World Bank approves climate funds before G8 summit

WASHINGTON, July 1 (Reuters) - The World Bank on Tuesday agreed to establish two investment funds to help developing economies switch to clean energy technologies to curb carbon emissions and assist poor countries adapt to climate change.

The approval of the Clean Technology Fund and Strategic Climate Fund comes days before a summit of Group of Eight leaders from industrial countries in Hokkaido, Japan, on July 8 where climate change issues are on the agenda.

Warren Evans, director of the World Bank's environment department, said the Bank is counting on between $4 billion to $5 billion in donor money for the Clean Technology Fund.

Britain, Japan and the United States have already said they will contribute to the fund, while more countries are likely to climb aboard now that the funds have been approved.

No specific funding or donor commitments have been discussed for the adaptation fund, although Evans said he was confident the World Bank will be able to raise the money.

"We would hope the funds are fully operational by the fourth-quarter of this year, and that some projects are being approved by the end of the year," he told reporters.

Evans said the design of the funds was agreed in negotiations between "a large number of stakeholders" and financing for projects would be decided by a committee made up of eight donor nations and eight developing countries.

"It recognizes the need to scale up rapidly the investments in low-carbon technologies and adaptation to climate change," Evans said, adding that the investments would be funded through either low-interest loans and grants, or both.

World Bank President Robert Zoellick said the funds are part the Bank's expanded response to challenges caused by climate change.

"We think the (funds) will have a significant impact in generating even more financing for climate action," said Zoellick, "but also in demonstrating new approaches to address the current and future effects of climate change.

"These approaches will range from agriculture to water management, from transport to urban development, and from biodiversity to energy access," he said. (Reporting by Lesley Wroughton; Editing by Tom Hals)