McCormick says US investment in Clean Technology
Fund is 'critical'
Jun 5, 2008 - Thomson Financial News
(Updates with additional details, Q&A)
WASHINGTON - 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
'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
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
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).
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