Climate impact auctions: an underused tool for green subsidies in the Global South
Matthey MA, Hollis A, Brandi C, Kobiela G, Roth B, Silberberger M (2025)
Publication Language: English
Publication Type: Journal article
Publication year: 2025
Journal
Book Volume: 25
Pages Range: 806-814
Journal Issue: 5
DOI: 10.1080/14693062.2024.2411319
Abstract
The urgency of reducing emissions globally requires the participation of Low- and Middle-Income Countries, which represent over 70% of global emissions. Funding from High-Income Countries’ support for a ‘just transition’ in developing countries through institutions such as the Green Climate Fund has almost exclusively been given as investment-cost subsidies. In contrast, the same industrialized countries extensively use performance-based mechanisms to drive emissions reductions domestically. We explore the advantages and disadvantages of using results-based subsidies allocated through reverse auctions as a tool to support mitigation in Low- and Middle-Income Countries. Results-based subsidies would drive strong responses by giving greater rewards for better performance. By reducing administrative discretion, results-based subsidies would decrease costs and facilitate participation by small- and medium-sized firms. Results-based subsidies would, however, increase capital costs and would reallocate risks from donors to project proponents. Overall, they could be attractive in specific circumstances, specifically for projects that can be competitive, have measurable results, and currently face socially suboptimal investment.
Involved external institutions
Universität Witten/Herdecke
Germany (DE)
University of Calgary
Canada (CA)
Deutsches Institut für Entwicklungspolitik (DIE)
Germany (DE)
Bellona (Germany)
Germany (DE)
Germany (DE)
University of Calgary
Canada (CA)
Deutsches Institut für Entwicklungspolitik (DIE)
Germany (DE)
Bellona (Germany)
Germany (DE)
How to cite
APA:
Matthey, M.A., Hollis, A., Brandi, C., Kobiela, G., Roth, B., & Silberberger, M. (2025). Climate impact auctions: an underused tool for green subsidies in the Global South. Climate Policy, 25(5), 806-814. https://doi.org/10.1080/14693062.2024.2411319
MLA:
Matthey, Max Alexander, et al. "Climate impact auctions: an underused tool for green subsidies in the Global South." Climate Policy 25.5 (2025): 806-814.
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