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Fulfilling Australia’s International Climate Finance Commitments: Which Sources of Financing are Promising and How Much Could They Raise?


  • Jotzo, Frank
  • Pickering, Jonathan
  • Wood, Peter J.


Developed countries have pledged to mobilise $100 billion per year by 2020 for climate change action in developing countries. Progress on financing is necessary to ensure broader progress on climate change cooperation. Supporting the global commitment is in Australia’s interests, since climate finance can harness low-cost mitigation opportunities and help vulnerable countries in the Asia-Pacific region adapt to climate change. Based on Australia’s wealth and emissions, we find that a fair share for Australia may be around 2.4 per cent, or $2.4 billion a year by 2020. We analyse possible sources of finance in Australia. Carbon markets could provide large financial flows but their shortterm prospects are uncertain, and additional public finance is needed in any event. While Australia currently draws its climate finance from a growing aid budget, a large scale-up of climate change aid could raise concerns that aid is being diverted from existing development priorities. A carbon levy on international transport could provide considerable revenue and could be implemented unilaterally ahead of a global scheme. Reducing tax breaks for fossil fuel using and producing activities could raise revenue well in excess of Australia’s total climate finance commitment, while improving economic efficiency and cutting carbon emissions. Further, Australia’s exports of coal and other resources provide a very large tax base which could be tapped to a greater extent.

Suggested Citation

  • Jotzo, Frank & Pickering, Jonathan & Wood, Peter J., 2011. "Fulfilling Australia’s International Climate Finance Commitments: Which Sources of Financing are Promising and How Much Could They Raise?," Working Papers 249538, Australian National University, Centre for Climate Economics & Policy.
  • Handle: RePEc:ags:ancewp:249538
    DOI: 10.22004/ag.econ.249538

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    References listed on IDEAS

    1. World Bank, 2010. "World Development Report 2010," World Bank Publications - Books, The World Bank Group, number 4387, December.
    2. Jan von der Goltz, 2009. "High Stakes in a Complex Game: A Snapshot of the Climate Change Negotiating Positions of Major Developing Country Emitters," Working Papers 177, Center for Global Development.
    Full references (including those not matched with items on IDEAS)


    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Cutting subsidies to fossil fuels could help Australia meet its financial climate commitments
      by Jonathan Pickering, PhD Scholar, College of Arts and Social Sciences at Australian National University in The Conversation on 2011-10-27 05:20:41
    2. Climate finance at Doha: what’s the damage?
      by Frank Jotzo and Jonathan Pickering in Development Policy Blog on 2012-12-12 02:00:40
    3. CCEP Working Papers in October 2011
      by David Stern in Stochastic Trend on 2011-11-02 13:05:00
    4. Will an incoming government boost Australia’s climate aid?
      by Jonathan Pickering and Paul Mitchell in Development Policy Blog on 2016-06-27 01:00:40


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    Cited by:

    1. Pickering, Jonathan & Skovgaard, Jakob & Kim, Soyeun & Roberts, J. Timmons & Rossati, David & Stadelmann, Martin & Reich, Hendrikje, 2015. "Acting on Climate Finance Pledges: Inter-Agency Dynamics and Relationships with Aid in Contributor States," World Development, Elsevier, vol. 68(C), pages 149-162.
    2. Mutsuyoshi Nishimura & Akinobu Yasumoto, 2011. "In Search of a New Effective International Climate Framework for Post-2020: A Proposal for an Upstream Global Carbon Market," CCEP Working Papers 1117, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    3. Jonathan Pickering & Frank Jotzo & Peter J. Wood, 2015. "Splitting the Difference: Can Limited Coordination Achieve a Fair Distribution of the Global Climate Financing Effort?," CCEP Working Papers 1504, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    4. Nishimura, Mutsuyoshi & Yasumoto, Akinobu, 2011. "In Search of a New Effective International Climate Framework for Post-2020: A Proposal for an Upstream Global Carbon Market," Working Papers 249540, Australian National University, Centre for Climate Economics & Policy.
    5. Jonathan Pickering & Paul Mitchell, 2017. "What drives national support for multilateral climate finance? International and domestic influences on Australia’s shifting stance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(1), pages 107-125, February.
    6. Luis Abadie & Ibon Galarraga & Dirk Rübbelke, 2013. "An analysis of the causes of the mitigation bias in international climate finance," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(7), pages 943-955, October.

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    More about this item


    Environmental Economics and Policy; Financial Economics;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming


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