Previous international climate finance mechanisms completely failed to deliver against the climate technology needs of low and middle income countries. By focussing only on funding for technology
hardware, climate finance mechanisms like the Clean Development Mechanism (CDM) reinforced the comparative advantages of countries, like India, China and Brazil, that already had relatively strong
innovation systems in place around key climate technologies. Using international climate finance to nurture innovation systems around climate technologies in low and middle income countries
would begin to address the problem that hardware financing mechanisms like the CDM can’t fix. It will underpin more sustained and widespread transfer and development of climate technologies.
If done in the right way, engaged with the right actors, it can also be achieved in ways that directly respond to the needs of poor and marginalised women and men. As such, innovation system building
provides a powerful new focus for policy and one that low and middle income counties could benefit from significantly were they to champion the use of international climate finance for innovation
system building.
