Climate change financing 'challenging but feasible'
advisory group convened by UN Secretary-General Ban
Ki-moon on mobilizing financing to help developing nations deal
with climate change says while challenging, the goal of $100
billion annually in support by 2020 is feasible. But the impact on
private sector cash flows could be significant.
Today’s
target=”_blank”>report by the High-Level
Advisory Group on Climate Change Financing (
target=”_blank”>AGF) said the money must come
from a wide range of sources - public and private, bilateral and
multilateral. It said grants and highly concessional loans were
essential for adapting to climate change in the world’s most
vulnerable countries, including small island developing
States.
Concerns have been aired over possible
measures to use private sector cash flows to finance the
commitments of government to meet this objective.
The 35-page report suggests that under varying
assumptions, the public sector could mobilise more than $100bn and
the private sector up to $500bn a year.
The group says that between $2bn and $27bn could be raised from
financial transaction taxes on foreign exchange, $4bn to $9bn from
shipping, $2bn to $3bn from aviation, $3bn to $8bn from removal of
fossil fuel subsidies and $8bn to $38bn from auctioning carbon
allowances.
The Advisory Group emphasized the
importance of a carbon price in the range of US$20-US$25 per ton of
CO2 equivalent in 2020 as a key element of reaching theUS$100
billion per year. States the report:
Based on a
carbon price of US$20-US$25 per ton of CO2 equivalent, auctions of
emission allowances and domestic carbon taxes in developed
countries with up to 10 per cent of total revenues allocated for
international climate action could potentially mobilize around
US$30 billion annually. Without underestimating the difficulties to
be resolved, particularly in terms of national sovereignty and
incidence on developing countries, approximately US$10 billion
annually could be raised from carbon pricing international
transportation, assuming no net incidence on developing countries
and earmarking between 25 and 50 per cent of total revenues. Up to
US$10 billion could be mobilized from other instruments, such as
the redeployment of fossil fuel subsidies in developed countries or
some form of financial transaction tax, though diverging views will
make it difficult to implement this universally.
“It will need sustained political will, appropriate public
policy signals for the markets, and financial ingenuity,” Mr. Ban
told reporters today at a press conference in New
York.
Mr. Ban noted that the report comes three weeks before the
opening of the UN Climate Change Conference in Cancún, Mexico.
“This report can help governments in their discussions on
climate finance, which is one of the most difficult areas in the
negotiations,” the Secretary-General said today. “I hope it will
help them move forward.”
“There is no silver bullet - no ‘one
size fits all’ solution for raising these funds.” UN
Secretary-General Ban Ki-moon
At the UN climate change conference in Copenhagen, Denmark, last
December, developed nations pledged $30 billion of fast-track
funding for developing countries through 2012 and committed to
jointly raise $100 billion annually by 2020.
Co-chaired by Prime Ministers Meles Zenawi of Ethiopia and Jens
Stoltenberg of Norway, the 21-member Advisory Group was set up by
the Secretary-General in February. “Without an agreement on finance
we won’t reach an agreement on climate,” Mr. Stoltenberg told
today’s press conference.
Mr. Meles said further progress would depend on the political
will of leaders everywhere, but particularly in developed
countries. “[The report] can be used to create an ambitious deal or
a weak and miserly deal, or it can be left to languish in the desks
of government bureaucrats,” he said.
The report stressed the importance of rapid and decisive
actions. “Now is the time to take decisions,” it said, adding that
mobilizing financing will require strong commitments to the goals
set by nations to mitigate climate change and the introduction of
new public instruments on carbon financing.
The careful and wise use of public funds, combined with private
funds, can generate “truly transformational investments,” the
Advisory Group found.
It also underscored that the prudent and results-based use of
funds would greatly enhance the credibility of both developed and
developing nations in raising and using resources.
target=”_blank”>The full report is available
here
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