Q. Consider the following statements:
1.The Kyoto Protocol created the Clean Development Mechanism (CDM) to promote emissions reduction projects in developing countries.
2.The Global Environment Facility (GEF) uses a market-based approach to finance projects, while the Green Climate Fund (GCF) uses a grant-based approach.
Which of the statements given above is/are correct?:
Explanation –
Statements 1 and 2 are correct. The Clean Development Mechanism (CDM) is a market-based mechanism established under the Kyoto Protocol to help developed countries meet their greenhouse gas emission reduction commitments.
It allows developed countries to invest in emission-reduction projects in developing countries and earn certified emission reductions (CERs), which can be counted towards their own emission reduction targets.
The CDM is designed to promote sustainable development in developing countries while helping developed countries meet their emission reduction commitments. It is also a way to transfer clean technology and investment to developing countries.
The GEF uses market-based instruments like loans, guarantees, and equity investments to fund projects. This means that it looks for projects that have the potential to generate a financial return, either through selling carbon credits or other environmental benefits.
On the other hand, the GCF uses grants to support projects. This means that it provides funding without expecting any financial return, and instead focuses on the environmental and social benefits of the project.
The GCF’s approach is more focused on building climate resilience and promoting sustainable development, while the GEF’s approach is more focused on leveraging market forces to drive environmental benefits.
Source: ForumIAS
