Raising $100 bil for climate action 'hard but feasible': EC

A global effort to raise $100 billion for investment in projects that tackle climate change and cut emissions in developing countries "will be challenging but can...can be done," a staff working document published by the European Commission Friday concludes.

Developed world nations, including the EU and its 27 members agreed, at the global climate summit in Cancun in December 2010 that they would together commit to raising $100 billion by 2020 to help developing companies adapt to and mitigate climate change. They had already agreed to provide $30 billion in "fast-start" funding a year earlier in Copenhagen.

The EC said that the finance could be raised if the right balance were struck between public funding, funding raised from the international carbon markets and private funds, partly leveraged from development banks. But the EC said strong international coordination would be needed to ensure efficient spending.

"The EU is already well on track to deliver its fast-start funding for 2010-12. And we will also contribute our fair share to climate funding in the long run. Both private and public sources of financing from the EU and other developed countries are essential to support actions for reducing emissions and adapting to climate change in developing countries," said EU climate commissioner Connie Hedegaard.

EU economic and monetary affairs commissioner Olli Rehn stressed that this funding could not come from governments and other public sources alone given that many countries faced severe fiscal constraints in the wake of the global financial crisis.

The EC said that several of the public sources related to carbon pricing are already in place in the EU and will be increasingly used in future years. But it said other sources, such as taxes on shipping and aviation would need international cooperation.

A substantial contribution could come from the carbon market itself through improvements to the Clean Development Mechanism, which funds emissions reductions projects in the developing world, and sectoral agreements to tackle emissions in particular sectors globally, the EC said.

Ensuring that funds raised are channeled efficiently to developing countries and spent within a "sound governance framework" is another key issue identified in the EC report.

"Strong international and European coordination is required on the governance aspects and on the delivery, including a fair international burden-sharing among developed countries." The EC said that the EU budget from 2013 could play a bigger role in channeling funds to developing countries.

--Paul Whitehead, paul_whitehead@platts.com

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