Poor nations urged to reform to win climate funds

OSLO Thu Jun 2, 2011 9:06am EDT

People walk near power-generating wind turbines at the Kenya Electricity Generating Company (KenGen) station in Ngong hills, about 22 km (14 miles) southwest of Kenya's capital Nairobi, September 8, 2010. REUTERS/Thomas Mukoya

People walk near power-generating wind turbines at the Kenya Electricity Generating Company (KenGen) station in Ngong hills, about 22 km (14 miles) southwest of Kenya's capital Nairobi, September 8, 2010.

Credit: Reuters/Thomas Mukoya

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OSLO (Reuters) - Many developing nations are missing out on a surge in investments in clean energy and need to cut red tape and agree new rules to attract funds to help fight climate change, a U.N. finance guidebook said on Thursday.

Clean energy sector investments worldwide grew 30 percent in 2010 from 2009 to a record $243 billion but 90 percent went to members of the Group of 20 -- leading industrialized nations and big emerging economies led by China and India.

"We are very concerned about the uneven distribution of investments," Yannick Glemarec, director of environmental finance at the U.N. Development Programme, told Reuters of a 160-page UNDP guidebook entitled "Catalysing Climate Finance."

Poor nations in Africa, Latin America and Asia could take simple steps to avoid staying on the sidelines. A U.N. estimate showed private sector investments in clean energy technologies could surge to $450 billion by 2012 and to $600 billion by 2020.

The guidebook laid out advice such as identifying technologies for cutting emissions, reforming bureaucracy and designing incentives such as feed-in tariffs to guarantee stable electricity prices for renewables such as wind or solar power.

Among examples of red tape, a plan to introduce electric three-wheel rickshaws in Sri Lanka to help curb pollution was delayed, partly because the Motor Traffic Act at the time had no rules for allowing electric vehicles on the road.

"This guidebook seeks to fill a gap," Glemarec said. "There is a lot of specialized literature on 'why' countries should capitalize on the green economy. There is very little literature about 'how'."

MAJOR ECONOMIES

The guidebook said it was taking a different tack from many initiatives for combating global warming that focus on major economies such as the G20, which account for more than 80 percent of world greenhouse gas emissions.

"A failure to provide fair access to climate financing to all developing countries would have severe political, financial and climate change consequences," it said.

It said that global capital markets, representing about $180 trillion in financial assets, had the size and depth if the right policies were followed to make investments attractive.

Glemarec said that developing nations had to realize that it was not enough, for instance, to tell a foreign investor that they had winds suitable for generating electricity.

Governments also had to plan access to the grid, cut delays in granting permits, set up predictable laws on pricing and improve local expertise, for instance to ensure maintenance without flying in staff from the other side of the world.

"At least 83 countries have some type of policy to promote renewable power generation," the guidebook said. In the most common policy, at least 50 countries had feed-in tariffs in 2010, more than half of them adopted since 2005.

Drawing on experience from more than 1,000 projects in 140 nations, the UNDP also cautioned that abrupt removal of subsidies, such as on kerosene, or a sudden hike in electricity prices, also had to be designed to avoid harming the poorest.

The report said wider participation by all nations was a key to help reach a goal, set at a U.N. climate conference last year in Mexico, of limiting a rise in temperatures to below 2 degrees Celsius (3.6 F) above pre-industrial times.

"The world may have no more than 100-150 months to dramatically change its energy supply trajectory and limit temperature rise to a 'safe' 2 degrees C," it said.

For Reuters latest environment blogs, click on: blogs.reuters.com/environment/

(Editing by Jon Boyle)

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