Cancun delegates debate climate fund: Who pays?

Charles J. Hanley, AP Special Correspondent

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 subsidising gasolene prices and put it towards the climate cause.

Delegates to the United Nations (UN) 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.

UN 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. Their ideas - airline and foreign-exchange levies among them - were on Wednesday's conference agenda, in a discussion led by the UN chief.

Addressing Tuesday's session, Ban noted the group found "it is challenging but possible" to raise $100 billion a year by 2020, as promised by richer nations at last year's climate conference in Copenhagen, Denmark.

This annual two-week meeting of parties to the 193-nation UN 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 much-debated, complex plan to compensate developing nations for protecting their climate-friendly forests.

No sweeping deal

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

The United States (US) has long refused to join Kyoto, which mandates limited emissions reductions by richer nations, and whose commitments expire in 2012. The US complained the accord would hurt its economy and should have mandated actions as well by such emerging economies as 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, improving health programmes to cope with new diseases spread by warming, and upgrading farming practices to compensate for shifting rain patterns.

Among other unresolved issues, developing countries were resisting efforts to give the World Bank a role in administering the eventual fund. They view the World Bank as too much under the control of richer nations and want the UN itself to run the fund.

The World Bank "has long been imposing policy conditions and programmes on South countries and peoples," complained dozens of international advocacy groups in an open letter to the conference.

More central were lingering disputes over the size and sources of the fund.

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

They view 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 per cent of their annual gross domestic product - today roughly $600 billion a year.

Northern resistance

Northern delegations resisted such ambitious targets, and also objected to language indicating most of the fund's money should come from direct government contributions. They leaned towards the conclusions of Ban's advisory group as the basis for the inevitably intense funding debate following a 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 minimise emissions, and would produce revenue.

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

The UN 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 US$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 US federal government gave US$72 billion in subsidies to the fossil fuel industry between 2002 and 2008, says a study by the Environmental Law Institute.