The UN High-Level Advisory Group on Climate Change Financing handed over a report detailing how developed countries can make good on their financial pledges to help poor countries reduce their emissions and adapt to climate change.
The group was set up in February and features heads of state, finance ministers and economists, including financier George Soros and Lord Nicholas Stern, author of an influential report on the economic costs of climate change.
"We will need a variety of revenue sources from both the public and the private sectors," UN Secretary-General Ban Ki-moon told the press in New York. He said all countries would need to demonstrate a strong commitment to domestic efforts to cut global-warming emissions.
"These efforts, along with the introduction of new public instruments based on carbon pricing, will be among the keys to mobilising the required financing," the UN secretary-general said.
The report finds that a carbon price of $20-$25 for each tonne of CO2 emitted is necessary to raise funding in the amounts required. This would both provide incentives for reducing emissions in industrialised countries and offer a potentially huge source of finance for poor countries.
The report proposes new public instruments that could raise billions of dollars annually.
Auctioning emissions allowances and carbon taxes could mobilise around $30 billion, introducing carbon pricing for international aviation and shipping could bring in $10 billion and redirecting fossil fuel subsidies could raise $10 billion annually, the report states.
The Advisory Group also looked into a financial transaction tax levied on banks. But it acknowledges that it is "difficult to implement universally" because of the lack of political acceptability.
Private sector to fuel fund
The private sector would finance much of the expected low-carbon growth, according to the report.
A robust carbon price could generate gross private capital flows in the range of $100bn-$200bn for climate action in developed countries. Moreover, carbon offset markets could generate between $30 billion and $50 billion annually.
The Advisory Group sees a significant role for multilateral development banks in leveraging private financing for climate projects. It estimates that for every $10 billion of additional resources, institutions such as the World Bank could deliver $30-$40 billion in grants and loans.
The report comes three weeks ahead of global climate negotiations in Cancún, Mexico, where world leaders will try to find common ground on climate financing, which remains one of the most controversial issues.
"While we have thus done a very important part of the leg work that needs to be done for the negotiations on climate finance to proceed, the final and perhaps more difficult task of clinching a deal on the matter is yet to be accomplished," said Ethiopian Prime Minister Meles Zenawi, who co-chaired the group.
He urged leaders in industrialised countries to show the political will to use the report for an ambitious agreement.