Taxes on international flights, shipping and financial transactions, as well as a global carbon price of $20 to $25 may be key to annually mobilising $100 billion in climate funding by 2020, according to the United Nations high level advisory group on climate change financing which submitted its report in New York on Friday.
At UN climate summit held in Copenhagen last year, developed countries committed to a goal of jointly mobilising $100 billion per year to meet the needs of developing countries with regard to climate change mitigation and adaptation. The 21-member advisory group set up to chart a course to meet this goal includes Planning Commission Deputy Chairman Montek Singh Ahluwalia, as well as British Prime Minister Gordon Brown, economist Nicholas Stern and financier George Soros.
Terming the target as “challenging but feasible,” the report says that financing could come from both public and private sources.
“If we are to reach this goal, we will need a mix of new public sources, a scaling-up of existing public sources and increased private flows. A carbon price in the range of $20-25 by 2020 will be important to meet the goal,” it said. While carbon trades at about that level in the European market today, many other developed countries – significantly, the United States – have resisted any move to put a price on carbon. However, this could potentially raise $30 billion per year, and would also provide incentives for further mitigation actions, according to the advisory group.
The report also called for exploring revenue sources such as international carbon taxes. This could mean a tax or trading system for the fuel emissions of international airlines or merchant ships, or even a fee on passenger air tickets, which has the potential to raise $10 billion per year. Taxing forex transactions could garner another $10 billion. Further carbon taxes in developed countries and redeploying fossil fuel subsidies could be other sources of funding.
The report will be discussed at the next U.N. climate summit to be held in Cancun, Mexico, later this month. Concrete pledges and action on climate funding is seen as crucial to the negotiations to be held there. “Without an agreement on finance we won't reach an agreement on climate,” warned the Norwegian Prime Minister Jens Stoltenberg, a co-chair of the advisory group.
“This 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,” said U.N. Secretary-General Ban ki-Moon, while accepting the report.