Oxfam's EU Advocacy office in Brussels

By Natalia Alonso, Tony Long and Jorgo Riss

The EU’s financial-transaction tax could unlock financing to be used to limit and cope with climate change.

A year of record breaking extreme weather has served as a timely reminder of the need to invest now to prevent catastrophic climate change. Recent reports by the World Bank, UNEP and the European Environment Agency make it blatantly clear that the world is wasting precious time that should be used to reduce carbon emissions and to help the poor adapt to the devastating effects of climate change. Yet, there is a real danger that financing to fight climate change will be scaled down in 2013.

Some may say that the economic crisis saps the EU’s ability to lead on climate. We believe the economic crisis is no excuse for the EU to abdicate climate leadership. It indeed not only offers fresh obstacles, but also opportunities to fight poverty and climate change. For instance, if European leaders agreed to allocate a significant portion of revenues from a planned financial transactions tax to climate action, they could raise money in these cash-strapped times.

At the 2009 climate talks in Copenhagen, industrialised countries committed to help developing countries reduce their own carbon emissions and protect their people from the worst effects of climate change, such as rising sea levels and droughts, storms and other extreme weather events, by mobilising $100 billion a year by 2020 and establishing an international climate finance fund, the Green Climate Fund.

Yet the Green Climate Fund remains empty – poor countries may be left to deal with climate impacts alone, as developed countries have so far failed to give concrete assurances that they will turn their back on them in the run-up to 2020. If the climate negotiations are to make progress in Doha, then it is vital that the EU and other rich countries set out a credible plan to deliver on their promises.

A recent study by the German Institute for Economic Research (DIW) estimated that the proposed European Financial Transaction Tax (FTT) would bring in €40bn-a-year from the 12 EU member states that have so far agreed to go ahead with the tax.

If EU leaders were to allocate even just a quarter of this sum to the Green Climate Fund, they could guarantee about €10bn annually to meet the needs of developing countries for climate finance.

The FTT is recognized as a promising source of new revenue to address the climate crisis, healthcare, education, and other public goods. President Hollande echoed this vision when he recently allocated a portion of France’s new unilateral FTT to development and the Green Climate Fund.

So far, EU governments are failing to show leadership at Doha. Now is the time for them to raise the EU´s emission target and to make a clear statement that a sizeable proportion of the revenue from any future FTT should be used to provide additional EU climate finance needed to meet the commitments to the poorest and most vulnerable.

Natalia Alonso is the head of Oxfam International’s EU office. Tony Longis the director of WWF’s European policy office. Jorgo Riss is the director of the EU unit of Greenpeace.

Originally published in European Voice on 3/12/12

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