News and Analysis • Volume 8 • Number 12 • 27th June 2008
G-8 Finance Ministers Support Climate Investment Funds
With the G-8 Summit of the world’s largest economies fast approaching, G-8 finance ministers met in Osaka for two days in mid-June to discuss a broad range of issues including the world economy, surging oil prices, development and climate change.
Soaring commodity prices and lingering damage from the 2007 sub-prime mortgage crisis in the US has made the ministers’ “policy choices more complicated,” the group said in a joint statement, but they “will remain vigilant, and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies and globally.”
The G8 finance ministers backed Britain, Japan and the US in their support of the World Bank’s new and controversial Climate Investment Funds (CIF), which are meant as an interim financial mechanism for combating climate change until a permanent post-2012 framework is agreed upon under the UN Framework Convention on Climate Change (UNFCCC). The funds, according to World Bank chief Robert B. Zoellick, are a “concrete step forward toward meeting the challenge of global climate change.”
However, because the funds would support “clean coal” power plants, some lawmakers and environmentalists argue that the CIF will do little to combat climate change. “Clean coal is a false solution”, Janneke Bruil of Friends of the Earth International said. “It has nothing to do with renewable energy”.
The CIF has two components, a 10-billion dollar Clean Technology Fund and another multi-billion dollar Strategic Climate Fund. The Clean Technology Fund aims to decrease emissions in the developing world by bankrolling the transition to low carbon economies. The Strategic Climate Fund will finance adaptation and mitigation costs for those countries most vulnerable to climate change.
In their joint statement, the ministers noted the importance of market mechanisms in addressing climate change and sustainable development policies, including emissions trading, tax incentives, performance-based regulation and consumer labelling. They also called for WTO negotiations that would reduce trade barriers for environmental goods and services and permit access to clean technologies.
The CIF will be made available by mid-July, following a World Bank Board of Directors meeting that will formally create the funds.
The G-8 Summit scheduled for 7-9 July in Hokkaido Toyako, Japan.
For documents released by the G8 finance ministers, see the archives for 14 June at http://www.mof.go.jp/english/whatsn.htm.
“G8 finance ministers remain optimistic about world economy”, Xinhuanet, 14 June 2008; “G8 frets over commodity shock”, Reuters, 14 June 2008; “G8 members push for new climate investment funds”, Asia-Pacific News, 13 June 2008; “New funds meant to tackle climate change efficiently”, Business Daily Africa, 24 June 2008; “World Bank chief says CIF a concrete step forward in tackling climate change”, Xinhuanet, 13 June 2008; “US, Japan, Britain urges support for global warming fund as G8 meet”, World Bank Group, 13 June 2008; “US urges support for global warming fund”, AP, 13 June 2008.