Denmark's Prime Minister Anders Fogh Rasmussen attends a session at the World Economic Forum (WEF) in Davos January 30, 2009.

Photo: Pascal Lauener

DAVOS - Denmark's prime minister called on rich and poor countries alike to commit to big cuts in greenhouse gas emissions, ahead of key year-end talks on a new climate treaty he will host in Copenhagen.

Hopes that a deal may be possible have increased since the election of what many see as a "green" U.S. president and business is increasingly enthusiastic about the opportunities thrown up by climate change.

"It is essential to engage heads of state and government stronger in the whole process to ensure a positive result in Copenhagen," Anders Fogh Rasmussen told the annual meeting of the World Economic Forum in Davos Friday.

Business leaders meeting in the Swiss ski resort this week have called on governments to create certainty on the climate issue, so they can plan for the future.

"What I hear business leaders here in Davos say is: We want clarity from governments on where they intend to go with climate change. We need a clear investment perspective," the U.N.'s top climate official, Yvo de Boer, told Reuters.

In a statement released Thursday, the forum said clean energy investment needs to more than triple to $515 billion a year to stop planet-warming emissions reaching levels deemed unsustainable by scientists.

This changing business environment would create opportunities for firms, said Royal Dutch Shell Chief Executive Jeroen van der Veer.

"This is the best opportunity that could come for Shell because we claim to be good at technology, we have an international mindset, we can invest in it and we happen to know something about it," he said.

However, some have warned the temptation is to switch to cheap, polluting fuels, notably coal, in times of economic hardship and there was a risk that would offset the effects of lower industrial energy use.

"It's bad news for the long term. Many renewable, nuclear and efficiency projects are being postponed," said Fatih Birol, chief economist of the International Energy Agency, which advises 28 industrialized nations.

"The long-term impact is that emissions will go up if governments don't do something," he told Reuters.

OPTIMISM

European Energy Commissioner Andris Piebalgs agreed that recession potentially made it difficult to push through the EU's ambitious environmental plans, and could complicate the process of getting a deal in Copenhagen this year, but said events this month had made him feel more optimistic.

The European Commission this week announced funding on carbon capture and storage and, in addition to the boost provided by Obama's backing for the environment, he said more unlikely supporters had included Russia and China.

"I am optimistic about what I have heard from leaders... There is a new chance for green growth. It is important to see the silver lining," he told Reuters.

Rasmussen said world leaders should agree on a long-term goal of reducing carbon dioxide emissions by 50 percent by 2050, with industrialized countries cutting by 80 percent.

By 2020 -- a timeframe more relevant to political cycles -- the rich world should cut by 30 percent versus 1990 levels and developing countries by 15-30 percent against current trends, he said.

Leading industrial nations agreed at a G8 summit in Japan last July to a "vision" of cutting world emissions of greenhouse gases by 50 percent by 2050. The European Union wants all developed countries to cut greenhouse gases by 25 to 40 percent by 2020.

"READY TO LEAD"

Valerie Jarrett, President Obama's adviser on intergovernmental relations, earlier told the Davos meeting that the United States was "ready to lead" in the fight against global warming, which threatens droughts, floods, disease and rising seas.

That has raised hopes among those pushing for action.

"For the last eight years a few countries have been hiding behind the U.S.," said Steve Howard, head of Britain's The Climate Group, a non-profit group working to combat climate change.

"Now there is no place to hide because the U.S. is assuming a leadership position, so the politics took a fundamental shift."

The recession now gripping the world is set to slow industrial emissions in coming years, which could dim pressure to commit to cutbacks and divert attention from the issue.

Some economists estimate emissions fell 35 percent in the great depression of the 1930s, and might do so again.

But de Boer, executive secretary of the U.N. Framework Convention on Climate Change, said countries from the United States to the European Union to China had been announcing plans and targets since the crisis broke.

(Editing by Simon Jessop)

© Thomson Reuters 2009 All rights reserved