Fin24

Green Fund can hurt your pocket

2011-12-04 10:59

Durban - If all the proposals for sustained funding for the Green Climate Fund realised, it will place a massive burden on an already struggling global economy.

If the Green Climate Fund does indeed manage $100bn a year by 2020 it will be more than twice the size of the World Bank, said a senior official who for the past six months has been closely involved in developing a technical framework for a fund such as is. He did not wish to be identified.

In a behind-the-scenes information session at COP17 regarding the fund the official said that, despite the considerable disagreement and uncertainty regarding exactly how the fun should look and function, a couple of potential donors are ready to inject money into the fund and are anxious to make announcements in this regard. Three countries are keen to house the head office of the fund.

But it's the three main proposals for stable funding sources that could affect economies and consumers globally. These are carbon taxes on aviation and shipping and a tax on all international financial transactions, which has been labelled the so-called “Robin Hood” tax.

Airlines globally are already complaining about the EU's plan for a carbon tax on the full long-distance flights of airlines that fly to and from Europe or merely through European airspace. The cost will eventually filter through to airline tickets.

A carbon tax on shipping's greenhouse gas emissions will make all international trade more expensive. The two taxes will force airlines and shipping to invest in new aircraft and ships that are more energy efficient.

A Robin Hood tax on transactions would cut the profits of banks handling the transactions, and impact their shareholders, warns Dr Marco Lotz, Nedbank's group sustainability carbon specialist. All the additional costs will of necessity be passed on to clients, he says.

The official involved in the setting up of the Green Climate Fund expects the wrangle about who will manage and who will advise the fund to persist to the end of the climate negotiations. Environmental groups are protesting strongly because the World Bank is the interim trustee of the fund. According to the official, at COP16 in Cancún, Mexico, the decision was already taken that the World Bank should be the interim trustee. The decision will certainly be reviewed in the next couple of years, but is not on the agenda in Durban.

The legal status of the fund is also a bone of contention. It is essential to know which legal entity adopts the fund because this will determine who must accept responsibility if wrong decisions are taken.

According to the official, in the past week the conferring of a credit rating to the fund was debated ad nauseam. Negotiators left many of the decisions regarding the fund to the envisaged 24-member board. The composition of the board itself was at issue - it should consist of 12 representatives each from the developed and developing countries.

The transitional committee which, co-chaired by Trevor Manuel, Minister in the presidency, had to draw up a report on the fund, presented it to COP17 last week.

While a couple of weeks ago at the committee meeting in Cape Town America and Saudi Arabia had been opposed to certain aspects of the plan for the fund, according to the official they did not again insist on changes to the report.

Comments
  • Ernst - 2011-12-04 12:44

    So what is the alternative? Do nothing? If the environment is destroyed then buy buy economy.

  • Lyndatjie - 2011-12-04 13:08

    And it boils down to money every single time.... Instead of nailing the rest of us - why don't they nail those that enriched themselves by raping the earth!

  • Jay - 2011-12-04 13:33

    When are politicians and business people going to get it: our beloved economy can not exist without a human society... and a human society can not exist without the environment! Your priorities are upside-down! The whole problem is our current way of life - just about everything we do needs to change... because the way we're doing it at the momement (with total disregard for waste and consequences) is what got us into this mess in the first place... OF COURSE such major change will affect the economy! But not nearly as much as the economy would be affected by rapid climate change! If we don't make the changes now (while we're still somewhat in control of the situation), then there is only one alternative. It's very simple! But politicians and businesses are showing once again that all they're good for is greenwashing and hot air. Once again we can not rely on them to create significant positive change. Our only solution in a capitalist society is to start from the bottom up - change our own lifestyles, change our buying behaviour and create change in our own communities. If they want our money and our votes, they'll eventually be forced to follow. The only reason the green issue is even on the politicians and businesses' tables is because enough individuals around the world are doing this. With the failure of COP17, our only hope now is for people in the developed world to changed things from the bottom up. So join in! Let the trickle become a stream!

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