Financial turmoil no bar to climate deal: U.N.

Gabriela Baczynska, Reuters 26 Sep 08;

WARSAW (Reuters) - Global financial turmoil should not hamper a new world climate deal because high energy prices remain an incentive to improve energy efficiency, the U.N.'s top climate official said on Friday.

Some analysts have said the current crisis sweeping financial markets may leave no money for investments in limiting greenhouse gas emissions amid U.N.-led talks aimed at clinching a new international deal to tackle global warming.

"I have personally not seen an economic analysis that shows the current credit crisis is having a bigger impact on the global economy than current oil prices," Yvo de Boer, head of the Bonn-based U.N. Climate Change Secretariat, told Reuters.

But he said the uncertainty generated by the credit crunch and the lack of trust in financial markets were obstacles to developing green energy projects despite the spur of oil prices around $100 a barrel.

"In spite of what's happening at the moment, I don't have the impression that lack of capital is the issue. It's investment uncertainty that has created the nervousness out there. And I think, if governments are clear in terms of climate change, that could help reduce some level of this uncertainty."

"Because if you are about to build a 500 million euro power plant and you don't know if your government will go for greenhouse gas emissions cuts of 5 percent or 50 percent, then that's a very risky decision to make," he said in an interview.

INVOLVING U.S., DEVELOPING NATIONS

Contrary to many analysts, De Boer expressed optimism on the chances of the United States joining a new global warming accord, which is due to be agreed in Copenhagen in December 2009 to succeed the Kyoto Protocol, which runs to the end of 2012.

"I think it is perfectly possible the United States will sign up to the Copenhagen agreement," said de Boer, who visited Poland to review preparations for December climate talks here.

But de Boer added that the reasons Washington did not buy into Kyoto -- mainly its fears the protocol would damage the U.S. economy and the lack of targets for developing countries -- were "as relevant as they were in 1997 (when Kyoto was signed)."

Kyoto binds 37 industrialized countries to limit greenhouse gas emissions by an average of 5 percent below their 1990 levels by 2008-12. It sets no target for developing countries.

To entice the United States, which is being overtaken by China as the world's top greenhouse gas emitter, the United Nations has to engage developing countries.

De Boer said that was only possible by safeguarding their economic growth and cutting ambitious climate policy costs.

One way to attract developing countries is the Clean Development Mechanism (CDM), which allows an industrialized country to boost its own emission quota if it invests in clean energy technology in a developing economy.

U.N. talks have been split on whether the CDM should include coal power plants with the ability to store carbon dioxide.

"That debate is still going on, but my personal view is that for coal-based economies, like China and India, carbon capture and storage would be critical," de Boer said. "And I believe that there are safe ways of storing CO2 underground, like for example storing it in empty gas fields."

De Boer said the talks scheduled for December in the western Polish city of Poznan involving environment ministers of the 192 U.N. member states could pave the way for a deal in Copenhagen to replace Kyoto, despite widespread skepticism.

(Editing by Gareth Jones and Charles Dick)