Ecuador wants funds to stop rainforest oil output

Adrian Croft, Reuters 27 Oct 09;

LONDON (Reuters) - Germany, Spain and France have expressed interest in a pioneering Ecuadorean plan not to pump oil from under a tropical forest in return for international compensation, Ecuadorean officials said on Tuesday.

Ecuador's President Rafael Correa, on a London visit, called for support for the Yasuni initiative, under which Ecuador would leave 850 million barrels of oil, worth $6 billion, underground as a contribution to countering climate change.

In return for not exploiting the oil in the environmentally rich area, the OPEC-member country is looking to other countries to pay it $350 million a year.

"We are proposing to the world that we will leave that oil underground. That means giving up on $6 billion, but we would thereby avoid polluting the planet," Correa said in a speech at the Chatham House thinktank.

Not touching the oil would avoid creating 410 million tons of carbon dioxide, Ecuador says.

Ecuador has launched a diplomatic offensive to promote its plan before U.N. climate talks in Copenhagen in December.

The left-wing Correa said that so far, the only progress toward international acceptance of the plan had been a German proposal to contribute $50 million a year for 13 years.

Foreign Minister Fander Falconi said the German support was conditional on Ecuador setting up a proposed international trust fund, into which countries would pay the money, and on a second country agreeing to give financial backing to the plan.

Falconi said the Spanish government had given strong support for the plan and Yolanda Kakabadse, a member of Ecuador's Yasuni commission, said the French government had expressed interest.

RUSSIAN VISIT

No talks are planned in Britain, where Correa is on a private visit, but the Ecuadorean delegation travels to Russia on Wednesday and will discuss the proposal there, Falconi said.

Ecuador says that foregoing oil drilling in a block that overlaps the Yasuni National Park would also protect two indigenous tribes living in isolation there.

The proceeds of the initiative would be used for clean energy projects and to alleviate poverty in Ecuador.

Ecuador also has more ambitious plans to invite other developing countries with energy resources -- such as other countries in the Amazon region, Malaysia, Indonesia, the Philippines, Papua New Guinea and Congo -- to form a consortium.

The consortium might then propose the creation of a new tradeable instrument, similar to carbon permits, that would put a value on carbon dioxide that was not emitted because resources were left in the ground.

During Correa's trip to Russia, Falconi said Ecuador would sign a strategic association agreement to promote cooperation on investment and technology transfer.

He said Ecuador had no plans to buy arms from Russia, although he said Ecuador would complete the purchase of two Russian helicopters, a deal he said had been negotiated over the past year.

Correa is a critic of Washington and an ally of Venezuelan President Hugo Chavez, who is building up his military with Russian weapons.

Both socialist presidents object to a deal being negotiated between Colombia and the United States under which U.S. anti-narcotics operations will be launched from Colombian bases.

(Additional reporting by Sujata Rao; Editing by Stefano Ambrogi and David Brough)