British economist Nicholas Stern told international climate negotiators Thursday that government regulation and public money also will be needed to create incentives for private investment in industries that emit fewer greenhouse gases.
In short, a new industrial revolution is needed to move the world away from fossil fuels to low carbon growth, he said.
"It will be extremely exciting, dynamic and productive," said Stern, one of 18 experts in public finance on an advisory panel appointed by U.N. Secretary-General Ban Ki-moon.
A climate summit held in Copenhagen in December was determined to mobilize $100 billion a year by 2020 to help poor countries adapt to climate change and reduce emissions of carbon dioxide trapping the sun's heat. But the 120 world leaders who met in the Danish capital offered no ideas on how to raise that sum — $1 trillion every decade — prompting Ban to appoint his high-level advisory group.
The Copenhagen summit also resolved to mobilize a three-year emergency fund of $30 billion starting this year. It was unclear how much has been raised and disbursed so far.
The advisory panel, which began working in March, will present its final report to Ban in October, a month before the next decisive climate conference convenes in Cancun, Mexico.
It will analyze a range of options, Stern said, and governments must decide which to chose, how much to raise from each source, and how to distribute the money.
Potential revenue sources include auctioning the right to pollute, taxes on carbon production, an international travel tax, and a tax on international financial transactions, as well as government grants and loans. Each could produce tens of billions of dollars a year, Stern said.
"No one single source will deliver $100 billion by itself. There is no silver bullet, no hole in one," he said.
Private capital also will be crucial, and governments must adopt policies reducing the risk to investors, he said.
The panel's recommendations will weigh the practicality, reliability, and political acceptability of each method, he said.
The advisory panel is chaired by the prime ministers of Norway and Ethiopia and the president of Guyana. Its members include French Finance Minister Christine Lagarde, White House economic adviser Lawrence Summers, billionaire financier George Soros and public planners from China, India, Singapore and several international banks.
The governments of 194 countries are negotiating an agreement to succeed the 1997 Kyoto Protocol, which called on industrial nations to reduce carbon emissions by an average 5 percent below 1990 levels by 2012. Unlike Kyoto, the next deal would set emission goals for developing countries, especially rapidly growing economies like China and India, in exchange for help with financing and technology.
The negotiating session in Bonn ends Friday, and delegates will meet once more in China before the Cancun ministerial conference.
