Bonn Talks Produce Ideas for Financing Climate Adaptation but No Agreements

The world’s richest countries have agreed for some time that they must cover the costs of climate mitigation and adaptation for the poorest nations. But as the latest round of UN climate talks ends this week in Bonn, Germany, it is still unclear how industrialized nations will finance these strategies.

Yvo de Boer, head of the UN Climate Change Secretariat, has called the financing issue one of the hardest nuts to crack, and for good reason.

According to an EU report last March, global investment to fight and deal with climate change in the developing world will need to reach about $90 billion per year by 2020.

To date, however, wealthy countries have failed to make good on promises made at the UNFCCC's 2001 Morocco summit to provide the 49 least developed countries (LDCs) $2 billion for immediate adaptation. So far, only $200 million has been contributed and few projects have been implemented as a result.

"The LDCs are demanding that the rich countries pledge up to $2 billion over the next five years in order to fulfill the promise they made eight years ago," said Saleemul Huq, senior fellow in the Climate Change Group at the International Institute for Environment and Development.

There is also the disparity between what developed countries are willing to do and what the LDCs, with the support of the UN, consider to be the level of need. A U.S. budget of $400 million to help poor countries adapt to climate change was dismissed as inadequate by the LDCs.

Despite these issues, a number of financing ideas were floated in Bonn. (Earth Negotiations Bulletin has some of the highlights of the financing discussion.) These included a levy on air travel and shipping fuel, and a proposal that rich countries set aside up to 2% of their gross national product to assist poor countries.

Airline and Shipping Taxes

The levy on air travel drew attention, in part because the proposal came from the 49 poorest countries attending the talks.

The proposed levy would raise average long-haul fares by less that 1% for coach passengers and could bring in up to $10 billion a year to help the LDCs, many of which are on the front lines of climate change.

A proposal for an additional compulsory surcharge on all international shipping fuel could raise another $10 billion.

The EU is particularly interested in these two industries because shipping emissions have increased by over 60% in the last 15 years and airline emissions have doubled. Both are international industries, and shipping emissions have been particularly hard to regulate as a result.

International Green Fund

Mexico proposed a "green fund" plan which would obligate all nations to pay into the fund according to a formula reflecting the size of their economy, greenhouse gas emissions and population.

Since 75% of global emissions come from the wealthiest countries, this plan would take into account historic and current emissions in setting financial obligations.

The biggest issues with the green fund are that it is estimated to collect under $10 billion a year, less than what is needed, and would be subject to approval by each participating country’s legislature.

Carbon Allowance Sales

Norway has proposed that a set percentage of emissions allowances be set aside for sale, with the proceeds used to support developing nations. Like the Mexican proposal, this was reported to have received some traction at the talks.

Determining sources of financing is not the only issue. There are also questions about how the money would be distributed.

The current agreement draft states: