News : European Commission sets out global finance blueprint for climate change

European Union: Europe is hoping for a successful summit at Copenhagen that will achieve an international agreement to tackle climate change

European Commission sets out global finance blueprint for climate change

September 11, 2009

The European Commission today put forward a blueprint for scaling up international finance to help developing countries combat climate change. This initiative aims to maximise the chances of concluding an ambitious global climate change agreement at the December U.N. climate conference in Copenhagen.

By 2020 developing countries are likely to face annual costs of around €100 billion to mitigate their greenhouse gas emissions and adapt to the impacts of climate change. Much of the finance needed will have to come from domestic sources and an expanded international carbon market, but international public financing of some €22-50 billion a year is also likely to be necessary.

A polluted lake in Bhopal, India. The effects of climate change will be more disastrous for emerging economies and developing countries

A polluted lake in Bhopal, India. The effects of climate change will be more disastrous for emerging economies and developing countries

The European Commission proposes that industrialised nations and economically advanced developing countries should provide this public financing in line with their responsibility for emissions and ability to pay. This could mean an EU contribution of some €2-15 billion a year by 2020, assuming an ambitious agreement is reached in Copenhagen.

European Commission President Jose Manuel Barroso said, "With less than 90 days before Copenhagen we need to make serious progress in these negotiations. That is why the Commission is putting the first meaningful proposal on the table on how we might finance the battle against climate change. The sums involved are potentially significant, both ambitious and fair. I am determined that Europe will continue to provide a lead but developed and economically advanced developing countries must also make a contribution ".

Environment Commissioner Stavros Dimas added: "The European Union has led the way in committing to ambitious emission reductions and agreeing the measures to achieve them. We are well on track to achieve our Kyoto reduction target. Now we must break the impasse in the Copenhagen negotiations.”

International negotiations

Negotiations to draw up a global climate change agreement to succeed the Kyoto Protocol are due to be concluded at the Copenhagen climate conference on 7-18 December. The European Union is pushing for an ambitious and comprehensive deal that will prevent global warming from reaching the dangerous levels – more than 2°C above the pre-industrial temperature - projected by the scientific community.

Financing needs

Based on the Commission's best estimates, assuming an ambitious global agreement, developing countries will need financing of roughly €100 billion a year by 2020 to mitigate their emissions and adapt to climate change.

Three main sources of finance should play a role in meeting these needs. Domestic public and private finance in developing countries could cover 20-40%, the international carbon market around 40% and international public finance could contribute to the remainder.

International public finance should be provided not only by industrialised countries but also by economically more advanced developing nations. Each country's contribution should be based on an agreed scale reflecting its responsibility for emissions and its ability to pay. Depending on the relative weighting given to these criteria, the EU’s contribution would be between 10 and 30% of the global total.

The Commission estimates that developing countries could need €9-13 billion a year from international public financing in 2013, rising to €22-50 billion a year by 2020. These figures would imply EU contributions of €900 million-3.9 billion in 2013 and €2-15 billion a year by 2020, respectively.

German Minister for Environment Sigmar Gabriel welcomed the European Commission’s recommendations saying, “With this initiative the EU has given an impetus for breaking climate deadlock in Copenhagen. It is important to come up with concrete numbers in this preparatory phase to bring to the negotiating table”.