Oxford Institute for Energy Studies

International Adaptation Finance: The Need for an Innovative and Strategic Approach.

by Benito Müller

Oxford Institute for Energy Studies
EV 42
June 2008

available at http://www.oxfordclimatepolicy.org/publi…

Contents

Executive Summary ………………………………………………………………………………………………….. 4
A. Introduction …………………………………………………………………………………………………………. 5
1. Current estimates of funding needs for adaptation in developing countries ……………… 5
2. Current international adaptation funding …………………………………………………………….. 7
B. How to raise the funding needed? The need for innovation …………………………………….. 9
1. Conventional Funding ………………………………………………………………………………………… 9
1.1. World Bank Pilot Programme for Climate Resilience (PPCR) ………………………….. 10
1.2 The Chinese +0.5 Percent of GDP Proposal …………………………………………………….. 10
2. The Mexican Multilateral Climate Change Fund (MCCF) Proposal ……………………. 11
3. Bi- and Multilateral Carbon Auction Levy Funding …………………………………………….. 12
3.1 The US International Climate Change Adaptation and National Security Fund ……. 12
3.2 EU ETS Auction Adaptation Levies ……………………………………………………………….. 12
4. The Swiss Proposal Global Carbon Adaptation Tax Proposal ………………………………. 13
5. The EU Global Climate Financing Mechanism (GCFM) …………………………………….. 15
6. An Adaptation Levy on International Emissions Trading …………………………………….. 16
6.1 The Template: CDM Adaptation Levy ……………………………………………………………. 16
6.2 Issues ………………………………………………………………………………………………………….. 17
6.3 The Norwegian Proposal ……………………………………………………………………………….. 17
6.4 Party Submissions on Extending the Adaptation Levy to other Mechanisms ……….. 18
7. Burden Sharing Mechanism (Tuvalu Adaptation Blueprint) ………………………………… 19
8. International Air Travel Adaptation Levy (IATAL) ……………………………………………… 20
9. International Maritime Emission Reduction Scheme (IMERS) …………………………….. 20
10. Evaluation of Proposed Revenue Instruments …………………………………………………… 21
10.1 New and Additional ……………………………………………………………………………………. 21
10.2 Predictable …………………………………………………………………………………………………. 21
10.3 Appropriate ……………………………………………………………………………………………….. 22
10.4 Equitable …………………………………………………………………………………………………… 23
10.5 Adequate …………………………………………………………………………………………………… 24
10.6 Conclusions and Recommendation ……………………………………………………………….. 25
C. How to spend the money raised: The need for strategic spending …………………………. 27
D. How to manage innovative international financing ………………………………………………. 28
E. Annex: The UNFCCC Workshop on Investment and Financial Flows to Address
Climate Change (5 June 2008), by Martin Khor ………………………………………………………. 30
Selected Workshop Presentations …………………………………………………………………………… 30
Discussion 34