EU pledges annual €2.4bn to climate fund

The European Union on Friday pledged €2.4bn ($3.5bn) in annual financing to boost developing nations’ efforts to fight global warming – an amount that exceeded previous expectations.

The EU contribution to the so-called “fast-start” fund, which will cover the period from 2010 to 2012, was boosted by last-minute shows of generosity from the UK and France.

Gordon Brown, the UK prime minister, raised his nation’s three-year contribution from £800m to £1.2bn ($1.9bn, €1.3bn). At a joint press conference in Brussels with Nicolas Sarkozy, French president, Mr Brown also announced that he would be prepared to boost that to £1.5bn next week, depending on efforts made by other developed nations at Copenhagen.

In an attempt to forge Anglo-French leadership on the environment, Mr Brown and Mr Sarkozy will co-host a “rainforest summit” with African leaders next week to discuss measures to curb deforestation.

Mr Sarkozy, meanwhile, pledged that France would raise its offer to €1.26bn over three years – an amount equalled by Germany.

The EU offer represents the largest single amount so far pledged to a fund that is supposed to total €7bn a year. It exceeded previous estimates from the bloc that it could muster between €500m and €2.1bn a year.

José Manuel Barroso, European Commission president, said Europe’s offer would add momentum to the final week of the Copenhagen conference, where negotiators are trying to close a global climate agreement. He also called for other developed nations to do their part.

“We hope that others will match our figures and our ambition. Finance is key to get this deal done,” Mr Barroso said.

The US is thought to be willing to put about $1.4bn on the table for the first year at least, and Norway has already pledged hundreds of millions in assistance to forested nations that could be brought under the "short-term financing" banner.

Fast-start financing has grown in prominence as a test of wealthy nations’ commitment to the developing world as progress has stalled on the terms of a much larger, long-term climate fund.

The EU and other parties have agreed that such a fund should total about $100bn a year, from 2020. But they have so far balked at making specific commitments.

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The discussions have been slowed by bargaining tactics, as well as by concerns about how the funds will be managed and disbursed. In the EU, there are also fundamental differences between member states about how the burden – likely to total as much as €15bn a year in taxpayer funds – should be shared.

Europe’s fast-start offer may be less than meets the eye, however, since an unspecified amount of the funding comes from existing development budgets. Although all 27 member states ultimately made contributions, they varied widely in amount. The Czech Republic, for example, pledged €12m over three years.

Meanwhile, Poland plans to fund its €56m contribution from the sale of left-over pollution credits it accrued under the Kyoto Protocol. The use of such credits has been frowned upon by the Commission because it could weaken an already fragile carbon price in world markets.

European leaders also re-stated the bloc’s commitment to increase its offer to reduce emissions – from 20 per cent to 30 per cent, by 2020 – if other countries made comparable efforts.

But that policy has also revealed a split within the EU. Countries such as the UK, France, Sweden and Denmark have argued that the EU should unilaterally move to 30 per cent now, as a way to nudge other countries into more ambitious cuts next week.

But the new member states from central and eastern Europe, led by Poland, have resisted this. Poland this week warned against such a move, and has argued that it could not be decided until another impact assessment was carried out – something that would take until March.

European leaders on Friday sought to play down their differences and instead shift the focus on to other developed nations – particularly the US and Canada.

“If others move forward, we will move up to 30 per cent,” said Fredrik Reinfeldt, prime minister of Sweden, which holds the rotating EU presidency.

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