Possible agreement on climate change will cost trillions

Brother John

Possibly the climate agreement in Copenhagen forum will lead to profound changes in energy production and our way of life in major changes in agriculture and forestry, as well as the emergence of complex new markets for credit, the issue of allowing a certain amount of greenhouse gases.
How much will all this cost?
The short answer is trillions of dollars in the next few decades. This is a significant amount, but a relatively small portion of total economic production in the world. Only in the field of energy infrastructure targets, which are expected to be out in the next few days the delegates organized by the UN climate conference, will cost more than $ 10 trillion. additional investments in the period 2010-2030, the show recent estimates by the International Energy Agency (IEA).
As scary as it sounds, and this amount IEA says that spending will grow relatively slowly and will largely be offset by economic benefits in the form of new jobs, improved lifestyles, more secure energy supply and reduced risk of climate catastrophe . The majority of investments will come from the private sector, says the agency.
„People often ask about the cost,“ said Kevin Parker, head of the unit of Deutsche Bank Asset Management, which monitors climate policies for the bank. „Most of the alleged numbers does not take into account the conservation and efficient use of energy that are readily available. It is also not considered the cost of inaction, namely the disappearance of the human race, „continued Parker.
Whatever the effects of global warming (most scientific predictions are not so apocalyptic), and there are different assessments about the economic consequences of failure to take action on the problem, some of them are quite high.

Modest fund of about $ 10 billion annually

Industrialized countries have proposed a relatively modest fund of about $ 10 billion annually for the next three or four years, which will help poorer countries adapt. Even this measure continues to be subject to disputes which party how to make what authority to monitor spending and on what criteria to identify projects eligible for funding.
Barack Obama’s spokesman said last week that U.S. President supports short-term fund to help developing countries and the U.S. would pay „their share“. In a number of multilateral initiatives cover the country from one quarter to one third of the bill.
Obama will arrive in Copenhagen on 18 December on the last day of the meeting – a sign that the White House believes in the possibility of reaching agreement on a large scale, including deals on some of the sensitive financial aspects.
„How much money should be deducted developed countries to attract developing in the conversation? It is this question is posed in Copenhagen, „said Robert Steyvins, head of the department of environmental economics at Harvard University.
Steyvins says that most of the funds will have to come from the private sector because it is „inconceivable“ the governments of rich countries to provide adequate funding, and private companies spend money much more effectively.
Climate and energy bill passed by the House of Representatives in June, set aside roughly $ 8 billion a year to help developing countries by 2030, says Steyvins. According to him, this amount represents the upper limit of state financial aid from the U.S..
Viewpoint of the developing world, of course, is quite different.
Alvaro Umana Quesada, head of the delegation of Costa Rica, said that for developing countries is important to have early and predictable resource flows from long-term financing. In his discussion at funds of $ 10 billion in so-called primary funding are adequate, but should rise to about $ 80 billion to reach $ 150 billion by 2020
„This is not who knows how much compared to the size of the global economy or rescue operations during the financial crisis – Quesada stated. – There is serious need of adjustment, small island nations are at real risk. Some of them will disappear in the next severe weather event. “

Global market for carbon credits

European Union supported the fund with that amount, but the U.S. remained evasive. Obama Administration requested funding in the field of climate change by $ 1.2 billion budget for 2010, which is well below the needs discussed in Copenhagen. Representatives of the White House say that in coming years will seek more money for international climate programs.
Perhaps the most detailed analysis of the financial requirements in any agreement comes from the Project Catalyst, an EU initiative and ClimateWorks. The work of the research team helped to shape the negotiations in Copenhagen. He estimates that roughly $ 100 billion will be needed by 2020 to fund programs to combat climate change in the developing world. About half can come from the growing global market for carbon credits under the system to limit emissions that would be worth $ 2 trillion. annually by 2020
A similar system already operates in Europe and in the U.S. Congress is considering. It puts a ceiling on carbon dioxide emissions for a given country or industry and allow trading of pollution permits under the limit. The overall limit on emissions is becoming smaller, which increases the cost of permits and creates a very large market for carbon credits.
The Parties will provide part of the carbon permits directly to the energy and environmental programs in the developing world, and the funds will come from a relatively small fee for each transaction. Other $ 10 billion – $ 20 billion would come from excise duty on fuel used in aviation and shipping sectors. The remaining approximately $ 25-35 billion will be in the form of loans and aid from industrialized countries to poorer ones, divided into three roughly between U.S., EU and Canada, Japan and Australia.

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