UN told climate funding is 'feasible'

Money raised from banks, taxes, and carbon permit auctions could match the $100bn promised at Copenhagen, says report
John Vidal guardian.co.uk 5 Nov 10;

Seventeen finance ministers, leading economists and heads of state say that it is "challenging but feasible" to raise $100bn (£62bn) a year by 2020 to allow poor countries to adapt to the effects of climate change and reduce emissions. If their findings, contained in a major report handed to the UN secretary general, Ban Ki-moon, are politically acceptable, the chances of a new global climate agreement are substantially increased.

Money from banks, carbon taxes, carbon permit auctions and new transport taxes could raise the $100bn promised to developing countries at the Copenhagen summit last December, said the high-level advisory group which was chaired by the prime ministers of Norway and Ethiopia and included Lord Nicholas Stern, the financier George Soros, UK energy secretary, Chris Huhne, and South African, Indian and French politicians.

The authors suggested public money could be raised from carbon taxes ($30bn), possible aviation and shipping taxes ($10bn), the redirection of fossil fuel subsidies ($10bn), and by increasing the flows of money from multinational development banks such as the World Bank ($40bn). Private funding of between $30bn and $50bn could come from carbon offset markets and a further $100bn -$200bn could be generated from private sector flows. A possible "Tobin-type tax on all financial transactions was effectively ruled out by the high-level group which argued that it was complicated to implement because it would require global agreement.

"I do think it fits the bill. It's an agreed report and that is significant. A big chunk of the money, as much as $50bn, is public money," said Stern. "There was a lively discussion. You have some pretty strong people there, many of us have had direct responsibility for making public policy at a senior level. It's now for the political processes around the world to pick up. There is inertia in the international discussions, I hope this will help," he said.

Stern said that a higher price on carbon was needed. "A modest price on emissions, in the range of US$20-25 per tonne of CO2 would push incentives in the right direction and raise substantial revenues," he said.

Guaranteeing major new aid flows for developing countries has become a prerequisite for a new climate agreement, but many developing countries argue that the $100bn on offer from rich countries falls far short of the funding necessary to help 130 poor countries which face devastating climate change. Others want the money to be drawn wholly from public finance sources which they say is more predictable.

Developing countries declined to react until they had read the report in detail but non-governmental groups said that initial analysis suggested that all the money could be raised from public funds. Tracy Carty, Oxfam climate change policy adviser, said: "The $100bn committed to in the Copenhagen accord must come from public sources of funding rather than private to ensure it reaches communities desperately in need of money to help them adapt to climate change and develop in a low-carbon way. Private finance cannot meet the needs of developing countries for adaptation."

According to the high-level group, national governments would have options on how to raise some money but much of the money would depend on institutions such as the World Bank being strengthened. Members stressed that they had not been asked to advise how much individual countries should pay or the combination of revenue which could be adopted.

"So far, market responses to climate change have failed to meet the needs of the poorest people in developing countries, who are least responsible but worst affected by climate change," said Sol Oyuela, Christian Aid's senior adviser on climate change and poverty. "It is crucial that most if not all the $100bn comes from new sources of public funding, such as taxes on planes, ships and financial transactions.

"This report quite clearly sets out a system of climate financing and makes clear that concerted global action and a carbon price of at least $25 is required to achieve the necessary transformation in the global economy. But we acknowledge this isn't the end game and the real challenge lies ahead as developed and developing countries work together to ensure concrete proposals are delivered," said Huhne.

"The next steps should include the proposals on international transport being considered by the International Civil Aviation Organisation, the International Air Transport Association and the International Maritime Organisation, and the multilateral development banks working on proposals for new green funds and for enhanced collaboration with the private sector," said Stern.

Climate money can be generated, political will needs to come from Cancun
WWF 5 Nov 10;

$100 billion in climate change funding by 2020 is achievable on the conservative estimates of the high level study for the UN, but funds will only flow from the reaching of a political agreement.

New York, USA: A high level analysis of climate finance submitted to the UN today has demonstrated the feasibility of putting up by 2020 US$100 billion a year in public funding to fight climate change.

According to WWF, this conservative analysis by the special High-level Advisory Group on Climate Change Finance (AGF) sets the stage for a finance agreement to come out of the UN climate summit starting late this month in Cancun, Mexico.

“The Secretary General’s high level group has come up with the financial mechanisms, now we look to governments to come up with the political mechanisms to get the finance actually flowing,” said Gordon Shepherd, leader of WWF’s Global Climate Initiative.

Financing, agreed in principle under the Copenhagen Accord from the last UN climate summit, is needed to support action in developing countries to halt the destruction of tropical forests, speed the transition away from high-emission models of development, and to help vulnerable countries adapt to climate change impacts.

