Mobilizing the Private Sector: Quantity-Performance Instruments for Public Climate Funds

The aim of this brief is to review the potential of Quantity-Performance (QP) instruments as a way to channel public funds to mitigate greenhouse gas emissions in a cost-effective way.

QP instruments are a method by which public funders provide ex post financial support on the basis of verified emissions reductions. They reduce risk for funders, who don’t pay unless emissions targets are met, and give vendors the freedom to meet those targets in any way they choose.

In this policy paper, Arunabha Ghosh, Benito Müller, William Pizer, and Gernot Wagner discuss three implementation methods of QP instruments and evaluate their cost-effectiveness, integration with a carbon market, and ability to address nonperformance, among other factors.