US NGOs call for aviation fuel or passenger fees to help contribute funding towards international climate finance
Al Gore, Chairman of the Alliance for Climate Protection
Thu 16 Dec 2010 – A US report presented during the COP 16 climate summit just ended in Cancun has added support to the UN-appointed High-level Advisory Group on Climate Change Finance (AGF) findings, which suggests that levies or taxes on international aviation and shipping could provide valuable sources of climate finance. The report by former US Vice President Al Gore’s Alliance for Climate Protection and the Center for American Progress suggests taxes applied to US aviation emissions could generate $2.6 billion per year that could be directed towards both near-term international climate financing and updating ageing US air traffic control infrastructure. The report also calls for the US to take a proactive approach to the EU’s Emissions Trading Scheme and adopt ‘equivalent action’ to address the concerns of US airlines caught up in the scheme.
The joint report, ‘The U.S. Role in International Climate Finance: A Blueprint for Near-Term Leadership’, asserts that the United States can and must take the lead on international climate finance, even under the current difficult political and economic conditions. It maintains it is in the United States’ best interest to help developing nations build clean energy economies and would help the country and its firms compete for a larger share of global clean energy markets, reduce risks of climate-related national security threats, build stronger relationships with key strategic allies and major emerging economies, provide reductions of billions of dollars in reduced climate impacts in the US and help improve energy security and lower energy prices.
“This study shows how to match money with actions on the ground and provides the basis for a plan that is simultaneously global in scope and local in action. And to Americans, in particular, it is a demonstration that not only is our leadership needed for global purposes, but that it is needed for our own self-interest,” said Al Gore, Chairman of the Alliance for Climate Protection, a non-profit, non-partisan organization which he founded in 2006 and claims to now have more than five million members and supporters worldwide.
With the collapse of climate legislation coupled with significant gains by climate sceptics in the US mid-term elections, the report says the US can restore its international credibility by leading a new international partnership to scale up emissions mitigation measures of developing nations.
“The international partnership will require combining technical expertise, innovative thinking, political determination and, importantly, new financial resources to help reduce the costs of green growth and low-emissions development in developing nations,” it says.
It determines that, globally, an additional capital investment of about $100 billion per year by 2020 is needed, along with additional incremental cost financing of about $60 billion per year by 2020, plus billions more in additional financing for climate adaptation.
“Compared to annual spending by major economies on fossil fuel subsidies ($312 billion), energy ($3 trillion) and infrastructure ($7 trillion), these sums are small,” it reasons.
It says the US should contribute around 20% of overall ‘fast-start’ funding pledged at COP 15 in Copenhagen for the period 2010-2012 and additional new near-term funding for an interim 2013-2015 period. The US should use some of this funding to launch new bilateral climate partnerships with key strategic allies such as Indonesia and India.
“To advance these goals and safeguard the competitiveness of US aviation and shipping carriers, the United States should work proactively with major trading partners to avoid unilateral taxes by other nations on US carriers, including through new international agreements and sensible US policies that mobilize international climate financing,” it says.
New sources of public funding will be required and the report’s analysts have identified four possible groups, including international civil aviation and shipping. It says countries could individually or jointly apply fees on fuels used in international civil aviation and shipping, or apply per-ticket fees as a proxy, and direct some of the revenues to international climate finance.
“This type of fee and redirection makes sense because of the inherently international nature of these industries and the fact that they are not currently covered by any global mitigation efforts,” it says. (The International Civil Aviation Organization (ICAO) might beg to differ over this as well as point to the provisions of the Chicago Convention.)
The report highlights the inequalities of taxes and measures applied unilaterally and disproportionately on US carriers, singling out the EU Emissions Trading Scheme as a prime example. To ensure US carriers are treated fairly and US taxpayers, carriers and consumers derive benefits from aviation emissions reduction measures, the report suggests the US take up the EU’s offer to negotiate with third countries taking “equivalent action” to reduce their aviation emissions.
“To address competitiveness concerns, a proactive approach should aim to reach agreement among all key countries, with a smaller group agreement, a bilateral pact with Europe and unilateral US measures as fall-backs if necessary to advance US economic and environmental interests.”
The report says US aviation emissions from bunker fuels have averaged 129 million tonnes per year over the last three years. Applying a fee of $20 per tonne would therefore generate around $2.6 billion per year in financing, and directing 25 to 50% of this financing towards international climate programmes would provide about $5 million to $1.3 billion per year in additional resources for updating, for example, the US air traffic control system.
Further study is needed to figure out how this could be implemented in a manner that gains US industry support, preserves US jobs and helps achieve climate goals, it concludes. “The one thing we cannot afford to do, however, is take a passive approach to bunker fuel policy. The economic and environmental stakes are too high.”