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Mexico Sees Support For U.N. Climate Finance Plan

Date: 04-Jun-09
Country: GERMANY
Author: Alister Doyle, Environment Correspondent

BONN - A Mexican proposal to raise billions of dollars to fight climate change is winning backing in talks on a new U.N. treaty, paradoxically because no one really likes it, a Mexican official said on Wednesday.

"It has something for everyone, although everyone will dislike part of it. That's the beauty of the proposal," Fernando Tudela, Undersecretary of Planning and Environmental Policy, told Reuters on Wednesday.

"It could be an area of consensus because nobody likes 100 percent of it," he said on the sidelines of June 1-12 U.N. climate talks in Bonn working on a new U.N. climate treaty due to be agreed in Copenhagen in December.

The "Green Fund" plan would oblige all governments to pay in cash based on a formula reflecting the size of each nation's gross domestic product, greenhouse gas emissions and population.

That could ensure that rich nations in Europe or North America, with the longest history of industrial use of fossil fuels, pay most. Cash would be paid mostly to poor countries at risk from droughts, floods, heatwaves or rising seas.

Last week, the proposal won praise from 17 major economies in Paris as a possible mechanism to help finance a U.N. pact. U.S. Special Envoy for Climate Change Todd Stern, for instance, called it "highly constructive".

"It's early days," Yvo de Boer, head of the U.N. Climate Change Secretariat, told Reuters when asked if the proposal might be adopted as a finance mechanism.

He noted that some developing nations were sceptical since they expected to receive funds, rather than first have to contribute to a common pot. Rich nations have been reluctant to commit to large amounts of cash.

AFRICA EXEMPT

Tudela said the poorest nations in Africa or small island states that are vulnerable to rising sea levels could be exempt from paying in cash since their contributions would be tiny.

The size of the fund has yet to be decided but could start at $10 billion a year. Estimates of cash needed to fight global warming range up to tens or even hundreds of billions of dollars a year in coming decades.

Tudela said developed nations, hit by recession, might accept the proposal since it breaks with a model of aid handouts. it could be popular with rich governments by requiring contributions from countries such as China and India.

"The plan is unlikely to survive entirely as it stands," said Jake Schmidt of the Natural Resources Defense Council in Washington. "Some elements of it are likely to be taken up." Cash could be raised by governments via taxes, or by auctioning off allowances to emit greenhouse gases, for instance under a separate Norwegian finance proposal, Tudela said.

"We may undertake discussions to walk the extra mile to connect to carbon markets," he said. "But you have to be careful with that. It's not going to be easy to integrate the carbon market with the Green Fund."

"There is also the possibility that the private sector could invest in the fund," he said. Businesses, for instance, might be able to withdraw credits in exchange for investments.

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Reuters
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