World Bank to suggest CO2 levy on jet, shipping fuel

* New climate deal unlikely to be agreed before Kyoto ends

* Focus increasingly on finance, including $100 bln pledge

By Gerard Wynn

BONN, Germany, June 5 (Reuters) – 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, a senior official said on Sunday.

Developed countries have already written off chances of agreement on a new binding deal at a U.N. conference in Durban this year, placing a new focus on piecemeal efforts including fund-raising.

Binding targets under the Kyoto Protocol cap the greenhouse gas emissions of nearly 40 industrialised countries but expire in 2012 and now look unlikely to be extended in time.

The World Bank is focusing on a levy on shipping and jet fuels in a report to G20 finance minister in October, among other efforts to keep climate action on track.

“We are looking at carbon emissions-based sources … including bunker (shipping) fuels and aviation fuels, that would be internationally coordinated albeit nationally collected,” said Andrew Steer, World Bank special envoy for climate change.

The Bank estimates the extra cost to help the developing world prepare for more droughts, floods and rising seas at $100 billion annually. Various sources put the extra cost of cutting carbon emissions at $200 billion or more annually.

Steer said he was disappointed by the pace of a U.N. climate process which launched talks in 2007 to find a Kyoto successor.

“I’ve got to say the situation is very urgent and sometimes that sense of urgency is not evident in the negotiations.”

“Durban could make important progress in a number of areas but an overall deal is not really on the cards right now,” he said on the sidelines of a new round of climate talks from June 6-17 in Bonn, Germany.

“In the meantime let’s get on with delivering what is committed,” he said, referring to various voluntary emissions targets and measures including a target agreed two years ago for the world to raise $100 billion climate aid annually by 2020.

The U.N. talks are stalled on the future of Kyoto, which only caps rich country emissions. Developing countries want to extend the pact while most developed nations want to replace it.

Global shipping and aviation emissions are neither limited nor measured under Kyoto. As a result these sectors are coming under closer scrutiny and the European Union in particular is involved in an escalating spat with the global airline body.

The EU plans a levy on the emissions of most flights that land or depart from Europe from January 2012, regardless of airline, a measure the head of the International Air Transport Association (IATA) on Sunday called illegal.

In addition to a levy on transport fuels, the World Bank is investigating raising funds from the sale of emissions permits to countries and companies, as already happens under the EU carbon market, and soft loans from development banks to stimulate private sector cash, said Steer.