G20 must respond to climate change fears
CRITICS often accuse world leaders of being able to focus on no more than one problem at once. So with the economic crisis and the eurozone’s problems in particular dominating recent G20 discussions, what are the chances of progress on climate change this week’s leaders’ summit in Cannes?
The economic crisis has done little to sharpen the pressure for action to tackle climate change. Banking collapses, austerity programmes and social unrest have for the most part knocked climate change from newspaper front-pages. But it is not far-fetched to suggest that the G20’s response to the financial crisis could help the fight against climate change.
Action cannot be put off until the current economic storm has passed. As Sir Nicholas Stern’s report pointed out, unchecked climate change could reduce global output by up to 20%. This would dwarf our current troubles — European output, for example, fell by 4.3% in 2009 but recovered 1.9% last year.
The poor countries most vulnerable to the floods, droughts, storms and other extreme weather associated with climate change need help now. The famine in the Horn of Africa, where at least three-quarters of a million people, are at risk of starvation and flooding across South Asia affecting more than 18 million people are just two examples of the sort of humanitarian emergencies that are already becoming more common.
It is rich countries whose emissions are overwhelmingly responsible for climate change. They have promised $100 billion per year to both help poor countries cope and reduce their own emissions. But the fund agreed last year in Cancun has yet to be activated and, as yet, no deal has been done to scale financing to that level.
Developing countries want those resources to come from developed countries’ national budgets. National budget contributions must lay the foundation of the $100bn, but in the current fiscal climate, the temptation to re-label old promises of development aid may be too great for finance ministers to resist. Climate change is a new crisis demanding new resources, not old wine in new bottles.
Equally, it is not and should not be up to the G20 to come up with a climate deal — that needs to happen in UN negotiations where poor countries have a seat at the table. But there is a real chance that the G20, with Bill Gates’ help could break the deadlock. His report on innovative financing for development, to be presented to G20 leaders in Cannes, will propose two ways developed countries can raise the new revenues needed.
The first is a charge on the unregulated, high and rising carbon emissions from shipping and aviation. Both sectors must play their full part in the fight against climate change, but in the near term, there is a particular opportunity for progress on pricing the emissions from ships — already responsible for more carbon pollution each year than Germany .
Oxfam and WWF have calculated that a moderate carbon price of $25 per tonne would generate $25bn per year by 2020 while raising the cost of global trade by less than $2 for every $1,000 that is traded.
To ensure poor countries are not unfairly hit, some revenue should be used to compensate them for the marginally higher import costs that may result. Of the rest, at least $10bn per year, could go to the new Green Climate Fund. A shipping carbon charge would strengthen the case for similar measures on aviation.
A joint statement by the finance ministers of France and South Africa earlier this month named shipping and aviation taxes as one of the building blocks of a potential deal when UN negotiations resume in Durban in November. It also set out the two countries’ “strong support” for the other opportunity presented by Bill Gates’ report: financial transactions taxes (FTTs).
Dubbed “Robin Hood” taxes by campaigners, they involve a small levy — around 0.05% — on transactions of banks, hedge funds and other financial institutions.
The taxes could be applied to share, bond, currency and derivatives transactions and would raise tens or even hundreds of billions of dollars every year. As well as fighting climate change in poor countries, revenue could also help the tens of millions of people pushed into extreme poverty by the economic crisis, and to protect the services and safety-nets upon which many poor people rely.
In addition to France and South Africa, FTTs are backed by Germany, Spain, the European Commission, Argentina and a number of countries outside the G20 including the group of African Francophone low-income countries. Although opposition from the US in particular makes global agreement unlikely, that should not prevent progress. In his role as chair of this year’s G20, France’s Nicolas Sarkozy has pledged to create a coalition of countries to press ahead with FTTs and raise funds for fighting climate change and development. A thousand economists — including Nobel Prize winners — have written to G20 leaders urging them to be a part of this initiative. Unilateral FTTs already exist in a number of the world financial centres including Britain, US, Hong Kong and Switzerland.
The International Monetary Fund has warned the G20 that as a result of its exemption value-added taxes, “the financial sector may be under-taxed and hence perhaps too big”. If this is true, then increasing taxes on the financial sector would help rebalance the global economy and encourage future growth.
The political case for action is also strong. Poll after poll shows that people want politicians to rein in banks’ bonus culture and make the financial sector pay its fair share and contribute to cleaning up the crisis it helped to cause. The spread of Occupy Wall Street-style protests around the world shows the anger bubbling under the surface.
G20 leaders in Cannes have the opportunity to address their people’s concerns, help poor countries caught in a crisis they did nothing to cause and take timely steps to address the coming climate crisis. It is a chance that must not pass them by.
- Mary Robinson is Oxfam Honorary President
