International climate finance from border carbon cost levelling

The reality of trying to raise substantial long-term revenues for international climate finance, including the outcome of the High-Level Advisory Group on Climate Change Financing, is revealing the need for fresh thinking on finance sources which takes account of political realities. Particularly after the credit crunch, it will be very difficult to raise all the international finance required from sources that have clear national identity and are presently under the control of finance ministries in the OECD countries. This article argues that the revenue associated with charging for the carbon embodied in the international trade of carbon-intensive commodities is an option with attractive properties. The article explains this option of WTO-compatible 'border carbon cost levelling', indicates potential revenues from its application to key carbon-intensive commodities, and outlines the potential ethical and political economy attractions of the option.