COP 16: UN Conference Delegates Debate Source Of Climate Change Funds

12/08/2010 05:27 pm ET | Updated May 25, 2011

CANCUN, Mexico (AP) — Should airline passengers pay a small tax to help out? How about global money dealers? Or perhaps governments should take what they spend subsidizing gasoline prices and put it toward the climate cause.

Delegates to the U.N. climate conference hope to agree in its final days on setting up a new "green fund" to help poorer countries grapple with global warming. Then the real arguments will begin – over where the cash will come from.

U.N. Secretary-General Ban Ki-moon stepped into the middle of the debate earlier this year by enlisting a high-level group of international political and financial leaders to offer advice. On Wednesday the U.N. chief presented their ideas to the conference, including airline and foreign-exchange levies, as he led a discussion with key figures on the panel.

It will be "challenging but feasible and doable even in the context of the ongoing economic crisis" to raise $100 billion a year by 2020, as promised by richer nations at last year's climate conference in Copenhagen, Denmark, Ban said.

He said "adequate" financial support would build trust between the developing and developed world, needed to forge an eventual umbrella agreement among all nations to fight climate change.

Besides the green fund, the annual two-week meeting of parties to the 193-nation U.N. climate treaty may also agree on ways to make it easier for poorer nations to obtain patented green technology, and may pin down further elements of a plan to compensate developing nations for protecting their climate-friendly forests.

But once more, as at the Copenhagen summit, negotiators won't produce a sweeping deal to succeed the relatively modest Kyoto Protocol after 2012, one that would slash greenhouse gases to curb climate change.

The U.S. has long refused to join Kyoto, which mandates limited emissions reductions by richer nations, and whose commitments expire in 2012. The U.S. complained the accord would hurt its economy and should have mandated actions as well by such emerging economies as China and India.

Washington's climate envoy, Todd Stern, repeated that position in Cancun on Wednesday, saying the U.S. won't sign up to any legally binding climate pact unless it applies to "all the major countries," including China and India.

Meanwhile, carbon dioxide and other global warming emissions from industry, vehicles and agriculture continue to accumulate in the atmosphere.

The green fund would be considered a key success for Cancun, but many details would remain to be worked out later, and agreement here was far from assured.

The financing would help developing nations buy advanced clean-energy technology to reduce their own emissions, and to adapt to climate change, such as building seawalls against rising seas and upgrading farming practices to compensate for shifting rain patterns.

The debate here zeroed in on the size and sources of the fund.

Behind closed doors, haggling over proposed Cancun decisions, delegates dueled over what developing nations considered an inadequate goal – the $100 billion a year by 2020.

The developing south views such finance not as aid but as compensation for the looming damage from two centuries of northern industrial emissions, and propose that the richer countries commit 1.5 percent of their annual gross domestic product – today roughly $600 billion a year.

Northern delegations resisted such ambitious targets, and also objected to language indicating most of the fund's money should come from direct government contributions.

One of the developing world's own leaders, Ethiopia's Prime Minister Meles Zenawi, defended the north's stand on that point.

In view of the economic crisis, "it is not feasible for most of that money to come through the (government) budgetary process at the moment," Zenawi, a cochairman of the U.N. high-level panel, said in the Ban-led discussion.

In the Cancun talks, northern delegations leaned toward the conclusions of Ban's advisory group as the basis for the inevitably intense debate over funding that will follow any Cancun decision.

The group's final report last month said the greatest contributions should come from private investment and from "carbon pricing," either a direct tax broadly on emissions tonnage from power plants and other industrial sources or a system of auctioning off emissions allowances that could be traded among industrial emitters.

Either route would make it economical for enterprises to minimize emissions, and would produce revenue. Zenawi said his group recommends that at least 90 percent of such revenues flow to domestic budgets and the remainder to the global fund.

The United States has been a major holdout against such carbon pricing plans, however, and the impending Republican takeover of the U.S. House of Representatives all but guarantees none will be enacted for at least two years.

The U.N. advisers also see possible revenue sources in a tax or trading system for fuel emissions of international airliners and merchant ships, or a fee on air tickets, with a potential for $10 billion a year.

They also suggested a possible levy on foreign-exchange transactions, producing possibly another $10 billion, and removal of government subsidies of fossil fuels, with the money redirected to a climate fund.

Fuel subsidies are believed to run into tens of billions of dollars annually worldwide. The U.S. federal government gave $72 billion in subsidies to the fossil fuel industry between 2002 and 2008, says a study by the Environmental Law Institute.