Bank Tax, CO2 Auctions Recommended by Soros Panel to Help Climate Efforts
At least $65 billion might be raised by taxing foreign-exchange transactions and auctioning pollution permits, a United Nations panel said today in a report recommending ways to finance aid for fighting global warming.
The panel, which includes billionaire investor George Soros and Larry Summers, director of President Barack Obama’s National Economic Council, said selling carbon-emissions permits would generate $38 billion and a financial transactions tax an additional $27 billion, according to the report released 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 by 2020 to poor nations at last year’s summit in Copenhagen. The report found that the goal is “challenging but feasible” to achieve.
“Without agreement on finance, we will not be able to reach agreement on other issues for climate change,” Jens Stoltenberg, Norway’s prime minister and co-chairman of the advisory group, said at a press conference in New York. “Now we need the political will to take the decisions.”
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 Stoltenberg and Ethiopian Prime Minister Meles Zenawi. The 21-member group also includes Soros, Summers and Deutsche Bank AG Vice Chairman Caio Koch- Weser.
The report didn’t specify what financial transactions would be covered by the tax beyond saying the focus would be on international currency sales.
‘Court Of Government’
“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.”
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 Washington-based 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 report.
Developing nations are “the most exposed” to the impacts of warming, Nicholas Stern, former chief adviser on climate change to the U.K. government and a member of the advisory panel, said in a statement. The UN in 2007 found that while developing countries have contributed the least to the buildup of greenhouse gases in the atmosphere, they’re the most at risk from the effects of climate change, especially small, island states and nations in Sub-Saharan Africa.
“As Africans, we’ve contributed virtually nothing to the environmental mess our planet is in,” Meles said at the press conference by telephone from Ethiopia. “We will, however, suffer the most.”
The panel assumed a carbon price of as much as $25 a ton on emissions in the levy it suggested. An additional $5 billion might 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 may generate as much as $14 billion.
“Concerted global action and a carbon price of at least $25 is required to achieve the necessary transformation in the global economy,” U.K. Energy and Climate Change Secretary Chris Huhne said in a statement. Huhne is a member of the advisory group.
An additional $12 billion would come from a levy on shipping and aviation, the report showed. Waskow said the levies on transportation need to be structured so as not to harm developing nations.
Sources of finance identified in the report included direct contributions from government budgets, a measure it said may generate the full $100 billion while being politically “challenging.”
The panel also looked at a “wires charge” on electricity generation, which it said might provide $5 billion; the removal of fossil fuel-subsidies, which may raise $8 billion; and a carbon tax, which would garner $10 billion. Private finance could provide a net $24 billion, it said.
Soros Proposal Shelved
A proposal Soros made at last year’s climate summit in Copenhagen, that the richest nations use $100 billion of foreign-exchange reserves to help developing nations fight climate change, was deemed not “politically acceptable” by the panel. The money is denominated in what are called special drawing rights, the IMF unit of accounting based on the dollar, yen, pound and euro.
Special drawing rights, created in 1969 to replace gold for large cross-border exchanges, are used by the IMF and other international organizations to account for financial transactions in different countries.
“We are simply asking those who created the problem to stop before it becomes too late,” Meles said. “The prospects for sanity and justice do not appear good, but I refuse to give up.”