economic activity will mean increased financial resources for the country. Growing economies will generate increased amounts of financial resources to help meet the challenges of adapting to the adverse consequences of human-induced climate change.