Soros Panel Draft Says Bank Taxes, Carbon Auctions Can Finance Climate Aid
At least $65 billion could be raised by taxing foreign-exchange transactions and auctioning pollution permits, a United Nations panel recommending ways to finance aid for fighting global warming will conclude today, according to a draft of its report.
The panel, which includes billionaire George Soros and Larry Summers, director of President Barack Obama’s National Economic Council, estimated that selling carbon emissions permits could generate $38 billion and a financial transactions tax an additional $27 billion, according to the draft dated Oct. 4 and obtained yesterday. The UN will release the study in New York today.
The findings are intended to guide envoys at UN climate talks that start this month in Mexico as they seek ways to pay for $100 billion in climate aid that was pledged to poor nations by 2020 at last year’s summit in Copenhagen. The draft report found that the goal is “challenging but feasible” to achieve.
“The ball is really now in the court of governments to move forward on generating these resources,” David Waskow, senior adviser on climate finance for the development charity Oxfam International, said in a telephone interview from Washington. “One can raise substantial public finance from public sources and do it in a way that’s not going to place additional pressure on national budgets and taxpayers.”
Appointed by UN
UN Secretary General Ban Ki-moon appointed the panel, called the High-Level Advisory Group on Climate Change Financing, in February. It’s led by Ethiopian Prime Minister Meles Zenawi and his Norwegian counterpart Jens Stoltenberg. The 21-member group also includes Soros, Summers and Deutsche Bank AG Vice Chairman Caio Koch-Weser.
The draft report didn’t specify what financial transactions would be covered by the tax beyond saying the focus would be on international currency sales. A UN spokesman confirmed the report was coming and didn’t discuss details of its conclusions.
“The report is going to say that it’s definitely possible to put together the $100 billion a year in financing for climate change,” Dan Shepard, a UN spokesman, said in an interview. “But there are challenges. The report has to be looked at by governments because they’re the ones that would have do it. But it can be done practically.”
The draft was written before the panel’s last meeting, which was on Oct. 12 in the Ethiopian capital, Addis Ababa. Changes may be made in the version released today.
Tobin Tax
If confirmed today, the findings would add to the weight behind calls for a tax on financial speculation, sometimes termed a Tobin tax after James Tobin, the Nobel Prize-winning U.S. economist who first suggested the idea in 1971.
Former U.K. Prime Minister Gordon Brown, French President Nicolas Sarkozy and labor groups including the U.K. Trades Union Congress have supported the idea. President Barack Obama’s administration opposes it. A tax of 0.05 percent on financial transactions may raise as much as $700 billion a year, according to WWF, a global environmental activist group.
A financial transactions tax would be “difficult to implement universally” and therefore “only feasible to implement among interested countries,” the panel said in its draft report.
Carbon Plan
The panel assumed a carbon price of as much as $25 a ton on emissions in the levy it suggested. An additional $5 billion could be gained from a tax on carbon offsets in the UN’s Clean Development Mechanism, which polluters buy to make up for emissions elsewhere, according to the study. Private offsets could generate as much as $14 billion.
An additional $12 billion would come from a levy on shipping and aviation, the draft report showed. Waskow said the levies on transportation need to be structured so as not to harm developing nations.
Other sources of finance identified in the report included direct contributions from government budgets, a measure it said could generate the full $100 billion while being politically “challenging.”
The panel also looked at a “wires charge” on electricity generation, which it said could provide $5 billion; the removal of fossil fuel-subsidies, which could give $8 billion; and a carbon tax, which would garner $10 billion. Private finance could provide a net $18 billion, it said.
http://www.bloomberg.com/news/2010-11-05/soros-panel-draft-says-bank-taxes-c02-auctions-can-fund-climate-aid.html