“These public funds are critical to speed up the development and implementation of new technologies, as well as for adaptation and resilience building, new energy efficient infrastructure, and for construction. It will also be used to leverage private sector finance which will contribute much of the investments needed in clean energy technologies,” said Shepherd.

“Our experience is that public investment and initiatives play key roles in mobilising and directing private investment.”

The AGF report gives strong support for financing from carbon pricing mechanisms, with one of the most promising sectors being international aviation and maritime transport, whose emissions are as yet unregulated. “We expect decisive action in Cancun to put this finance source on a fast track to implementation”, said Shepherd.

Other promising sources were downplayed because of opposition from some individual group members, with the chief casualty being the financial transaction tax (FTT).

““Financial transaction taxes have been successfully implemented in more than a dozen countries and at this point we should be examining all potential sources of finance on their merits”, said Shepherd.

Although the assumptions used by the AGF to assess the scale of potential financing generated are extremely conservative, and some members placed undue emphasis on private sector investments in meeting the $100 billion per year financing milestone, the report provides a useful starting point for moving forward.

Parties in Cancun can build upon the AGF recommendation on the way to establishing a much needed new UN Climate Fund and could contribute to host country Mexico’s wish for progress on all elements of a “balanced” Cancun package.

The AGF was set up by United Nations Secretary-General Ban Ki-moon in February, Co-chaired by Prime Minister Stoltenberg from Norway, and Prime Minister Zenawi from Ethiopia, to explore innovative financing sources and mobilize the financing promised for climate change during the United Nations Climate Change Conference in Copenhagen last December.

UN climate panel calls for carbon and transport taxes
Tim Witcher Yahoo News 5 Nov 10;

UNITED NATIONS (AFP) – A top UN panel on Friday called for increased taxes on carbon emissions and air and sea transport to raise 100 billion dollars a year for poor nations to combat climate change.

The group led by the prime ministers of Norway and Ethiopia also proposed a tax on international financial transactions for a UN fund aiming to be ready by 2020.

The panel -- which also included finance ministers and financier George Soros -- was set up at last year's acrimonious Copenhagen climate summit and its proposals will get a first international airing at the UN climate conference in Cancun, Mexico starting at the end of the month.

UN Secretary General Ban Ki-moon called the proposals "financially feasible and politically viable." Environment pressure groups said governments are duty-bound to follow the proposals.

Prime Minister Jens Stoltenberg of Norway and Prime Minister Meles Zenawi of Ethiopia said there carbon emission taxes must be used as a deterrent to producing the gases blamed for global warming and to raise revenue.

They proposed that carbon dioxide emissions should cost between 20 and 25 dollars a tonne. This, along with auctions of carbon emission allowances and new carbon taxes, could raise up to 30 billion dollars a year, they said.

The bulk of carbon emissions currently cost between 10 and 20 dollars, according to experts.

The group is also looking to raise 10 billion dollars a year from taxes on international transport, 10 billion dollars by switching subsidies from fossil fuels, 10 billion dollars from private capital flows linked to carbon trading and tens of billions of dollars from international financial institutions.

Stoltenberg said the International Maritime Organization was already working on a system to tax the carbon emissions of shipping. And he highlighted a system to be introduced by European nations in 2013 which will tax carbon emissions for air travel within Europe.

Jet fuel or passenger tickets could be taxed to raise money for the fund, they said.

"This is more realistic than many people believe," Stoltenberg said of the transport tax. "We need the political will to take the decisions and that is up to the governments."

The group also proposed a tax on financial transactions but admitted in their report: "diverging views will make it difficult to implement this universally." The United States has led nations opposed to a new financial tax.

The UN chief said the climate finance for poorer nations "is not about charity. It is about doing the right thing for those who are suffering most from a crisis that they did least to cause."

The UN chief said there was "a gap of trust between developed and developing countries, that is why the (climate) negotiations have not been going very well."

Stoltenberg called climate financing "a question of burden sharing, of balancing economic interests and responsibilities."

Zenawi said the pressure would now be on the leaders of the rich nations.

"As Africans we have contributed virtually nothing to the environmental mess that our planet is in. We will however suffer first and suffer most as a result of the climate changed caused by others."

Zenawi said that African nations consider climate finance "an issue of sanity and justice. The prospects for sanity and justice do not appear to be good. But I refuse to give up. I refuse to believe that our leaders lack the political will and foresight to do what is right."

Greenpeace International said that rich nations have no excuse for not meeting their financial commitments.

"Unless developed country governments keep their promise to provide long-term finance, a global agreement on climate action would be nearly impossible to reach," the group said in a statement.

Oxfam's climate change spokesperson, Tracy Carty, commented: "Money to tackle climate change and help poor communities adapt can be raised without dipping into taxpayers' pockets. The next step is for political leaders to lay out a clear roadmap for making this funding a reality."