“The World Bank will suggest a global levy on jet and shipping fuel in recommendations to G20 governments later this year on raising climate finance,” World Bank Special Envoy for Climate Change Andrew Steer told Reuters in an interview on Sunday after the C40 Conference. The World Bank confirmed the proposal for Breaking Energy.
The Bank hopes to use the income from these levies to help the developing world prepare for global climate change, an effort that could cost up to $100 billion a year.
This proposition also comes as part of the Bank’s Partnership for Market Readiness (PMR), an initiative launched at the UN’s climate change conference in December 2010.
On June 2, the Bank announced that it would be granting eight countries funds to design and implement greenhouse gas mitigation initiatives. The countries include Chile, China, Colombia, Costa Rica, Indonesia, Mexico, Thailand, and Turkey. The PMR is itself supported by 15 countries who have collectively pledged $70 million for the project.
“These countries are taking a lead in building the capacity and foundation for a future global carbon market with the support of the Partnership for Market Readiness,” Steer said in announcing the grants on June 2.
But in the Reuters interview he expressed impatience with the progress of UN climate change effort, which he said was moving too slowly.
“I’ve got to say the situation is very urgent and sometimes that sense of urgency is not evident in the negotiations,” he said.
Projects like the one proposed by Steer are already being considered quite seriously by the European Union (EU), which is planning to implement a levy on jet fuel, by January 2012, on on all flights that land or take off from Europe.
This EU proposition has already been met with harsh criticism.
“It is clear that the countries are going to retaliate, whether in the form of imposing additional taxes on European airlines or restricting access to markets,” Willie Walsh, chief executive of International Airlines Group told the Guardian.
He noted that such a levy would cause competition between countries that lack such a tax and those that don’t. The havoc it will wreak on the market is still largely uncertain, he said.
“It will add more concern in the mind of travelers that they will face disruption to services and I think there is a real risk this could happen,” Walsh said.
It remains to be seen if the World Bank propositions goes through and if so, how airlines across the world will react. With an multilateral international agreement in place, regulators are betting competition between countries and airports could be minimized.
Read the full Reuters story here.