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‘Private money must play key role in fighting climate change’

By Joydeep Gupta, IANS

Bali (Indonesia) : The UN Framework Convention for Climate Change (UNFCCC) has estimated that 85 percent of the money needed to address the problem would have to come from the private sector. Intelligent financial engineering would hold the key to mitigation, a top UN official said here Friday.

“That means private investment will have to go where it has not gone before. Intelligent financial engineering will be the key,” UNFCC Executive Secretary Yvo de Boer said.

To change the business-as-usual scenario, the world needs around $200 billion by 2030 to mitigate the impact of climate change.

“This sounds like a large figure, but it will be only 0.3-0.5 percent of global GDP in 2030,” de Boer said.

UNFCCC estimates $65 billion out of the $200 billion will have to come from developing nations.

The world’s energy demand was scheduled to go up 50 percent by 2030, de Boer said, while the demand for coal would go up by 70 percent.

Eighty percent of this increased demand would come from China and India.

In the business-as-usual scenario, this would raise greenhouse gas emissions 50 percent by 2030.

“But we need to bring global GHG emissions down 50 percent by 2050,” de Boer pointed out.

Current funding available for mitigation would be insufficient and to bridge the gap, de Boer suggested scaling up and optimising funding from private and public sectors and shifting investment patterns to cleaner technologies, especially in the fields of energy supply and transport.

Ironically, most ministers from around the world scheduled to attend the final part of the UN climate change conference here next week were environment ministers, “and they have no money for international cooperation funds, while the ministers who do control these funds do not want to shift them from poverty alleviations programmes”, said de Boer.

That was why the Indonesian government had called a special meeting of finance ministers here this weekend in the middle of the Dec 3-14 Bali summit being attended by over 10,000 delegates from 187 countries, de Boer pointed out.

de Boer described the current carbon emissions trading market as “a key tool that needs more ambitious targets. It is key to green economic growth in developing countries. It is a cost effective and flexible tool and it opens new markets in green goods and services.”

India has already traded carbon emissions worth 270 million euro in 2006. But private money would not go to these parts of the world where return on investment was low or uncertain.

“That is where we’ll have to provide official assistance,” de Boer said.

He also suggested providing soft loans and tax incentives to green technologies, while spending public money for high-risk technologies.