'New and innovative' funds for climate change

There have been a number of proposals submitted to the UNFCCC aimed at generating additional revenue for climate change. These proposals are often coined ‘new and innovative’ financing mechanisms as they are based on raising funds through action in the carbon market, or more broadly through carbon or international travel taxes or levies, rather than from conventional official development assistance (ODA) derived from public expenditure (typically funded from domestic revenue streams). A more detailed description of the funds can be found here.

A summary of the various new and innovative financing proposals can be accessed below. For details on the terms and acronyms used, visit the 'Glossary and abbreviations' page.

Proposal

Purpose

Sources of funds

Funds per year in billions (US $)

Source of annual funding estimate

Revenue flows to newly created vs. existing funds

AUCTIONS OF EMISSIONS ALLOWANCES

Norway’s auctioning of allowances

Adaptation

Annex I allowances withheld, auctioned by international body

$14 in 2012

Müller (assumes 2% levy)

Unclear where the money would be transferred/held

 CARBON MARKET-BASED LEVIES

Extending the levy to JI and/or IET (proposed by LDCs)

Adaptation

Levy on JI and/or IET

2008–2012: $5.5–8.5
2013–2020: $3.5–7.0 (based on unit issuance, AAUs only)

UNFCCC document: FCCC/TP/2008/6

Existing: KP Adaptation Fund

Pakistan’s CDM levy

Adaptation

3-5% levy on CDM

$0.3–1.7

UNFCCC document: FCCC/TP/2008/7

Existing: KP Adaptation Fund.

CHARGES, LEVIES OR TAXES ON EMISSIONS OR SPECIFIC ACTIVITIES

IATAL

Adaptation, Mitigation

$7/€5 per ticket fee or 2% levy on airline travel

Fee: $13.7
Levy: $10.4–26

Proposal originator (Müller), at ticket price $275–685

Existing.

IMERS

 

Adaptation

Emission charge, ‘cap and charge’ for Annex-I

$2.5 in 2012 for adaptation, increasing with time ($1 for LDCs & SIDS)

Proposal originator (Stochniol)

Existing

Tuvalu’s Burden Sharing Mechanism

 

 

 

Adaptation, Mitigation

(1) .01% levy on int’l airfares, maritime transport freight charges operated by Annex II
(2) .001% levy on int’l airfares, maritime transport freight charges operated by non-Annex I (LDCs / SIDS exempt)

$0.04 from Annex II; $0.003 from non-Annex I

Müller (based on total UNCTAD 2007 freight costs for 2005)

Existing: SCCF and LDCF

Swiss Global Carbon Adaptation Tax

Adaptation, Mitigation

Tax ($2/t CO2) on emissions from fuels
≤1.5 t CO2/capita exempt

Total: $48.5
NCCF: $9.4 (for HICs); $20.7 (for MICs/LICs)
MAF: $18.8

Proposal originator (Swiss Confederation) based on 2010 data

NCCF: nat’l governance
MAF: existing; KP Adaptation Fund

DEFINED BUDGETARY CONTRIBUTIONS FROM DEVELOPED COUTNRIES

Group of 77 and China

Adaptation, Mitigation

0.5–1 per cent of GNP of Annex I Parties

201–402, Calculated for 2007 GDP

UNFCCC document: FCCC/TP/2008/7

New funds to be created

Republic of Korea, Crediting NAMAs

Mitigation

Carbon credits for the verifiable mitigations arising from the
NAMAs

Uncertain

UNFCCC document: FCCC/TP/2008/7

Unknown

HYBRIDS

Mexico’s World Climate Change Fund

Adaptation, Mitigation

Contributions based on GDP, GHG and population and possibly auctioning permits in developed countries, levy on disbursement of mitigation funds for adaptation

$10 for mitigation fund, $0.2 in 2030 (based on a 2% levy of $10 Bn per annum fund)

Proposal originator (Mexico Secretary of the Environment)

New mitigation fund created (MCCF).  Funds for adaptation would flow to the KP Adaptation Fund


Sources: