Monday, March 8, 2010

IMF proposes climate change fund

The head of the International Monetary Fund says countries should adopt a quota system to raise money needed to adapt to climate change

Associated Press, Monday 8 March 2010

The head of the International Monetary Fund has proposed a plan for the world's governments to pool together to raise money needed to adapt to climate change, a rare step for an organisation that normally does not develop environmental policies.

The IMF managing director, Dominique Strauss-Kahn, said the fund is concerned by the huge amount of money needed and the effect this will have on the global economy. He added that the proposal may help efforts to reach a binding agreement on climate change this year.

Strauss-Kahn proposed that countries adopt a quota system similar to the one the fund uses to raise its own money, which could bring in money faster than proposals to increase carbon taxes or other fundraising methods. He only provided a broad outline of the plan, as the organisation will release a paper this week with full details. It is unclear how the proposal will be received.

The IMF raises funds from its 185 members mainly through a quota system that is based broadly on each country's economic size. TheUnited States is currently the largest shareholder.

"We all know that [carbon taxes and other fundraising methods] will take time and we don't have this time. So we need something which looks like an interim solution, which will bridge the gap between now and the time when those carbon taxes will be big enough to solve the problem," Strauss-Kahn said. "And that is exactly what the IMF proposal is dealing with."

He said a climate change accord reached last December estimated $100bn a year will be needed by 2020 to fund programs, including those to help poor nations deal with droughts, flooding and food shortages expected to be caused by climate change.

Nations failed to reach a binding deal in Copenhagen in December, but agreed on a voluntary plan to control greenhouse gas emissions which are blamed for the gradual heating of the Earth that scientists predict will worsen weather-related disasters. The accord, however, included collective commitments by rich countries to provide billions of dollars to help poor countries adapt to climate change, a major demand the poor nations had made.

The more than 190 nations will reconvene in Cancun, Mexico, later this year for another attempt to reach a binding agreement to replace the Kyoto protocol, which sets emissions targets for industrial countries and expires in 2012.

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