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Sources of Climate Finance: Innovative Options and Challenges

This article discusses the need for periodic review of current international flows of climate finance, near-term needs, and potential sources of additional funds. It explores innovative options such as international financial transactions tax, revenue from aviation and shipping emissions, and border levies on carbon intensive imports.

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Sources of Climate Finance: Innovative Options and Challenges

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  1. ecbi Long-term Finance Sources Erik Haites, Margaree Consultants Inc., Toronto ecbi Finance Circle, Bonn, June 12, 2011 european capacity building initiative initiative européenne de renforcement des capacités for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

  2. Sources of Climate Finance • Need periodic review of: • Current international flows of climate finance • Near term needs for climate finance • Potential sources of additional funds, if needed • Need resources for the Green Climate Fund: • Pledges by developed countries – amounts > fast-start finance difficult given their financial situations • Innovative sources

  3. Innovative Sources • Possible innovative sources: • International financial transactions tax • Levy/auctioned allowances for international aviation and shipping emissions (or air passenger levy) • Border levies on carbon intensive imports (or carbon export optimization tax) – unlikely AGF • Other international needs (MDGs) considering the same possible sources • International aviation and shipping emissions most likely source for climate finance

  4. Revenue from Bunkers No agreement at ICAO/IMO to regulate emissions and generate revenue for climate EU will regulate aviation in 2012. Legal challenges will not succeed. Shipping will follow. Result – revenue goes to developed country treasuries; only part goes to climate finance Exemptions/revenue rebates reduce funds for climate and change distribution among developing countries

  5. Conclusions Getting substantial initial pledges for GCF will be a challenge Innovative sources increasingly important Revenue from bunkers best prospect for climate and it helps reduce emissions Action by EU rather than ICAO/IMO turns it into national revenue stream and so reduces funds for climate finance Air passenger levy could be implemented quickly

  6. Climate Policy Special Issue International financial support to address climate change Just published Available at: http://earthscan.publisher.ingentaconnect.com/content/earthscan/cpol

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