Billions of dollars raised by Australia's carbon tax will end up overseas, helping poor countries battle climate change.

Prime Minister Julia Gillard's new tax will be used to allow Australia to meet its share of a $100 billion-a-year United Nations fund to transfer wealth from rich countries to help undeveloped nations adapt to global warming.

The Gillard Government is party to a UN agreement which Climate Change Minister Greg Combet entered into in December at a meeting in Cancun, Mexico, under which about 10 per cent of carbon taxes in developed nations will go into a Green Climate Fund.

Even when Ms Gillard was denying there would be a carbon tax last August, her government had committed to spend $599 million on climate change handouts over the current three-year Budget period, mainly in the Pacific and South-East Asia. About $470 million has already been allocated.

The scale of the potential overseas carbon tax payments dwarfs the $500 million in educational foreign aid to Indonesia which provoked recent bickering between the Government and the Opposition.

Former WA ALP secretary Bob McMullan, now Ms Gillard's parliamentary secretary for international development assistance, is a member of UN Secretary-General Ban Ki Moon's high level advisory group on climate change financing.

A report released by the group in November makes clear the role of carbon taxes in transferring wealth from developed countries.

"The Advisory Group emphasised the importance of a carbon price in the range of $US20-$US25 per ton of CO{-2} equivalent in 2020 as a key element of reaching the US$100 billion per year," the report said.

"Based on (that) carbon price, auctions of emission allowances and domestic carbon taxes in developed countries with up to 10 per cent of total revenues allocated for international climate action could potentially mobilise around $US30 billion annually," the report said.

"Without underestimating the difficulties to be resolved, particularly in terms of national sovereignty and incidence on developing countries, approximately $US10 billion annually could be raised from carbon pricing international transportation, assuming no net incidence on developing countries and earmarking between 25 and 50 per cent of total revenues."

The report said much of the remaining shortfall could be met from direct budget contributions by rich nations.

Mr Combet's Department of Climate Change says: "It is in Australia's interest to assist developing countries to take urgent adaptation actions and to build their capacity to reduce emissions."

It says Australia is part of a transitional committee designing the $100 billion fund, "with a view to (making the fund operational)" in time for the next UN climate talks in South Africa in December.

The West Australian

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