CAN Position: New, Innovative Sources of Climate Finance, May 2015
~~The gap between the need for adaptation and loss and damage finance and the current finance provided or committed is large and growing. It has been estimated that each year US$150 billion will be needed for adaptation and loss and damage by 2025, even if warming is kept below 2 degrees. When compared with the currently provided sum of approximately $20-23bn per year and the current warming trajectory of approximately 4 degrees, the scale of the challenge is clear. There is also a growing gap in mitigation finance. Finance for mitigation needs to increase urgently in order to keep warming below 1.5 degrees.
This briefing paper identifies a number of potential new sources of climate finance. Some of these “new” sources of finance have been under discussion for a number of years within the High Level Advisory Group on Finance, the Leading Group on Innovative Finance and others. They include a Financial Transaction Tax (FTT), a fossil fuel levy (or Carbon Majors Levy), carbon pricing for international aviation and maritime, domestic or regional carbon pricing/carbon markets, and others. If the political will is generated to fully realise these new sources of finance, they could fill the finance gap that exist.