Cost-Effectiveness and Synergies for Emissions Mitigation Projects in Developing Countries

This paper assesses the available evidence evaluating the effectiveness of concessional spending on climate mitigation in developing countries. Impact evaluation evidence on climate mitigation in developing countries is very limited. However, the Green Climate Fund and the Clean Technology Fund lead their peers by making available project-level data on the expected mitigation and cost of funded projects. We analyse this data and find that expected cost-effectiveness for real-world mitigation projects in developing countries appears to vary by orders of magnitude both within and between sectors, often exceeding $100 per tonne of carbon removed. In assessing the pursuit of synergies between mitigation and other development objectives, we distinguish between strong and weak synergies, illustrating with examples. We argue firstly for a greater focus on impact evaluation and for much higher reporting standards, including for “transformational” potential, for organisations spending concessional finance on mitigation projects. Secondly, we urge donors to pay closer attention to cost-effectiveness for such projects. In particular, we argue that donors should be cognisant of the balance between mitigation and other outcomes, and should not overcommit mitigation financing to projects with minor secondary mitigation outcomes.