New report outlines ‘feasible’ way of raising US$100 billion to help developing countries tackle climate change, says Lord Stern
A new report launched today shows that it is feasible for rich countries to raise US$100 billion a year by 2020 to help developing countries tackle climate change, according to one of its authors, Nicholas Stern.
Lord Stern of Brentford is a member of the High-Level Advisory Group on Climate Change Financing, which was commissioned in February by the United Nations Secretary-General, Ban Ki-moon, to write the report.
The report identifies key measures for raising public funding, including carbon taxes and auction revenues, taxation or auction revenues from international transport, resources from the removal of subsidies for fossil fuels in rich countries, and increased resources to the multilateral development banks. Private finance measures include carbon market offsets and private sector flows which are enhanced by public policy measures. The report is available online.
Lord Stern, who is I.G. Patel Professor of Economics and Government and Chair of the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science, said:
“This report shows that it would be feasible, if there is the political will, for the rich countries to raise US$100 billion a year by 2020 from public and private sources to help developing countries to tackle climate change. It lays out a coherent set of policies that reinforce each other.
“Unmanaged climate change would disrupt the lives and livelihoods of hundreds of millions of people, probably causing mass migration and leading to severe and extended conflict. Poor countries and communities are the most exposed and vulnerable to the impacts of climate change, even though they have done least to cause the rise in greenhouse gas levels. So rich countries have a clear obligation to provide financial support for developing countries to make the transition to low-carbon economic growth and to adapt to those impacts of climate change that cannot now be avoided.
“The scale and urgency of this issue for developing countries was recognised by every member of the Advisory Group, which included heads of government, finance ministers and leading figures from the private sector. Most of the members, who were serving in their personal capacities, have experience of grappling directly at a senior level with the making of public policy and with practical public finance.
“The report points out the value of introducing a price on carbon. This would address the massive market failure resulting from the fact that the prices of products and services that involve emissions of greenhouse gases do not reflect the costs of damage caused by climate change.
“A modest price on emissions, in the range of US$20-25 per tonne of carbon dioxide, would push incentives in the right direction, raise substantial revenues, and foster the levels of investment from the private sector that will be crucial to the low-carbon industrial revolution. There is a powerful case that the carbon price should be substantially higher than this by 2020.
“I hope that this report will prove helpful in public discussion and policy analysis for those who wish to use it. The options discussed could help countries meeting later this month in Cancún, at the next session of the United Nations Framework Convention on Climate Change, to identify new sources of financial support. This new finance could help to overcome the current inertia in international negotiations over climate change.
“The upcoming G20 meetings in Seoul, South Korea, might be a useful forum to advance discussion on some of the options laid out in the report, such as the redirection of fossil fuel subsidies, increases in climate-related contributions to multilateral development banks on behalf of developed countries, and a potential levy on international transport.
“The next steps in implementation should include the proposals on international transport being considered by the International Civil Aviation Organization, the International Air Transport Association and the International Maritime Organization, and the multilateral development banks working on proposals for new green funds and for enhanced collaboration with the private sector.”
Notes for Editors
- Nicholas Stern was Second Permanent Secretary at HM Treasury of the UK Government between 2003 and 2007. He also served as Head of the Government Economic Service, head of the review of economics of climate change (the results of which were published in ‘The Economics of Climate Change: The Stern Review’ in October 2006), and director of policy and research for the Commission for Africa. His previous posts included Senior Vice-President and Chief Economist at the World Bank, and Chief Economist and Special Counsellor to the President at the European Bank for Reconstruction and Development. He was recommended as a non-party-political life peer by the UK House of Lords Appointments Commission in October 2007. Baron Stern of Brentford was introduced in December 2007 to the House of Lords, where he sits on the independent cross-benches.
- Lord Stern is Chair of the Grantham Research Institute on Climate Change and the Environment, which was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment. Lord Stern is also Chair of the Centre for Climate Change Economics and Policy, which is hosted by the University of Leeds and the London School of Economics and Political Science (LSE).