McCormick says US investment in Clean Technology
Fund is 'critical'
WASHINGTON, Jun 06, 2008 -- Thomson Financial
It is "critical" that the US support the Clean Technology Fund (CTF), a
multilateral initiative that aims to help developing countries fund the
additional costs of deploying clean energy technologies over dirtier and
often cheaper alternatives, a Treasury official told a House Subcommittee
today.
"If we take no action to provide developing countries with the right
incentives, their investments today could lock in a legacy of
highly-polluting, less efficient technologies for which we would all
eventually pay through the accelerated effects of climate change," said
David McCormick, US Treasury Under Secretary for International Affairs.
The accelerated and unprecedented economic growth of developing countries in
recent years has dramatically increased demand for energy and has come at a
cost to the environment, McCormick said.
In testimony before a Subcommitee of the House Committee on Financial
Services, McCormick outlined the details of the CTF, a multi-billion dollar
global initiative announced by President George W. Bush in September 2007.
The Bush administration has already asked Congress to commit $2 billion to
the fund and the President's FY 2009 budget includes a $400 million
appropriations request for the initial contribution.
The US would serve as lead donor, and with the help of countries in the G8
and beyond, would seek to raise up to $10 billion over the next three years.
The UK and Japan have already pledged their support to the effort.
The fund has three objectives: to reduce emissions through the accelerated
deployment of clean technologies, to stimulate and leverage private sector
investment in clean technology, and to promote international cooperation on
global climate change agendas, McCormick said.
US support of the CTF "will contribute to building the kind of trust between
developed and developing countries that will be necessary if a new UN
climate arrangement is to be reached," McCormick said.
The fund will be administered by the World Bank and implemented through all
of the multilateral development banks (MDBs). Resources can be leveraged
from the MDBs, but the bulk of the funding will come from national
governments and private sponsors.
Subcommittee members expressed concern about the World Bank's involvement in
the fund, noting the Bank's environmentally questionable investments. In
April, the Bank approved &450 million in funding for coal-fired power plant
in India. In today's hearing, full committee Chairman Barney Frank suggested
that if the CTF were to be implemented, it "could be helpful" if the Bank
make a commitment not to fund projects that run counter to clean technology
initiatives.
According to McCormick, the fund will not cover the entire cost of any
energy project, rather the gap between cheaper dirtier technologies and more
expensive cleaner technologies. "In short, the CTF will help developing
countries make the choice between deploying clean technologies and
conventional technologies economically neutral," McCormick said.
Funding -- which will come in the form of concessional loans, grants, equity
investment, and credit guarantees -- will be allocated to developing
countries, with an emphasis on those that expect high emissions growth.
To be eligible, developing countries would be required to work with the
World Bank to develop investment strategies based on plans aimed to reduce
carbon emissions.
McCormick noted that according to the International Energy Agency, by 2030,
global demand for energy will increase by over 50 pct, with nearly
three-quarters of the growth coming from a group of developing countries
(Brazil, China, India, Indonesia, Mexico and South Africa). tessa.moran@thomsonreuters.com
tlm/wash/rw
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