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G20 summit will test resolve on greener economy

LONDON (Reuters) - A G20 summit next week will test leading countries’ appetite to fight climate change after spending trillions bailing out banks and shoring up the global economy.

The April 2 meeting in London of leaders of major developed and emerging economies aims to battle a financial crisis.

British Prime Minister Gordon Brown, hosting the meeting, also wants to coordinate economic stimulus spending on a global response to climate change.

If the summit fails to widen its agenda to green spending that would be seen at best as a wasted chance, and at worst evidence of waning enthusiasm to sign this year an ambitious pact to replace the Kyoto Protocol after 2012.

“We need a very clear signal that the G20 views this as broader than fixing a financial crisis,” said Achim Steiner, executive director of the UN Environment Program.

“When you see $100 billion going into rescuing one or two companies you have to ask yourself is this the most rational way of dealing with a (climate) threat that will have far greater economic consequences and human suffering.”

The London meeting coincides with a resumption next week of U.N.-led climate talks in Bonn, Germany, meant to lay the foundations for a new climate treaty in Copenhagen in December.

G20 powers could confirm next Thursday their commitment to forge a new climate treaty in Copenhagen, and urge spending wherever possible of a $2 trillion-3 trillion global stimulus on “green” causes, analysts say.

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The United States, the Europe Union, China and South Korea have led green spending plans of $300 billion-500 billion, or about 15 percent of wider economic stimulus plans, to boost low-carbon technologies, improve efficiency and protect the environment.

Much of that will be spent in the next two years.

Some analysts and green groups argue that is not enough, wary that future climate spend will be hamstrung by rising public debt, and worried that some planned projects such as road building will lock in future carbon emissions.

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Green advocates say that infrastructure projects to build wind farms and improve home efficiency suit recovery spending, because they will create jobs as well as tackle post-recession threats including energy security and climate change.

“As far we are thinking about refloating, re-regulating financial markets, we should be thinking about climate change because unabated it will affect economic returns as much as any dodgy banking system,” said Mark Kenber, policy director at the London-based Climate Group.

Applying environmental conditions to stimulus spending may also pare state aid and protectionism fears. But the fight against recession inevitably means that the climate cash left will have to lever private sector money.

Governments could get more for their buck by guaranteeing private sector loans, or under-writing “green bonds” where pension and insurance funds invested in clean energy.

Similarly, public funding of carbon cuts in developing countries may smooth agreement on a tough treaty in Copenhagen, which would in turn assure investors that global energy policy is tilting in favor of low-carbon, fossil fuel alternatives.

“(Making) government spending work very, very hard in terms of leveraging private capital... that fits very much with the Copenhagen agenda,” HSBC analyst Nick Robins said.

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