" "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

FINANCE & INVESTMENT087Below: SamanthaSmithPhoto: WWF-Canon/Richard StonehouseBali Action Plan under the UNFCCC, as well as throughArticle 4 of the UNFCCC and Article 2.2 of the KyotoProtocol. FOR EXAMPLE: A SYSTEM FORMARITIME TRANSPORT Out of the Bunker: Time for a fair deal on shippingemissions, a new report from WWF and Oxfam releasedin early September (wwf.panda.org/climatefinance),spells out how to reach agreement on a carbon pricingmechanism for shipping that can raise up to US$25billion, with minimal impacts on the cost of goodsshipped - estimates are around 0.2 per cent onaverage. The report notes that a large part of thisrevenue - at least US$10 billion but potentially muchmore - can be used for action on climate change indeveloping countries. The WWF-Oxfam reports spell out how to overcome thelong-standing impasse over the competing principlesof the International Maritime Organization (IMO) andthe Climate Convention (UNFCCC). Since ships canchange owners, operators and flags easily, the IMOinsists that ships of all flags should be treated equally.The UNFCCC has the principal of "common butdifferentiated responsibilities and respectivecapabilities (CBDR)", and calls on developed countriesto act first in reducing their emissions. To protect the economies of poorer countries (wheresmall price increases could cause greater hardship),the WWF-Oxfam report proposes a system of rebatesfor developing countries related to their share of theglobal shipping, to ensure that there is "no netincidence" or cost burden on developing countriesresulting from a global carbon pricing system. DECISION NEEDED NOWThe UN climate conference in Cancun last yearcreated a "bank" for global climate finance: the UNGreen Fund. This bank now needs reliable andsufficient sources of funding. The current pledges forfast-start finance expire at the end 2012, so thequestion of where finance will come from after thatmust be answered in Durban. IMO and theInternational Civil Aviation Organization (ICAO) are thetechnical bodies that will likely implement anymeasures to address emissions from the maritimetransport and aviation sectors in practice. However,they need further guidance from the UNFCCC on howto proceed in tackling greenhouse gas emissions. Theupcoming climate negotiating session in Durban,South Africa this December is the best opportunity forthe global community to resolve these key outstandingissues. If countries have the will, they can decide tomove forward with addressing emissions frominternational aviation and shipping, and fund urgentneeds for climate finance. As the WWF-Oxfam paperdescribes, the pieces appear to be falling into place fora solution that respects the principles and practices ofthe various conventions, and addresses the concernsof developed and developing countries. Progress inaddressing the rapidly growing emissions from theseinherently global sectors would be a milestone in thebattle against climate change and in generating thefinancing needed to support action, especially in thepoorest countries and those most vulnerable toclimatic disruptions. A strong outcome on financingefforts at the Durban climate summit can put us on apath to avoid the worst consequences of climatechange. Reaching an agreement on a market-basedapproach to pricing unregulated carbon pollution frominternational shipping will help reduce global carbonemissions and help developing countries deal with theimpacts of climate change. In Durban, world leaderswill get a chance to make progress on climate financeand show that they can be bold and ambitious in bothword and deed. nABOUT THE AUTHORSamantha Smith leads WWF's Global Climate andEnergy Initiative. Through the Initiative, WWF workstowards a low-carbon, safe and sustainable future forall. Previously, Ms Smith held senior roles in the NewEnergy division of Statoil where she developed windpower and CO2 projects. Prior to this, she wasdirector of WWF's International Arctic Programme.Ms Smith started her professional career as acorporate litigation attorney in the USA, with anemphasis on finance and environmental matters. Ms Smith has degrees in history and law from theUniversity of California, Berkeley. For moreinformation on WWF's work on climate finance,please go to: www.panda.org/climate_finance