Boost for climate finance hopes

Raising US$100 billion a year (666 billion yuan) to help vulnerable countries cope with the impacts of climate change and lower greenhouse-gas emissions is “challenging but feasible”, a UN committee said today.

But reaching this goal will require a new tax regime, greater international cooperation and a carbon floor price of US$25 a tonne, the high-level advisors on climate finance told UN secretary general Ban Ki-moon.

In December last year, rich nations pledged to provide US$100 billion each year from 2020 in order to finance climate adaptation and mitigation projects in the developing world. For the past 10 months, a committee chaired by the prime ministers of Ethiopia and Norway and comprising 21 members including Nicholas Stern and George Soros, has been investigating possible mechanisms to make this promise a reality.

Today, the committee published its final recommendations, which include taxing foreign-exchange transactions, a moved it argues would raise between US$2 billion and US$27 billion a year, and imposing levies on shipping and aviation, which it said would bring in US$10 billion.

It said carbon pricing – either through a direct carbon tax or a cap-and-trade system – would raise US$30 billion, provided there was a stable carbon price of US$20 to US$25. And the removal of fossil-fuel subsidies by governments could free up US$3 billion to US$8 billion.

The advisors concluded that a large increase in private-sector investment was also necessary to achieve the goal and that “strong commitments” to domestic mitigation and the introduction of carbon-pricing instruments were needed to trigger this.

The report has been welcomed by green groups, who say it should provide impetus for a finance agreement at the Cancún climate-change summit later this month. Gordon Shepherd, leader of WWF’s Global Climate Initiative, said: “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.”

Read the full report here.