Oxfam's EU Advocacy office in Brussels

Last week representatives from the EU, the G20 and Least Developed Countries, the World Bank and industry came together at a high level panel event organised by Oxfam in collaboration with the Mission of Norway to the EU to discuss how to raise the $100 billion pledged by rich countries at Copenhagen to help poor countries adapt to climate change and develop in a low carbon way, every year by 2020.

Rich countries will need to pay out of their national budgets, but that will never be sufficient to meet the climate finance pledge they made in Copenhagen. New sources of public finance will be needed. European Commissioner for Climate Action Connie Hedegaard reiterated the EU’s determination to pay its fair share, and said that innovative sources will be key in delivering this. “To get 100 $ billion out of public finance ministries each year from 2020 and onwards, I think everyone can see what a nightmare this is going to be, so it is very important to accept that it must be a mix of private funding, public funding and innovative sources, and Europe is really pushing for that”, she said.

A fair global carbon charge on shipping was highlighted as a key potential source of new money to be put towards such climate financing. Applying charge of $25 per tonne of carbon emissions in the shipping industry – which is responsible for more than 3% of global emissions – could raise at least $25 billion per year in climate finance, whilst significantly contributing to the reduction of global emissions.

Speakers agreed that it is both possible and desirable to reach a global deal on such a carbon charge, and further stressed that a mechanism compensating developing countries for the marginal resulting increases in the cost of trade would be a necessary part of such a deal.

Jarl Krausing, climate change expert at the World Bank, stated that “we do not want to establish a global system which means that developing countries will have to pay at the same level as developed countries. There has to be a compensation scheme.’’ He asserted that ‘’it has been assessed that probably 40% of the revenues would have to go back as compensation to developing countries. In the end, $7 billion to $11 billion dollars would be generated as climate finance flows’’.

Representatives from the shipping industry also demonstrated confidence in such a scheme. Simon Bennet, Director of external relations at the International Chamber of Shipping , highlighted that ”the UNFCCC principle of common but differentiated responsibility (CBDR) has to be reconciled with the need for any market-based measures on CO2 to be applied equally to all ships trading internationally. […] But the most part we believe the spirit of CBDR can be fully met by directing most of the money to an International Maritime Organisation compensation fund”.

On the Financial Transaction Tax, another potential source of innovative finance for climate action and development, Mr Serge Lepeltier, Ambassador for Climate Change Negotiations of the French government, said that “a tax on financial transactions has moved within the realm of the possible” and that “President Sarkozy remains very proactive on these issues and strongly pushes for an FTT”

Mobilising scalable, reliable and predictable financial flows from innovative sources will be crucial to substantiating the pledges made at Cancun last year and to help developing countries deal with the devastating impacts of climate change. The G20 in their final communiqué recognised that innovative sources of finance are needed to fight climate change in poor countries, laying the foundation for a deal on a fair carbon charge for shipping to be struck at the UN climate talks in Durban later this month. Oxfam will continue to campaign for both the FTT and a fair carbon charge on shipping, and hold leaders accountable to the financial commitments they made at last year’s climate negotiations.

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