UPDATE 1-German court paves way for Peruvian farmer's suit against RWE

* Peruvian farmer sued RWE over its role in climate change

* Runs potato, tomato farm in Andes, also mountain guide

* German court says it will hear evidence in his lawsuit (Adds detail from court, Germanwatch statements)

DUESSELDORF, Germany, Nov 30 (Reuters) - A German court will hear evidence on a climate activist’s suit against energy utility RWE rather than terminate proceedings, boosting Peruvian farmer Saúl Lliuya in a test case other environmentalists will watch closely.

The case centres on whether a company can be held financially responsible for the contribution of its carbon dioxide emissions to the effects of climate change in other parts of the world.

Lliuya, supported by activist group Germanwatch, has argued that greenhouse gas emissions from RWE’s plants are partly to blame for melting an Andean glacier that is threatening to cause flooding and damage his house.

He is demanding that RWE pay 17,000 euros ($20,140) to help shoulder the cost of flood defences. That figure is based on a study cited by Germanwatch that says RWE is responsible for around 0.5 percent of greenhouse gases caused by human actions since industrialisation.

RWE says Lliuya’s complaint is unfounded, saying a single emitter cannot be held responsible for global warming.

Germanwatch said Lliuya is 38 years old and lives in the Andes town of Huaraz, where he both runs a small farm growing potatoes, lettuce and tomatoes and works as a mountain guide.

Last year, a lower court in Germany dismissed Lliuya’s claim. But the higher regional court in Hamm said on Thursday it found legally conclusive his argument that RWE may be held liable if its actions are found to infringe on someone’s property rights.

The court said in a statement that it would commission experts to compile evidence on whether emissions from RWE power plants can be shown to abet global warming and consequently the melting of the glacier - and whether that puts Lliuya’s home at risk of flooding.

The experts will also have to determine for what percentage of global warming RWE is responsible.

Germanwatch said in a statement that the Hamm court’s decision to proceed with the case was a “historical breakthrough”, paving the way for further cases to be brought against firms with high CO2 emissions.

“Companies would have to disclose the resulting risk of litigation and set aside provisions. Investors would have to take this risk into account in their investment decisions.”

RWE finance chief Markus Krebber said earlier this month that he expected the hearing of evidence would be a very long and complex process, and he did not expect the suit to result in a wave of litigation over the effects of climate change.

$1 = 0.8441 euros Reporting by Tom Kaeckenhoff; Writing by Maria Sheahan; editing by Mark Heinrich