Dominik argued that although the Accord was not legally binding and did not include global emissions reduction targets, "real progress" was made last year in the run-up to the Copenhagen climate conference by extending the coalition of countries agreeing to take mitigation action in key developing countries, covering all sectors.
The analyst stressed that there is now "significant potential" to develop new styles of negotiation and ways of providing leadership.
"Much more initiative and leadership must be provided by the private sector – particularly around iconic and mega-projects like the Desertec Industrial Initiative, which aims to produce 15% of Europe's power from clean sources in the Sahara – with governments responding by putting in place the appropriate enabling policy framework," he said.
The role of the private sector will be particularly crucial in providing climate funding because the global recession has tightened government budgets.
"Given the difficult fiscal situation of governments around the world, private sector financing is more important now than ever," he said, adding that public money would have to be used to unlock greater flows of private capital.
"This will require innovative public-private partnerships, where public money is used to reduce risk and spur private investment," he said. In the developing world, development finance institutions like Germany's KfW, the Overseas Private Investment Corporation (OPIC) in the US and the International Finance Corporation (IFC) will also play such a role in bringing in private money, he added.
The EU has been eyeing an OECD-wide carbon market to establish a global carbon price while generating financial flows for climate adaptation and mitigation in developing countries.
Dominik argued that pricing carbon externally and establishing linked carbon markets around the globe remain vital objectives in the fight against climate change, despite the uncertainty that the outcome of the Copenhagen conference created in carbon markets. He noted that carbon prices in Certified Emissions Reduction (CER) markets fell by around 20% following Copenhagen.
"[...] In the near-term, it will also be necessary to put other policies in place. These include grants and subsidies for low-carbon research, development and demonstration, and feed-in tariffs and loan-guarantees for low-carbon technology diffusion," the analyst said.
