Fund to help poor countries cope with climate clears hurdle

A fund designed to help poor countries in the firing line of climate change cleared a key hurdle at UN talks on Friday, opening the way to its launch next year, delegates said.

But developing nations complained the fund fell far short of their needs and accused rich countries of welshing on their promises.

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Agreement by ministers on the final day of the talks under the UN Framework Convention on Climate Change (UNFCCC) takes the much-heralded Adaptation Fund a major step towards launching operations.

The Fund is designed to help developing countries launch projects and build skills that will shore up their defences against climate change.

Mounting temperatures, stoked by heat-trapping fossil-fuel pollution, are expected to boost water scarcity, sea levels and the frequency of storms, floods and drought.

The Fund's operational start has been held up by several issues.

One of them was cleared on Friday when ministers agreed to demands from developing countries that they should directly access the Fund, rather than face a long vetting process, said Antonio Hill of the British charity Oxfam.

The European Union (EU) had led resistance to direct access, arguing poor scrutiny would open the way to wastage or corruption.

Still to be agreed is determining the criteria by which countries are eligible for funds -- an issue to be discussed at the UNFCCC in Bonn on December 15-17 -- and the other is identifying which branch of national governments is accountable for administering the money, said Hill.

At present, the Adaptation Fund has several million dollars in cash, as well as carbon credits that have yet to be cashed in but are probably worth around 55 million dollars at current rates.

Its revenue derives from a levy of two percent on credits derived under the Clean Development Mechanism (CDM), a key component of the UNFCCC's Kyoto Protocol.

Under the CDM, rich countries which have ratified Kyoto -- the United States is the sole holdout -- can gain credits from projects that reduce or avert greenhouse-gas emissions in poor countries.

These credits can be sold or offset against the country's Kyoto's emissions cap.

According to the most optimistic estimates, CDM revenue to the Fund could reach as much as 300 million dollars a year by 2012, when the Protocol's current provisions expire.

Developing countries, though, say the needs for adaptation will be in the tens of billions of dollars a year, and funds from government sources are bound to fall badly short.

They pushed hard in Poznan for Kyoto's provisions to be overhauled so the revenue stream is drawn from two other Kyoto market mechanisms.

One is from the Joint Implementation (JI) scheme -- similar to the CDM, but for low-carbon projects in the former Soviet bloc -- and from emissions trading scheme.

The EU, though, said it was premature to make this move.

Poorer countries accused industrialised countries of a copout that boded ill for efforts, agreed in Poznan, to complete a new treaty on climate change in Copenhagen in December 2009.

"In the face of the unbearable human tragedy that we in the developing countries see unfolding every day, this is nothing but callousness, strategizing and obfuscation," said India's delegate, Prodipto Ghosh.

"At this moment, I think, we can all see clearly what lies ahead at Copenhagen.

Barry Coates of the British charity Oxfam said the glaring question of how to raise the money to coping with the impacts of climate change remained unresolved.

"The elephant in the room is still where the money for adaptation is going to come from. We urgently needed a decision on increased future funding for adaptation, but we didn't get there."

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