BRUSSELS The United Nations should set up a war chest to help process the billions of dollars poor countries will be paid to slash their greenhouse gas emissions, the European Union has proposed.
The facility would sit separately from an existing "Adaptation Fund," which aims to soften the impact of climate change on crops and water sources, the executive European Commission added in a draft report, seen by Reuters on Monday.
The EU hopes to find unity on its financial support for the developing world in coming weeks to boost the chances of success at international climate talks in December in Copenhagen, where countries aim to agree on a successor to the Kyoto Protocol.
The paper is one of the first attempts to deal with the practicalities of collecting and distributing the billions of dollars poor countries say they will need before signing any such deal.
British Prime Minister Gordon Brown says $100 billion will be needed annually by poor nations by 2020, but some environmentalists put the figure near $140 billion. Ethiopia says Africa will veto any deal that is not generous enough.
Much of the flow of funds from rich to poor nations will be handled bilaterally, but the EU has suggested this money could be supplemented by taxing fuel for ships and aviation.
"It could be natural to assign this new finance to a new fund set up under the U.N. Framework Convention on Climate Change (UNFCCC)," the report added.
The U.N. facility might also channel any money accrued under a Mexican proposal to collect funds according to a formula based on each country's population, wealth and greenhouse gas emissions.
Greenpeace campaigner Joris den Blanken welcomed the idea, but said it should play a bigger role.
"It is very important that developing countries have a say in how these funds are managed," he said. "We much prefer this option to suggestions the funds are managed by donor-driven organizations like the World Bank."
An international registry would verify that emissions cuts that are paid for are being carried out, but if the verification system proved weak the EU might create its own independent fund.
"This could help to enable the EU and its member states to ensure that its money was being well spent," the report said.
Environmentalists have warned that traditional sources of development aid might simply be diverted and rebranded as climate funding in the years ahead.
But the paper said the overlap was relatively small, as most development aid goes to the poorest countries, which produce low levels of greenhouse gases and would receive little of the money earmarked for emissions cuts.
"Action to tackle deforestation may be a major exception to this, but it should be feasible to identify any significant reorientation of Official Development Assistance budgets toward deforestation," it added.
(Editing by James Jukwey)