Saturday, November 13, 2010

UN panel sees sources for billions for climate

by Charles J. Hanley

A high-level United Nations panel outlined potential sources, including levies on international flights, to raise up to $100bn a year in new money for poorer countries to cope with climate change and reduce their greenhouse gas emissions.

The greatest contributions would come from private investment and from “carbon pricing”, either a direct tax broadly on emissions of carbon dioxide or a cap on emissions coupled with trading in emissions allowances, the advisory group of global political and financial leaders said in a report to UN secretary general, Ban Ki-moon.

The United States has been a major holdout, however, against such carbon pricing plans, and last week’s Republican victory in the US House guarantees none will be enacted for at least two years.

Asked about the impact of the US election, Norwegian Prime Minister, Jens Stoltenberg, co-chair of the UN panel with Ethiopia’s Prime Minister, Meles Zenawi, noted that its report is based on projections to 2020.

“I believe that many things might happen in American politics in a period of 10 years,” said Stoltenberg.

At last December’s climate summit in Copenhagen, Denmark, developed nations, led by US President, Barack Obama, agreed to set a goal of $100bn in annual climate finance by the year 2020.

In scores of developing nations in a warming world, money will be needed to build coastal protection against rising seas, modify or shift crops threatened by drought, build water supply and irrigation systems, preserve forests, and improve health care to deal with diseases spread by warming.

It also will help them move to low-carbon energy systems, such as solar and wind power, and away from the fossil fuels whose emissions are blamed for global warming.

“It is challenging but feasible to meet this goal,” the panel said of the $100bn target.

The 21 members of the High-Level Advisory Group on Climate Change Financing, appointed by Ban last February, included White House economic adviser Lawrence H. Summers, financier George Soros, President Bharrat Jagdeo of Guyana, French Economy Minister, Christine Lagarde and Mexican Finance Minister, Ernesto Cordero Arroyo.

Their report will be discussed at the UN climate conference of environment

ministers opening on 29 November in Cancun, Mexico.

Last year’s Copenhagen conference failed to produce a long-hoped-for international agreement mandating significant emissions reductions among industrialised nations, and possibly some more advanced developing nations, beyond 2012. That year marks the expiration of the first phase of the Kyoto

Protocol, which mandated only modest reductions and which the US rejected.

Financial help for developing countries is considered essential for reaching a global deal that also envisions reining in their emissions. The current fiscal crises among industrialised nations will complicate negotiations at Cancun and beyond, however.

To generate revenues for climate

causes, the high-level panel said, a “carbon price” must be set at $20-25 per ton. Such a price can be established through straight taxation on emissions tonnage from power plants and other industrial sources, or through a system of auctioning off emissions allowances that can then be traded among industrial emitters. Either route would make it profitable for enterprises to minimise their emissions, and would produce revenue.

The panel estimated either approach might produce $30bn a year by 2020 for a climate fund. The European Union, under the Kyoto Protocol, already has a carbon trading system, with the per-ton price currently in the $20-25 range.

The advisers saw these other possible revenue sources:

A tax or trading system for fuel emissions of international airliners and merchant ships, or a fee on air tickets, with a potential for $10bn a year.

A levy on foreign-exchange transactions; $10bn.

Removal of government subsidies of fossil fuels, with the money redirected to a climate fund; $10bn.

Stepped-up grants and loans from the World Bank and similar institutions; net gain of $11bn.

Private investment in developing countries’ climate projects, partnering with international aid; up to $20bn.

The panelists acknowledged likely political difficulties in enacting transportation and foreign-exchange levies on a global scale, but Mr Ki-moon said their vision was both “financially feasible and politically viable”.

“The advisory group has given us a path,” he said. “It is now up to governments to consider the options and to act.”

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