Sunday, 14 March 2010

Stern backs $100bn IMF climate fund plan

London, 11 March: A climate fund proposed by the International Monetary Fund (IMF) to raise $100 billion a year by 2020 has won support from climate change economics guru Nicholas Stern.
Speaking in Nairobi on Sunday, IMF managing director Dominique Strauss-Kahn said: “Sustainable growth in developing countries will require large-scale, long-term investments for climate change adaptation and mitigation. The Copenhagen Accord suggests that $100 billion a year is needed by 2020, over and above existing aid commitments. This will be difficult to do with the standard approach – a series of ‘pledging conferences’ for decades to come.”
He said that, ultimately, financing will come from “budgetary transfers from developed countries, drawing on scaled-up carbon taxes and expanded carbon trading mechanisms”. However, these revenue sources will take time to be put in place, so an IMF 'Green Fund' could “act as a bridge to large-scale carbon-based financing in the medium term”.
In a subsequent interview with wire service AFP, Strauss-Kahn said that the IMF is going to publish a working paper on the Green Fund in the next couple of weeks. However, in the Nairobi speech, he stressed that the IMF would not manage the fund.
Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, said: “The ‘Green Fund’ is a creative and constructive idea which shows that the International Monetary Fund recognises clearly the very serious risks that climate change creates for future global economic growth and development.”
Late last year, George Soros, the former hedge fund manager and now billionaire philanthropist, suggested that such a fund tap ‘Special Drawing Rights’, the international reserve assets held by the IMF to supplement its members' official currency reserves.
However, Soros’ proposal was for a modest $100 billion over 25 years, rather than the $100 billion per year by 2020 apparently on the table from the IMF.
In January, Strauss-Kahn floated the idea of an IMF-led green fund, at the Davos meetings in Switzerland.