World Should Triple Funding for Climate, Mexican Official Says

The world should triple the amount of planned spending on climate programs this decade to bring emerging countries into a global deal that sets proper prices for energy and emissions, a Mexican finance official said.

Richer countries could provide $300 billion a year by 2020 for a new financing system, instead of the committed $100 billion, to accelerate investments that bypass fossils fuels. Those include projects based on wind, biofuels, solar and geothermal energy and increase efficiency, said Elias Freig, coordinator for Mexico’s Special CO2 Taskforce.

“Sound, sustainable, new, equitable and predictable financial support for climate action in developing countries is a top-tier priority” for United Nations talks this month, he said today in an interview. Funding is “critical to rebuilding trust at the UN climate negotiating table, and for solving the climate change challenge and dilemma once and for all.”

A United Nations panel recommending ways to finance aid for fighting global warming said the goal to provide $100 billion was “challenging but feasible,” according to its Nov. 5 report. The panel, which includes billionaire George Soros, Sir Nicholas Stern and Larry Summers, director of President Barack Obama’s National Economic Council, estimated that just selling carbon emissions permits could generate $38 billion in 2020, assuming a carbon price of $25 a ton.

A “high carbon price” of $50 a ton would produce $70 billion. Both scenarios assume 10 percent of allowances sold are set aside for poorer nations. Imposing carbon taxes where emissions trading isn’t possible would help ensure consumers make decisions that help protect the climate, Freig said. The taxes could be neutral in poorer nations, with the revenue spent to help pay for social programs, he said.

“The relative prices of energy sources are screwed up,” said Theodore Panayotou, an adviser to the Mexican ministry and an instructor in environmental economics at Harvard University from 1986 through 2009. Fossil-fuel subsidies need to be removed, he said yesterday in an interview. “Stop subsidizing the bad.”

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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