Multilateral banks, including the World Bank, are crucial for providing climate finance to low-income nations. However, many developing countries struggle to access these funds due to bureaucracy and high costs. Calls for reforms, such as offering loan guarantees to reduce investor risk, could unlock billions in private financing. Although this solution relies on major pledges from donor countries, it is considered essential to accelerating climate action.
Taxing Fossil Fuel Profits
Since the Ukraine crisis in 2022, fossil fuel companies have experienced unprecedented profit surges. Taxing these windfall profits is a practical way to fund climate finance, with potential support from organizations like the International Energy Agency. If implemented, this approach could channel significant resources toward climate action, though it would require strong political resolve.
Implementing a Frequent Flyer Levy
Frequent flyers contribute disproportionately to aviation emissions, with a small fraction of travelers responsible for a large share of flights. A levy on frequent or premium-class travelers could generate climate finance while addressing carbon inequality. This policy is straightforward to implement, largely impacting high-income flyers, and could face minimal public resistance.
Reforming Harmful Subsidies
Globally, $650 billion in subsidies go to fossil fuels, agriculture, and fisheries annually, often harming the environment. Redirecting even a small part of these funds to climate initiatives could make a significant impact. Although logical, this proposal faces resistance from industries dependent on these subsidies, requiring a gradual phase-out approach.
Wealth Taxes
Wealth inequality has widened since the pandemic, with the richest individuals producing large carbon footprints. A modest wealth tax, such as the 2% proposed by Brazil’s president, could yield $250 billion annually, targeting only a small number of ultra-wealthy families. While such taxes face resistance from the wealthy, public support could make them feasible.
Carbon and Shipping Levies
Carbon taxes directly address emissions by encouraging cleaner energy. Though difficult to implement globally, carbon taxes could be highly effective. Meanwhile, the International Maritime Organization’s proposed shipping levy, based on vessels’ carbon emissions, could reduce the shipping industry’s environmental impact and is likely achievable in the near term.
Carbon Trading Systems
Selling carbon credits from preserved forests incentivizes conservation and raises funds for climate initiatives. However, carbon trading faces issues with integrity, transparency, and double-counting, undermining its effectiveness. While it holds potential, carbon trading requires significant reforms to become a reliable climate finance tool.
