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Swiss propose climate funding scheme

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Switzerland has presented a financing mechanism at the United Nations designed to cover the costs incurred by countries as they adapt to climate change.

This content was published on September 25, 2008 - 11:27

Proposed on the sidelines of the UN General Assembly in New York, the idea met with great interest.

Since the Bali Climate Change Conference at the end of last year, negotiations have focussed on stabilising greenhouse gas emissions as well as measures to adapt to the effects of global warming, and how to finance them.

Various industrial nations have already put forward the idea of climate funds with concrete financial commitments, but according to the Swiss environment ministry, they are not enough to cover the total global need.

The World Bank has estimated that climate change adaptation measures alone will cost between $10 and $40 billion (SFr10.81 and SFr43.24 billion) annually.

The Swiss plan would ensure that the poorest nations are also able to take action to adapt to the effects of global warming.

"We have to assume that extreme weather events such as droughts and flooding will increase. The poorest countries will be particularly hard hit by these developments, financially too," said Environment Minister Moritz Leuenberger during the presentation.

Levy

The Swiss proposal, the Funding Scheme for Bali Action Plan, foresees governments collecting a levy on their country's emissions amounting to $2 per ton of carbon dioxide emissions. This would raise $48.5 billion per year.

Switzerland, for its part, would be liable for a payment of approximately SFr60 million per year, based on today's emission levels.

An exemption would be made for countries not having reached a level of 1.5 tons per capita, which would be the case for the least developed nations.

Each country would be entitled to retain a part of the revenue from the levy to finance national climate measures. This percentage would depend on their level of development, with the poorest countries keeping 85 per cent, and industrial nations around 40 per cent.

The remainder of the proceeds would go into a Multilateral Adaptation Fund (MAF), earmarked exclusively for countries with low or average per-capita incomes.

Balanced plan

"From our point of view, the proposed system provides a balance between the commitments of industrial nations and those of developing countries," Leuenberger said.

He presented the plan to a UN forum in New York attended by representatives of countries engaged in climate financing issues, including Bangladesh, the Netherlands and Britain as well as World Bank officials.

"It's a very important topic and a current issue, not just one for the future," said United States economist Jeffrey Sachs, head of the UN Millennium Project.

Sachs, who moderated the forum, said the Millennium Development Goals (MDGs) are tied to climate change. "Development means adaptation and vice versa."

Climate protection measures should not be implemented at the cost of the MDGs, he said, therefore there is a need for specific proposals, such as adaptation strategies that can be reliably financed.

Practical

"The challenges will only increase if more money is not found. The Swiss proposal is practical and easy to adapt. It could be a very powerful mechanism," Sachs added.

The Swiss plan is not the only one that has been tabled so far. But it has been well received because it demonstrates how income can be generated reliably.

Leuenberger explained that the idea could be combined easily with other concepts, such as the European Union's emission trading scheme.

It is not the intention to see only the Swiss plan implemented, the environment minister said. He added that it is a concrete proposal offering guidelines for further negotiations.

The aim is to have a climate adaptation mechanism included in the follow up accord to the Kyoto Protocol to be discussed in Copenhagen at a climate summit at the end of 2009.

"It's time for states to agree binding measures and not just make promises," Leuenberger said.

swissinfo, Rita Emch in New York

Swiss scheme

Environment Minister Moritz Leuenberger first floated the idea of a global, CO2 levy at the climate conference in Nairobi in 2006.

The first financing model was presented at the Bali conference last year. The plan was fine tuned and approved by the Swiss government in July.

According to the model, Switzerland would have to pay SFr60 million annually based on its current emissions.

Neither Swiss taxpayers nor the business sector would be required to foot the bill since the money would come from existing financial instruments.

Switzerland currently emits more than 7 tons of CO2 per capita, well above the threshold of 1.5 tons to gain an exemption from the levy.

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