Quest for funds

Estimates differ widely as to the funds needed to help countries in the South adapt to the consequences of climate change and switch over to more climate-friendly technologies. The amounts vary considerably depending on what targets and timeframes are taken as the basis. What is clear is that the figure runs into three digit billions. The developing countries and NGOs are demanding that these funds are provided in addition to development aid.
The Climate Action Network (CAN), a worldwide network of 450 NGOs, puts its minimum at 150 billion US dollars per year (reference year 2020). As the originators of climate change, the industrialised countries would need to provide developing countries with that amount. Fifty billion would go towards adaptation measures, 69 billion for steps to keep emissions at an environmentally sustainable level despite growth. In addition, 35 billion would be used to protect forests (deforestation accounts for about one fifth of CO2 emissions), and smaller amounts allocated, inter alia, for a system of insurance.
The EU Commission is working with similar figures (100 billion euros). In its latest World Development Report, the World Bank takes 2030 as its reference year and arrives at a figure of 475 billion US dollars annually, of which 75 billion for adaptation.

A range of proposals

Several countries have put forward proposals as to how this money could be raised. Prominent amongst them are binding financial mechanisms that would generate new resources based on the polluter pays principle.

• Norway suggests the international auctioning or sale of some of the emission rights accruing to states under the new climate agreement. The proceeds depend on how many rights are auctioned, and how the prices are determined. NGOs are calling for the auctioning of at least 10 per cent of emission rights, which according to the Climate Action Network would bring in 69 billion US dollars. Others base themselves on a two per cent share.

• Mexico proposed the idea of a green fund that would go towards promoting climate-friendly technologies. That fund should receive at least 10 billion US dollars annually in contributions, countries' quotas being set in accordance with their emissions, the size of their population, and their gross national product.

• Shipping and air traffic: The EU in particular is pressing for shipping and air traffic to be included in a new climate regime. This could generate income, for example through a combination of a ticket tax and the auctioning of pollution rights. The 48 poorest countries have already called for a flight tax to help pay for adaptation measures.

• Switzerland proposes an international CO2 tax to finance climate change adaptation measures. Two dollars would be levied on each per capita tonne of CO2, but waived for the first 1.5 per capita tonnes. All countries that produce negligible amounts of pollution would be exempt from the tax. By Swiss calculations, the tax would bring in some 43 billion US dollars per year, part of which could be spent domestically. Under this model, Switzerland would get off cheaply, paying roughly 36 million US dollars. Although the content of the proposal is interesting, not a single country has so far supported it, as no one wants to have taxes imposed on them.

• The G77 and China are demanding that industrialised countries should provide 0.5 to 1 per cent of their gross national product – in addition to development aid. That would mean an extra 2.5 to 5 billion francs per year for Switzerland.

At the time of going to press in late October, no preference had yet emerged in the talks. The proposals by Norway and Mexico, as well as the one on an air travel and shipping tax do have chances. The climate expert at the World Wildlife Fund Switzerland, Patrick Hofstetter, who represents the major environmental and development organisations on the Swiss negotiating delegation, also sees these proposals as the politically most realistic ones.
Pepo Hofstetter, Alliance Sud

Climate Action Network

rticle published in: Alliance Sud News no. 61, Autumn 2009