The Advisory Group on Long Term Finance (AGF) report was launched today in New York.
The AGF was set up to identify technically sound and politically feasible potential sources for long-term finance by 2020, with particular thought to achieving the $100bn finance goal.
Secretary of State The Rt Hon Chris Huhne MP participated in the AGF, which was co-chaired by Norwegian Prime Minister Jens Stoltenberg and Ethiopian Prime Minister Meles Zenawi.
Other members were drawn from all over the world and included heads of state such as President Jagdeo of Guyana, the French Minister of Finance Christine Lagarde, and global figures such as George Soros, Larry Summers and Nick Stern. With the exception of the co-chairs, all other members participated in their personal capacity.
The AGF has shown it is possible to meet the 2020 goal set in Copenhagen of mobilising $100bn per year of public and private finance to assist poorer countries with the climate challenge.
The report demonstrates the commitment of developed countries to deliver on the promises made in the Copenhagen Accord and shows developed and developing nations can work together. It contains a number of proposals for how to achieve the $100bn goal but suggests there are only a small number of feasible measures that can generate the scale of finance needed. These include:
- raising public revenue through a range of largely domestic or regional measures, e.g. carbon taxes or emissions trading auctioning driven by (ideally international) support for a credible carbon price. The report suggests this could raise $30bn per year;
- raising finance from schemes to tackle emissions in the international aviation and shipping sectors, while addressing negative financial impacts on developing countries. The report suggests this could raise $10bn per year;
- using the multilateral and bilateral financial institutions to increase investments in low- carbon infrastructure. The report suggests this could raise gross flows of up to $40bn;
- redirecting fossil fuel subsidies to raise $10bn;
- raising $30-50bn through scaled-up carbon markets;
- enabling a much greater flow of private finance in low-carbon investments, which presents many opportunities for green growth in developing countries. The report suggests this could be in the region of $100-200bn.
Speaking after the launch of the report, The Rt Hon Chris Huhne MP said: “Today we’ve taken a significant step in the quest for an ambitious climate change deal. Raising the $100bn of climate finance needed by 2020 will be crucial to help developing countries deal with the impacts of climate change and to put their economies on a low carbon footing.
“This report quite clearly sets out a system of climate financing and makes clear that concerted global action and a carbon price of at least $25 if not more are required to achieve the necessary transformation in the global economy.
“But we acknowledge this isn’t the end game and the real challenge lies ahead as developed and developing countries work together to ensure concrete proposals are delivered in time for the climate talks in Cancun this year and South Africa next year.”
For a copy of the report, see the UN Secretary-General’s High-level Advisory Group on Climate Change Financing (AGF) webpage.