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NEW DELHI: The contentious issue of finance will be among the key items that will take centrestage at the UN-sponsored climate talks in Durban. Predictable and continuous funding to undertake steps to tackle climate change lies at the core of a balanced global deal.
At the pre-conference meeting, South Africa said that the Durban meet should go beyond operationalising the Green Climate Fund agreed on at the Cancun meet. Pretoria indicated that the UN meet should take up "the very contentious issue of finance". This will be a tough political decision because of economic recession that impacted the industrialised countries.
India maintains that developing countries can't be asked to shoulder the burden of providing funds. New Delhi and other developing countries stress that the principle of common but differentiated responsibilities, on which the UN convention is based, cannot be blurred. Developed nations are required to provide finances to the developing countries. South Africa's stress on "multilateralism, environmental integrity, fairness" will mean bringing the discussion back into the UN-sponsored framework. Till now, most of the discussion on financing has been outside the framework of the UNFCCC.
The high-level advisory group on finance, appointed by the United Nations Secretary General, to look into the question of sources of long-term finance provided a variety of sources without ranking them or indicating preferences. While there has been little discussion within the UNFCCC on the issue, the G-20 has attempted to step in. The G-20 is of the view that the UNFCCC is "not the relevant forum" to discuss long-term finance and that an efficient track was required to follow up on long-term finances, to ensure that the climate fund doesn't end up becoming an empty shell.
The G-20 has asked the World Bank, the IMF and Bill Gates to provide a report on the issue. While the World Bank is looking into instruments of multilateral development banks, private finance and carbon financing, the IMF is concentrating on international public sourcing, especially bunkers and domestic carbon-related sources of finance.
The Bill Gates report deals with innovative financing. India, and other G-77 countries have stressed that developing countries would need to be compensated if the distinction between developed and developing countries could not be made while making the levy.
Speaking at the recent G-20 meet, Finance Minister Pranab Mukherjee said "international levies on shipping and aviation emissions should be included in the list of possible options for revenue raising only if a mechanism for refund of the revenues collected from developing countries is instituted and the collections refunded to developing countries".
Discussions on the sources can be expected to include the financial transaction tax. In late August, European Commission President Jose Manuel Barroso proposed a levy on certain kinds of financial activities and will be applicable on transactions where at least one party is located within the European Union. Although the EU is yet to present the financial transaction tax (FTT) as a source for climate funds, but given its potential to generate fresh funds, it has been considered by the UN Advisory Group on Finance, and by the G-20 as a source for long-term climate financing. India, Brazil and South Africa argue that the FTT shifts the onus of providing climate finance to the developing world.
Acknowledging the importance of the question of finance, South Africa's minister of International Relations and Cooperation Maite Nkoana-Mashabane said "There was general agreement that sustained scaled up financing remains one of the core elements of a balanced, fair and credible outcome in Durban."
