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ACKNOWLEDGEMENTThe above article is excerpted from the Introduction to Part 2 of "Ready, Steady, Grow", a study by the UNEP Finance Initiative's Biodiversity andEcosystems Workstream (BEWS) and Climate Change Working Group (CCWG), September 2011.The United Nations Environment Programme FinanceInitiative (UNEP FI) is a strategic public-privatepartnership between the United Nations EnvironmentProgramme (UNEP) and approximately 200 financialinstitutions globally. For more information visit:www.unepfi.orgFINANCE & INVESTMENT085

" "AS THE WWF-OXFAM PAPER DESCRIBES, THEPIECES APPEAR TOBE FALLING INTOPLACE FOR A SOLUTION THATRESPECTS THEPRINCIPLES ANDPRACTICES OF THE VARIOUS CONVENTIONS,AND ADDRESSESTHE CONCERNS OF DEVELOPEDAND DEVELOPINGCOUNTRIEShere has been no lack of bold governmentdeclarations on climate change over thelast decade. But while governments mayexpress lofty ambitions, many remain shyabout making actual commitments to addressing theclimate change threat. This is obvious when looking atthe commitments for emission reductions in theCopenhagen Accord, but it is also true for anotheressential component of a global climate changeagreement: finance. THE US$100 BILLION CHALLENGEIndustrialised countries committed in Copenhagen in2009 to provide US$100 billion annually by 2020 forfinancing climate action in developing countries, bothfor mitigation and adaptation. Most of this moneyneeds to come from public finance, so that it can thenbe used to leverage much greater amounts of privatefinance. That is what it will take to bring about amassive shift of investments into low-carbontechnologies and infrastructure. US$100 billion peryear is a lot if it all has to come from cash-strappedgovernments reeling from debt burdens and theongoing financial crisis. But government budgets arenot the only source of public finance. In 2010, UNSecretary-General Ban Ki-Moon asked the High-LevelAdvisory Group on Climate Finance (AGF) to identifypotential sources for this funding. The AGF's reportconfirmed that innovative sources of public financeexist, and there is an opportunity to move forward nowto secure them. Currently, two reports are beingprepared for the G20 finance ministers meeting inNovember on financing for low-carbon developing, oneby Bill Gates and the other by the World Bank and theInternational Monetary Fund (IMF). Early indicationsare that they will look favourably on innovative sourcesof financing like carbon pricing for shipping andaviation, and financial transaction taxes. And after theG20 meeting, the upcoming climate talks in Durban,South Africa are the next opportunity to act.WHAT ARE INNOVATIVE SOURCES OFFINANCE?Innovative sourcesare financial instruments thatgenerate public finance directly, outside governmentbudgets, for international public goods - e.g. for actionon climate change. This means that any levy, tax orother revenue would be earmarked for specific actionson climate change, and channelled through aninternational body such as the UNFCCC. The AGFevaluated measures to address international transport;Financial Transaction Taxes (FTTs); internationalauctioning of emissions allowances; and SpecialDrawing Rights issued by the IMF. It concluded that inthe near term, the most practical and most acceptablesolution was to impose levies on emissions frominternational transport such as shipping and aviation.This is also known as "bunkers" since the fuels usedby ships and planes are known as bunker fuels. BUNKER FUELS AS ONE POSSIBLESOURCE OF FINANCEInternational shipping and aviation are significant andfast-growing greenhouse gas emitters. In 2007, theyemitted over 1 Gigatonne of CO2, and for 2020 thisamount may almost double. Greenhouse gases fromthese sectors have, to date, been entirely unregulatedand the fuels they used untaxed, unlike fuels andemissions from domestic modes of transport. Actionon bunker fuels is also clearly mandated through theWALKING THE TALK ONCLIMATE ACTION FINANCE086FINANCE & INVESTMENTSAMANTHA SMITH, LEADER, WWF GLOBAL CLIMATE AND ENERGY INITIATIVE T