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Raising Climate Finance

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Chang-Hun Kim

on 27 November 2013

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Transcript of Raising Climate Finance

photo credit Nasa / Goddard Space Flight Center / Reto Stöckli
Raising Climate Finance
Climate Change
Refers to Anthropogenic global warming

Global warming- temperature increase in Earth's surface

Climate change-
global warming and everything else that
increasing greenhouse gas levels will affect.
United Nations Framework Convention on Climate Change

-Negotiated at UNCED, also called Earth Summit
-Rio de Janeiro in June 1992
-154 nations signed

-Objective: to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.
-Fundamental principles: “common but differentiated responsibilities”

Development Cooperation Mechanisms
“Clean Development Mechanism (CDM)”

Kyoto Protocol, Article 12

Allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol to implement an emission-reduction project in developing countries and earn salable CER credits

Case Study
Efforts of UK
How do we deal with Climate Change?
“Common But Different Responsibility”
Principle 7 of the Rio Declaration

"In view of the different contributions to global environmental degradation,
States have common but differentiated responsibilities
. The developed countries acknowledge the responsibility that they bear in the international pursuit of
sustainable development
in view of the pressures their societies place on the global environment and of the
technologies and financial resources
they command."

How do we deal with Climate Change?
“Common But Different Responsibility”
-Kyoto Protocol (Annex 1 Countries)
Problem: GHG Externality
Global warming is a negative externality
--> Affects everybody and results from activities by many, but no
manageable small group can change the overall effect

Abatement of GHG
--> Benefits everybody, but preferred to be created by others at no cost to

How should this problem should be solved?
Private sources of finance – market based approach


Public sources of finance - taxing

Private Sources of Finance
“Global cap-and-trade system”
With appropriate allocation of tradable emissions

Internalize externalities
A way developing countries can be financed by themselves

Private Sources of Finance
“Global cap-and-trade system”
Key objective: getting prices right!

Each schemes with different carbon instruments traded at different prices?
Appropriate level and direction of finance to developing countries?
Uncertainty about future prices?

Carbon leakage
The increase in emissions outside a region as a direct result of the policy to cap emission in this region

Private Sources of Finance
“Expanding CDM”
Stimulate climate-related finance flows
Helps get the prices right!

What should be done?
-Increase its scope beyond individual projects to sectors and programs
in developing countries
-Help more countries participate

Private Sources of Finance
“International Auctioning”
Auctioning emission quotas earmarked for climate-action funds in developing countries

Public sources of Finance

1) Multilateral efforts
-Climate related sources
-Non-climate related sources

2) National domestic methods

Multilateral Efforts: climate related sources tax
1. Adaptation Fund
Multilateral Efforts: climate related sources tax
Taxes imposed by ICAO and IMO:
-Fuel tax: more effective in curbing
fuel consumption, carbon emissions
-Ticket tax: more revenue raising,
more useful for financing
developing nations

-Merits: advocate taxes on ‘bads’
-Problems: Vulnerable island states
face large increases in their
transport costs
Multilateral Efforts: non- climate related sources tax
3. International financial institutions and funds
Multilateral Efforts: non-climate related sources tax
4. Tax on global ‘bads’

Global ‘bads’ include:

1) Congestion in maritime straits
2) Rights to geostationary orbits and associated radio frequencies
3) Arms sales

Multilateral Efforts: non-climate related sources tax
5. transaction taxes
-Tax imposed on foreign exchange transactions
in order to reduce currency speculation and to
stabilize the price volatility.
ex) Tobin Tax

-Attempts to tax a social ‘bad’

Drawbacks of transaction tax
1) The drawbacks of hypothecation are particularly relevant
-: an financial activity that borrower pledges collateral to secure a
debt or a borrower as a condition precedent to a loan.
National efforts:
National auction

Carbon taxes

Fossil-fuel royalties and subsidies

Assessed or indicative contributions

Cooperation to achieve climate change
UK is participating in 200 projects for climate change that are domestic and international
Goals of the UK projects are
Share knowledge with other countries
Help other countries built up resistance to climate change
Encourage other countries to sign international agreements

The ICF stands for the international climate fund

Action is taken place in the UK and also Abroad

Green Investment Bank
Our mission is: "to accelerate the UK's transition to a  green economy and to create an enduring Institution, operating independently of Government."

