October 29, 2010 / 5:01 PM / in 7 years

EXCLUSIVE-Carbon, forex among UN climate aid suggestions

* Draft says private and public sectors should be tapped

* Objections to many of the suggestions

* Cash to help poor curb emissions, tackle drought or floods

By Alister Doyle, Environment Correspondent

OSLO, Oct 29 (Reuters) - Carbon markets and taxes on foreign exchange deals or plane tickets are among suggested sources for a promised $100 billion a year from 2020 to help poor nations fight climate change, a draft report by U.N. advisers said.

The draft, obtained by Reuters on Friday, showed that the group co-chaired by Norwegian Prime Minister Jens Stoltenberg and Ethiopian Prime Minister Meles Zenawi reckoned that both the public and private sectors would have to be tapped for cash.

Industrialised nations promised at the U.N. Copenhagen summit last year to a goal of raising $100 billion a year from 2020 to help developing nations combat climate change and adapt to impacts such as droughts, floods or rising sea levels.

The U.N. expert group was set up to suggest how.

Among their suggestions are to raise between $2 and $27 billion from financial transaction taxes on foreign exchange, $4-$9 billion from shipping, $2-$3 billion from aviation, $3-$8 billion from removal of fossil fuel subsidies or $8-38 billion from auctioning carbon allowances.

The 35-page draft, written just before the final meeting of the group on Oct. 12 in Ethiopia, lays out a wide range of options. It says that loans, rather than outright grants, may be part of the cash.

But it said there were objections to many suggestions, such as imposing a 0.001 to 0.01 percent tax on projected 2020 foreign exchange transactions estimated at $756 trillion.

“The lack of political acceptability and unresolved issues of developing countries incidence makes it ... difficult to implement universally,” it said.

STALLED TALKS

It also said there was limited “political acceptability” for a possibility, suggested last year by billionaire George Soros, of raising money based on Special Drawing Rights, the reserve asset of the International Monetary Fund.

And it relies heavily on carbon. The draft said that “new carbon-based public instruments and a carbon price in the range of $20-$25 a tonne of carbon dioxide equivalent in 2020” were “key elements” to reach the $100 billion goal.

The group will submit its final report on Nov. 4 to U.N. Secretary-General Ban Ki-moon as part of efforts to revive stalled U.N. talks on a new climate treaty. Rich nations have been reluctant to promise cash amid budget cuts at home.

The report concludes that the target of $100 billion a year is “challenging but feasible” -- a phrase used by Stoltenberg after the final meeting in Addis Ababa.

Some developing nations and environmental groups want all the cash to be government grants, rather than from the private sector or in the form of loans.

“The report misses the mark in not stating clearly that $100 billion can all be raised by public finances,” said David Waskow of Oxfam International. He said it was wrong to suggest lending to poor nations suffering from emissions by richstates.

“If you damage your neighbour’s house or car you wouldn’t lend them money to fix it. You would pay them,” he said. Still, he said the report was a platform for talks among environment ministers who will meet in Cancun, Mexico, from Nov. 29-Dec. 10.

The draft report gives an overview of sources without a clear blueprint of how to raise the cash. Under varying assumptions, it said the public sector could mobilise more than $100 billion and the private sector up to $500 billion a year. (Additional reporting by Gerard Wynn in London)

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