Funds raised from a price on aviation and shipping could ensure the implementation of further projects that protect the livelihoods of developing populations most at risk of the effects of climate change.
And the financial impacts of such a levy are unlikely to be large for consumers. For instance, a charge of $25 per tonne of carbon would only raise the price of air tickets by an estimated 2-4 per cent.
All developed countries at the climate talks, excluding the US, Australia, and some countries classified as developing such as Singapore and Mexico, support the idea of using revenues. However, almost all developing countries are worried about the impacts that such measures could have on trade and tourism and therefore their development.
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Compensating developing countries for this economic harm is critical to the acceptability of bunker fuel levies. Such compensation would require, at most, 40 per cent of revenue, which would leave around USD $23 billion for climate finance and other uses.
As countries converge at the UN climate talks, the rapidity of emissions growth and plans to combat this trend form the cornerstone of the talks. At the same time, the urgent need for substantial finance to fund adaptation in developing countries is being fervently discussed in the meeting rooms and corridors of the National Stadium where the talks are being held.
Unfortunately, an international agreement on bunker fuels has recently been swept off the table, partly due to Australia's refusal to pledge any additional climate finance. Yet to reach the goal of USD $100 billion by 2020 real action must be taken.
A more constructive approach to the provision of climate finance should be adopted by Australia and other rich countries as the negotiations move to Peru in 2014. In line with these commitments, Australia and other countries should support a decision to invite the International Maritime Organisation and International Civil Aviation Organisation to implement carbon pricing.
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