Meeting the costs

A NEW global deal on climate change is due to be inked this year, and one of the sticking points is how poor countries will be funded to reduce their emissions.

The question is how much rich countries should pay - possibly close to $200 billion a year - and how the money should be collected.

The solutions range from global levies on fuel, the creation of a fund from emission trading scheme revenues, or just handing over compensation.

Whatever the solution, it's a sleeper issue that will affect business.

The idea is that no global pact to tackle climate change will work unless it gets the developing world to reduce emissions too.

But the developing world wants to lift its people out of poverty.

Why should poor countries have to develop their economies using expensive wind farms and public transport, when countries like Australia have got rich on cheap coal and cars?

Britain called for a $120 billion annual climate fund for developing countries.

Denmark and Tuvalu jointly suggested a levy on aviation and shipping fuels.

The US suggested 7 per cent of ETS revenue go to the developing world.

The Australian ETS has no revenue going to poor countries. It mostly goes to compensation for industry and households.

China controversially proposed developed nations hand over half a per cent of their GDP to a developing nation climate fund - about $5.5 billion a year for Australia.