REPORT
There Is Enough Money!
Summary
How to deliver an ambitious, credible and high quality new climate finance goal
Monday November 18, 2024
The global projected investment requirement for climate action as estimated by the latest IHLEG report is around $6.3–6.7 trillion per year by 2030, of which $2.3 - 2.5 trillion will be in developing countries (incl. emerging economies) other than China. As a means of comparison, the IMF estimated that the world spent $7 trillion on fossil fuel subsidies in 2022 alone. This shows that while the figures may seem staggering, it is possible to mobilize the financing to address climate change effectively.
Developing countries, and in particular the Least Developed Countries (LDCs) and Small Island Developing States (SIDS) will continue to require international support to be able to fund their response to the climate crisis and provide their population with renewable energy access. The New Collective Quantified Goal (NCQG) outcome will have to determine the level of support they will be able to count on in the future.
Many countries and experts have been calling for the NCQG to reach at least $1 trillion per year to help poorer and more vulnerable countries with the just energy transition and address adaptation challenges. The core of the NCQG must be funded through international public finance and include a significant amount in highly concessional financing, including grants for highly indebted countries. While part of this funding must continue to come from wealthy countries’ budgets, for instance as part of their Official Development Assistance (ODA), it is insufficient to limit the concessional financing on ODA only, mostly for two reasons: ODA in key donor markets is being cut heavily, as Global Citizen’s tracker shows; and even if all donors were to meet their commitment to allocate 0.7% of their GNI to ODA, the amount (around $420 billion, nearly twice as much as today) wouldn’t be enough to address for instance climate adaptation in poorer countries, let alone other priorities such as access to health and education.
The below table shows that agreeing on an ambitious NCQG is not a question of means, but of political will. The money is there - and most often, the instruments to mobilize more resources could also help to drive down emissions. It also shows that an ambitious quantum for the NCQG doesn’t have to come at the detriment of the quality of funding, as most instruments below would raise money which could be reallocated in the form of grants. The only exceptions are MDB reform and Special Drawing Rights (SDRs). Agreeing on a clearly defined NCQG while giving it credibility through the endorsement of new financing sources such as levies, an ambitious timeline on the phaseout of fossil fuel subsidies and further MDB reform is needed and possible.
An ambitious and credible NCQG delivering high quality funding, including to the poorest and most indebted countries, is a matter of political will!
More details can also be found in Global Citizen’s Where’s The Money report and on the There Is Enough Money page.
What? | How Much? | How? | Sources |
|---|---|---|---|
Multilateral Development Banks (MDBs) | $240-300 billion/ year by 2030 | Further MDB Reform incl. implementation of all recommendations of the Capital Adequacy Framework Reform proposals, could help triple lending capacity by 2030. This would be debt-based financing. | |
Special Drawing Rights (SDRs) | $80 - 650 billion | Issuing New Special Drawing Rights (SDRs): Similar to the issuance made back in 2021, the IMF could release another $650B (which doesn’t require the approval of US Congress). | |
Rechanneling of existing SDRs: Wealthy nations still hold around $400 billion SDRs from the 2021 issuance that they effectively don’t use. Rechannelling only $20 billion via an MDB hybrid capital mechanism could leverage up to $80 billion in new debt-based financing. | |||
Tax on High-Net-Worth Individuals | $200 - 390 billion/ year | A minimum tax of 2% on the wealth of the 3,000 billionaires worldwide would generate $200-250 billion / year. Extending the tax to centimillionaires would add $100-$140 billion. The tax can be implemented without global agreement. The 1% most wealthy individuals in the world emit as much as the bottom 66% of the global population by income. | |
Fossil Fuel Levies | At least $55.75billion/ year | A Fossil Fuel Extraction Levy would be charged per ton of CO2 embedded (CO2e) within the domestic extraction of coal, oil and gas. | |
Phasing Out Fossil Fuel Subsidies | Up to $4.4 trillion/ year by 2030 | Reform of subsidies: Global subsidies for fossil fuels reached a record $7 trillion in 2022, according to IMF data (incl. Implicit subsidies). This includes $1.3 - 1.5 trillion in direct government subsidies for fossil fuels. | |
Redirecting funds currently allocated to fossil fuel subsidies can both free up funds for climate finance and slow down emissions. Full price reform could raise revenues of $4.4 trillion, 3.6 percent of global GDP, by 2030. | |||
Shipping and Aviation Levies | $19-200 billion/ year | A global maritime shipping levy applied well-to-wake of 150-300 per ton of CO2e would in 2027-2030 generate an estimated $127 billion per year. | |
Air passenger levy: A flat $25 tax on each one-way flight globally or a Frequent Flyer Levy starting at $9 for a person’s second flight to $177 for their twentieth within the same year could generate $121 billion/ year (based on 2019 data). | Zheng&Rutherford, Aviation climate finance using a global frequent flying levy | ||
A global aviation fuel levy of €0.33 per liter on the consumption of kerosene jet fuel for international flights would generate an estimated €18 billion per year (TILDA $19 billion). | |||
Global Carbon Tax on Aviation and Shipping: Carbon pricing can be imposed on global sectors like international aviation (mostly passenger flights) and shipping (also known as maritime). The estimates are based on a carbon The aviation sector as a whole accounts for approximately 11% of CO2 emissions from transport and has been one of the fastest growing GHG emitting sectors. Today’s impact of shipping on GHG emissions is 3% but could grow to 10% by 2050. | |||
Financial Transaction Taxes | $275-$423bn / year | A G20 levy on shares with a 0.5% nominal rate (similar to the UK stamp duty) would generate $275 billion/ year. Extending the tax to intraday transactions (bought and sold within the same day, including high frequency trading) would increase revenue to nearly $423 billion. Financial transactions have been constantly on the rise, especially during crisis times. | |
Levy on Cryptocurrency Mining | $5.2 billion/ year | Global levy on the electricity use of crypto miners of 0.045 per kWh could raise $5.2 billion a year. If they were a country, in terms of energy consumption, bitcoins would rank 27th, before Pakistan. | |
Plastics Production Levy | $25-35 billion / year | A global fee on primary polymer production of 60-90 per ton would raise $25-35 billion per year. | |
GHG Emission Tax on Animal Proteins | $186 billion / year | A GHG-Pricing mechanism on meat of $0.10 per 100 grams could bring in $186 billion per year if applied in OECD countries and China. | |
Global Carbon Pricing | $1.4 trillion by 2030 / globally | A carbon price of $75 in high-income countries, $50 for middle income and $25 for low and lower middle income countries would raise up to 1.4 trillion (1.2 trillion in G20 countries alone). |
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