National Climate Change Financing Proposals

National Climate Change Financing Proposals refer to government proposals calling for effective financial mechanisms which support national mitigation, adaptation and technology transfer programs and activities.

To date, a number of government proposals on financing for mitigation, adaptation and technology transfer have emerged within the United Nations Framework Convention on Climate Change (UNFCCC) negotiations process. Some of the proposals on climate funds which have gained attention include the following:

• Mexico has proposed a Comprehensive World Climate Change Fund which would provide for mitigation, adaptation, and technology transfer activities. Withdrawals would be limited to countries that contribute to it and would be determined by a formula based on current greenhouse gas emissions, population, and gross domestic product. The Comprehensive World Climate Change Fund would aim to mobilize no less than $10 billion a year. Mechanisms that could mobilize financial resources include auctioning permits in domestic cap and trade systems and taxing air travel. In addition, Mexico proposes that a portion of the Climate Change Fund be set aside for the benefit of the poorest countries, as they will be most affected by climate change. The fund would be transparent and inclusive and all countries would have equal voice its governing structure. ¹
• China and the Group of 77 (a U.N. coalition of developing countries, now with 130 members) presented a proposal calling for a financial mechanism that would link private and public funding sources to the spending needs of governments in order to reduce potential fragmentation in climate change financing. Funding would be additional to current official development assistance. The majority of funds would come from industrialized countries and would be offered as grants rather than loans. The level of funding would be set at .5 to 1 percent of the gross national product of industrial countries as a group. A governing board with equal representation from developing and developed nations would determine how much funding would be allocated for programs on adaptation, mitigation, and technology transfer. ²
• Switzerland has presented a proposal calling for a scheme for climate adaptation based upon a global carbon tax of $2 per ton of carbon dioxide emitted. Countries emitting less than 1.5 tons of carbon dioxide would be exempt from the tax. Estimated revenues from the funding scheme would be $48.5 billion annually. Of that number, $18.4 billion would be for a Multilateral Adaptation Fund. Revenues collected from a global carbon tax would be paid into the fund based on its level of economic development. High-income countries would pay 60% of their revenues to the fund. Medium-income countries would pay 30 % and low income countries would pay 15%. ³
• India proposed a New Global Fund for Adaptation. It said that a substantial portion of its GDP is being spent on measures to adapt to climate change. New and additional financial resources are needed under the Convention. ⁴
• TheEuropean Union has presented a proposal focused on expanding the global carbon market, leveraging private investment flows, and making financing predictable and timed to the needs of developing countries. It would also consider auctioning emissions allowances, introducing taxes on aviation and shipping with a global tax on carbon dioxide emissions. ⁵
• Norway has proposed that financing for adaptation needs be met through auctioning a share of "assigned amount units," portions of allowed emissions of all industrial countries. Companies in countries obliged to cap national emissions could buy these certificates to help them reach their emissions targets. Revenues from a system of auctioning emission allowances in the shipping sector would fund adaptation activities in developing countries. ⁶

• South Africa, on behalf of the Africa group, has proposed the scaling up of adaptation funding by more than 100 times what is now available. Financing would go beyond existing funds within the United Nations convention. ⁷