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

  • Frank Jotzo

    ()

  • Jonathan Pickering
  • Peter J. Wood

    ()

    (Resource Management in Asia-Pacific Program, Crawford School of Public Policy, The Australian National University)

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 short-term 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.

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File URL: http://ccep.anu.edu.au/data/2011/pdf/wpapers/CCEP1115Jotzo.pdf
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Paper provided by Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University in its series CCEP Working Papers with number 1115.

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Date of creation: Oct 2011
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Handle: RePEc:een:ccepwp:1115
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