Everyone knew him...
Back in 2007
The Current debate
not much about
whether anthropogenic climate change in terms of
global warming is happening or not

Its much more about
who to take responsibility
Northern, rich states
who have taken humanity into the path of fossil fuel technology
Or the
Southern poor states
who have the chance to develop economically
Heavily involves the
issue of finance
In our presentation...
1) Realistic and practical financing methods to tackle climate change in private and governmental level suggested by the article-
Mitigation and Adaptation

2) Case study of efforts in the U.K.
The speaker is from the UK
UK still has the biggest finance industry
Like Germany the public has mass support and awareness to tackle the issue
Chang-Hun Kim
Richie Woo
Chan-Kook Kim
Gue-Hee Kim
Ji-Eun Kim
ㅣㄴLauranne Be Larose
Hill Raphael
Seo Hyun Park
Laura Salakari
Climate change is probably the
most global, and most difficult issue
to tackle-
Who should bear the burden
is highly arguable.
Economic cost of climate change policies-
mitigation and adaptation
are important especially for the
developing countries
Recent consensus has been geared towards
“common but different responsibilities”
Among the two big categories of financing,
private and public
, exists pros and cons that should be carefully considered
As one of the richest country of the world, the
UK shows leadership and examples
in climate change policies- an example others should follow
Thank You!
How do we deal with Climate Change?
Historical backgound

Adaptation and Mitigation
Mitigation and Adaptation
Mitigation: reducing the magnitude of climate change itself
ex) emission reductions

Adaptation: limiting our vulnerability to climate change impacts
--> Are developing countries capable?

Development Cooperation Mechanisms
Ariticle Summary
Private source of Finance
Public source of Finance
Private Sources of Finance
1) Global cap-and-trade system

2) Expanding CDM

3) International Auctioning

Multilateral Efforts :climate related sources tax1. Adaptation Fund
Multilateral Efforts :climate related sources tax
1. Adaptation Fund
ICAO: International Civic Aviation Organization
IMO: International Maritime Organization
Multilateral Efforts: climate related sources tax
Drawbacks of transaction tax
2. uncertainty caused by price elasticity of transactions, which is liable
to change according to circumstances

3. it is not clear that the activities the taxes are imposed on are
necessarily bad
Balance is needed between public and private methods
Public finance is necessary to leverage private finance by de-risking investment opportunities for private sector

Good governance is important for the harmony of private, multilateral and national methods of raising fund

1972 Stockholm - Conference on the Human Environment

- First international recognition about climate change

- 114 of the 132 UN member states

- Foundation of the UN Environment Program (UNEP)

1992 Rio de Janeiro - Earth Summit

- Also known as the UN Conference on Environment and Development

-172 governments participated

- Agreement of the UN Framework Convention on Climate Change

1997, Kyoto - Third Conference of the Parties (COP3)

COP: The supreme decision-making body of the UNFCCC

- Agreed on the Kyoto Protocol

Kyoto Protocol 
- International treaty that sets binding obligations to reduce greenhouse

- The Protocol "recognises that developed countries are principly
responsible for the current high levels of Green House Gas emissions in
the atmosphere"

Mitigation and Adaptation
Questions to be raised

-Are mitigation and adaptation accessible for Developing Countries?

-Government-mandated reductions could damage economies in
Developing Countries

Climate Change Risk Assessment (CCRA)
The CCRA has reviewed the evidence for over 700 potential impacts of climate change in the U.K.
Full transcript