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Friday
Nov272009

How to pay for climate change policy

The likelihood of the forthcoming UN Climate Change Conference (COP15) yielding a hard and fast climate change deal looks slim. It was hoped that with more than 15,000 officials from 192 countries due to attend the conference in Copenhagen from 7 to 18 December, something more solid than a statement of intent might have been achievable. 

Attending a two-day Asia-Pacific Economic Co-operation (Apec) summit in Singapore, world leaders, including presidents Barack Obama of the US and Hu Jintao of China, revealed that in their opinion it will not be possible to reach a legally binding climate change deal at the Danish conference. Instead they plan to use the summit as a "staging post" in the pursuit of a global deal that will see a cut in emissions of greenhouse gases.  These conclusions largely concur with statements on and off the record from a number of European officials and ministers. The possibility of a legally binding deal has been described as anything from "unlikely" or "extremely unlikely" to "impossible".  

Speaking in Beijing after subsequent discussions with President Hu Jintao, Barak Obama appeared to take a more optimistic stance than the one expressed in the joint statement from the Apec forum. "Our aim there is not a partial accord or a political declaration, but rather an accord that covers all of the issues in the negotiations and one that has immediate operational effect," he said.

Danish Premier Lars Loekke Rasmussen has seized on Obama's comments as a sign that an agreement of note is possible. "I am glad that the Danish strategy was supported today in Beijing at the Chinese-American summit... it confirms that we have taken the right stance," Mr Rasmussen told the BBC. Mr Rasmussen is determined that guest delegates must put "numbers on the table" and reach a "concrete and binding" agreement.

At the heart of the discussions will of course be the thorny issue of money. How much will nations agree to spend and more importantly, how will it be raised?

The challenge to cover the cost of structural changes within existing energy infrastructures is enormous. In addition, what financial incentives might Governments adopt in order to encourage efficiency and the necessary research, development and deployment of renewable energy?

Gordon Brown has suggested a "global financial transactions levy.” It’s an idea closely related to a plan by economist James Tobin, for a tax on all currency trade across borders. Oxfam estimate that the yield could be enormous with tax of 0.05 percent on financial transactions producing 700 billion dollars a year. “Payback time for banks.” says Max Lawson, their senior policy adviser. Martin Hearson from ActionAid believes that as much as 160 billion dollars a year could be put aside through action on tax havens.

Germany and France have in the past broadly supported such a scheme. However, the significance of Brown's recent statement is that Britain itself enjoys 60 percent of the kind of financial transactions referred to. So far the U.S has shown very little enthusiasm for these types of collaborative tax proposals.

All will soon be revealed, with the financial implications for businesses, Governments and energy consumers the world over, eagerly awaited.

 



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