An “innovative” global tax on financial transactions should help pay for the nearly $150 billion in expenses needed by 2020 to fight climate change in developing countries, the leaders of France and the United Kingdom said on Friday.
The tax would be used to help developing nations meet the costs of “mitigation and adaptation” to reach the goal of preventing global warming to less than 2 degrees.
A financial transactions tax would impact financial markets, including the buying and selling of stocks, bonds and other financial assets, including derivatives. Specific tax rates were not included in the proposal.
To ensure predictable and additional finance in the medium term to 2020 and beyond, we should make use of innovative financing mechanisms, such as the use of revenues from a global financial transactions tax and the reduction of aviation and maritime emissions and the auctioning of national emissions permits. We will work together on this, said French President Nicolas Sarkozy and British Prime Minister Gordon Brown in a joint statement.
Over the next three years, $10 billion is needed for a “fast start” launch fund, they said. A large part of that money would be used for adaptation in Africa, small island states and other poor and vulnerable countries, they said.
About 20 percent of early funds would be used to pay for protecting forests by reducing deforestation.
“We want the Copenhagen agreement to agree a reduction in deforestation of 25 percent by 2015, leading to a 50 percent reduction in 2020 and a halt in 2030,” they said.
“The developed world should pay for the majority of this, supporting developing countries’ own efforts, they said.
France and UK will contribute $600 million to start, they said. The UK said it was prepared to go further and contribute up to $800 million a year, depending on others’ offers.