Gerard Wynn

Emerging economies can help fund the fight against climate change through sovereign wealth funds, swollen by oil and other exports receipts, the World Bank’s Latin America chief, Pamela Cox, said

LONDON, UK; June 12, 2008.- Developing countries blame climate change on rich nations which have fuelled decades of growth by burning fossil fuels, and so want them to take the lead in fighting the problem.

But industrialised nations, and especially the United States, want big emerging economies to agree to a bigger role under UN-led talks to clinch a climate deal next year.

The World Bank has well-advanced plans to administer some US$10 billion in rich nation funds to help the developing world cut greenhouse gas emissions and plan for a warmer world.

But it supports a global, longer-term fund raised from both developed and developing countries, Cox told Reuters.

“In something like that the sovereign wealth funds, I think, could play a big role,” she said.

“It would be great if some of these sovereign wealth funds started investing in alternative technologies, some of the climate change funds that are being put forward,” she said, but added that the World Bank could not tell countries how they should invest their sovereign wealth.

Emerging economies control up to US$3 trillion in sovereign wealth funds fuelled by rocketing oil and commodities prices and growing trade imbalances with Western trading partners.

Mexico discussed with the World Bank last month plans for a global climate fund.

“I think it’s great that a leader of an emerging market country is proposing this,” said Cox, referring to Mexican President Felipe Calderon. “His idea is to have all countries contribute to these funds, not just industrialised countries.”

Some emerging economy oil exporters are planning clean energy and other climate initiatives.

The Organisation of Petroleum Exporting Countries is planning a US$750 million research fund into burying greenhouse gases underground — which could also boost oil extraction — and has committed about US$35 million so far, the UN says.

The United Arab Emirates has launched a $15 billion “Masdar Initiative” to help plan for an era of falling oil reserves by investing in low carbon-emitting energy like solar power.

Tokyo said on Monday it would contribute US$1.2 billion to the planned US$10 billion of developed country Climate Investment Funds (CIF) administered by the World Bank. The United States has proposed US$2 billion and Britain says it will add part of a 800 million pound (US$1.57 billion) environment fund.

The CIF will invest roughly US$5 billion each in funds to help developing countries cut emissions of planet-warming greenhouse gases, and to plan for climate change.

The clean technology fund would include loans to the private sector, especially in larger emerging economies, while the other “climate resilience” fund would include grants to least developed nations, Cox said.

Officials from more than 170 countries are meeting in Bonn this week to try and agree proposals for a new global climate deal after the first round of the Kyoto Protocol ends in 2012.

(Reuters)

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