US$100 billion (Dh367.31bn) promise by the industrialised world to help poorer countries fight global warming will require new taxes that could hit world trade, air travel or financial transactions, an environmental expert told UN climate talks yesterday.
Such levies, which would affect everyone from air passengers to workers transferring funds overseas, have become a key point of debate at ongoing climate talks that aim at reaching a new international treaty on global warming by December.
Revenues from the special taxes, plus contributions from governments and the private sector will help industrialised countries meet their pledge to provide poor countries with $100bn a year by 2020, said Lord Stern, a member of an advisory group formed by Ban Ki-moon, the UN secretary general.
“What we’re looking at is financing the investment associated with a new industrial revolution,” said Lord Stern, who was the author of a 2006 benchmark report on climate change for the British government.
“No one source is likely to develop $100 billion annually by itself by 2020.”
The UN secretary-general’s high-level advisory group on climate change financing is examining a range of potential taxes that could be levied internationally, such as a tax on aviation or marine bunker fuels, which contribute to greenhouse gas emissions, or a tax on financial transactions, Lord Stern said.
Each option could raise $10bn to 20bn a year, he said, although the structure for how the taxes would be levied had still not been worked out. The group will release a final report on its analysis by October, he said.
The group would explore ways for poorer countries to receive compensation for the higher cost of taxes, he said.
The taxes would have to be levied with uniformity to avoid distorting international transport markets, said Ato Newai Gebre-ab, the economic adviser to the prime minister of Ethiopia and a contributor to the advisory group.
“One option would have been to say, why not make some countries exempt?” he said. “Exemption obviously cannot be considered because you have to put all the enterprises on a level playing field.”
Industrialised countries promised at climate talks in Copenhagen in December to provide $30bn a year for the next three years to help the world’s poorest countries adapt to the effects of changing weather patterns and sea levels.
They promised the level of aid would rise to $100bn a year by 2020. But developing countries have yet to see much of the aid money, and some delegates have criticised the process for moving too slowly.
In a statement on Monday, the main bloc of African countries at the talks called for developed countries to set aside 1.5 per cent of economic output for climate aid “that should be new and additional and not just recycled” from existing aid programmes.
The UN group’s recommendations would carry significant weight at the climate talks as negotiators debate existing proposals for international taxes, said Antto Vihma, a climate negotiations expert at the Finnish Institute of International Affairs in Helsinki.
“Innovative funding sources, such as taxes on bunker fuels and aviation, are much more talked about than they used to be,” he said. “(Developing) countries are split on these issues because some regard adaptation as an extreme priority, and some feel quite threatened on fuel taxation, either because they’re big on shipping, or they’re oil exporting countries.”