Soros Finds Cash Supply for Climate AidDec 10, 2009 - Andrew C. Revkin - The New York Times
COPENHAGEN — As climate treaty negotiators continued to tussle over how much rich countries should pay to help poor ones deal with climate risks, preserve forests and adopt non-polluting energy technology, the financier George Soros appeared on the sidelines Thursday to identify a new pot of $100 billion that could help pay the bills.
The money, he said at a news conference, would come from a pool of assets made up of an international financial instrument called special drawing rights, or S.D.R.’s.
Placed in a “green fund,” he said, this money could be invested in the most vulnerable developing countries to protect rain forests, plant new forests, expand farming methods that store carbon, and help with adaptation and energy programs.
There are substantial hurdles to moving forward, including a requirement, given how such funds are administered, for congressional approval in the United States — no easy step these days.
But Mr. Soros said that France and England recently undertook a $2 billion deal involving S.D.R.’s that provides a template for his climate plan.
As the global financial crisis played out, he explained, the International Monetary Fund issued $283 billion in S.D.R.’s, $150 billion of which went to the world’s 15 biggest industrialized countries. These instruments are a “virtual currency” with a value set by a basket of real currencies.
More than $100 billion in S.D.R.’s is sitting in reserve accounts, he said. They are backed by the monetary fund’s gold reserves, and currently the excess value of the gold is supposed to be used to benefit the world’s least developed countries, he added.
He acknowledged that the S.D.R.’s normally serve as a source of liquidity, but in this case would be used as a financing tool. But given the limits on what rich countries are able to offer in the climate talks with budgets tight and deficits high, he said financial innovation was vital to breaking the deadlock in the negotiations.
The justification, he said, came from the scope of the climate challenge. “I’ve been convinced that this is really an existential problem for the world,” he said.
The idea has merit as a way to pay for the “fast start” climate adaptation fund of $10 billion a year that rich countries have proposed but not yet figured out how to pay for, said Thomas C. Heller, who advises Mr. Soros on climate policy and is a professor emeritus of international legal studies at Stanford University.