WASHINGTON (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 help 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.
“The G8 is likely to broadly support the establishment of the climate investment funds,” Warren Evans, director of the World Bank’s environment department, told reporters.
He said the World Bank was counting on an initial $4 billion to $5 billion in donations by G8 nations for the Clean Technology Fund, adding that media reports that $10 billion would be raised for the fund “are on the high side”.
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 $500 million for programs.
“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 said.
Evans said he was not overly concerned with the timing of the first contributions because it takes some time to put the projects together.
He 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. Decisions would be made by consensus, he added.
“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 or grants, or both.
World Bank President Robert Zoellick said the funds are part the Bank’s response to climate change challenges.
”We think the (funds) will have a significant impact in generating even more financing for climate action,“ Zoellick said, ”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.
U.S. Treasury Undersecretary for International Affairs David McCormick welcomed the establishment of the funds.
“We have been working closely with the Bank’s leadership, potential donor and recipient countries, as well as the environmental and business communities, to develop a fund that effectively addresses the dual challenges of poverty and climate change,” he added.
Evans said the Bank would ensure that work on the climate investment funds does not interfere or influence current U.N.-led negotiations among developing and developed countries to replace the Kyoto pact on climate change.
United Nations climate experts want the new treaty to go beyond Kyoto by getting all countries to agree to curbs on emissions of greenhouse gases. Under Kyoto, only 37 countries are bound to cut emissions by an average of 5 percent from 1990 levels by 2012.
Editing by Tom Hals and Braden Reddall