The trillion-dollar question is: who will now lead the climate battle?

Political and business leaders gather this week in an attempt to revive the world's faltering challenge to global warming. But they face a battle to lift the cloud of scepticism that has descended over climate science and chart a new way forward
Paul Harris in New York, John Vidal and Robin McKie, The Observer 28 Mar 10;

Some of the planet's most powerful paymasters will gather in London on Wednesday to discuss a nagging financial problem: how to raise a trillion dollars for the developing world. Those charged with achieving this daunting goal will include Gordon Brown, directors of several central banks, the billionaire philanthropist George Soros, the economist Lord (Nicholas) Stern and Larry Summers, President Obama's chief economics adviser.

As an array of expertise, it is formidable: but then so is the task they have been set by the UN secretary general, Ban Ki-moon. In effect, the world's top financiers have been told to work out how to raise at least $100bn a year for the rest of this decade, cash that will be used to help the world's poorest countries adapt to climate change.

"The prices we pay for our goods do not reflect one key cost: the damage that their production does to the planet's climate system," said Bob Ward, of the Grantham Research Institute on Climate Change at the LSE. "We need to find ways to extract payment from those who cause that damage and then use that money to fund developing nations so that they can protect themselves from the worst effects of global warming."

And to raise those funds the Advisory Group on Climate Change Financing has made clear that it will consider everything – from placing levies on international aviation and shipping, to enlarging carbon markets, introducing financial transaction taxes and using the International Monetary Fund's special reserve currency. You name it and it will be run up the flagpole – for success in establishing a developing world finance plan is now considered crucial to the success of next December's UN climate change meeting in Mexico. "Finance is a prerequisite for a climate agreement," said Rajendra Pachauri, chair of the UN's Intergovernmental Panel on Climage Change, on Friday. "Developing countries are very sensitive about this. Talks will collapse without strong and secure financing in place."

It sounds familiar, and so it should: these new discussions mark a renewal of global climate talks that ended only three months ago at the Copenhagen UN summit, which failed to set a deal to control emissions of carbon dioxide.

Politicians and negotiators are preparing another assault on the issue, though this time talks will be very different. For a start, climate science has suffered damaging setbacks. There was the leaking from the University of East Anglia's climate research unit of email exchanges between some of the world's top meteorologists as well as the discovery that a UN assessment report on climate change had vastly exaggerated the rate of melting of Himalayan glaciers.

The former revelation suggested some researchers were involved in massaging the truth, sceptics claimed, while the latter exposed deficiencies in the way the UN's Intergovernmental Panel on Climate Change – authors of the report – go about their business. The overall effect has been to damage the credibility of the large number of scientists who fear our planet faces climatic disaster. Trying to restart stalled negotiations will be very hard.

Yet increased scepticism is only part of the problem for negotiators. Since December, new political groupings have emerged. China, India, South Africa and Brazil, known as the "Basics" nations, have assumed climate leadership roles, while the European Union has retreated from the front line. Nothing is quite what it was.

Consider the US. Obama – fresh from his successes in passing his health bill and his nuclear arms talks with Russia – has indicated he is turning his attention to climate change. At an hour-long meeting last week, his climate and energy adviser Carol Browner and White House legislative affairs director Phil Schiliro discussed the prospects of a climate change bill with Senate leader Harry Reid and other senior Capitol Hill Democrats. Three senators – Democrat John Kerry, independent Joe Lieberman and Republican Lindsey Graham – have also been holding talks to draw up legislation. Their planned bill looks set to be released next month.

For campaigners, these developments seem encouraging, while Obama's critics are angry. "The administration has shown it is prepared to draw up a partisan bill and force it through. If that is their model of governing, then there is no limit to what they will do," said Ken Green, a scholar at the American Enterprise Institute, a conservative thinktank.

A US climate law will be primarily aimed at curbing greenhouse gas emissions. But the devil, as always, will be in the details, for the bill is likely to include many provisions that will anger the green lobby. Graham wants to include measures that would boost offshore oil drilling on America's continental shelf, while recent leaks suggest funds may be provided for so-called "clean coal" power stations. In addition, there is likely to be support for nuclear power. All three ideas are reviled by environmentalists.

Barack Obama's move on climate change is therefore far less radical than it seems, for the simple fact is that there is little political appetite to repeat the dramas that marred healthcare reform. The new legislation will therefore be softened in order to ensure Republican support. "It is not going to be a one-party push. I am sure we can get 60 votes to support this," said Tad Segal, a spokesman for the US Climate Action Partnership, a coalition of environmental and business groups in favour of new laws limiting emissions. As Washington insiders know all too well, that is the way US law is passed, no matter what the concerns of the rest of the planet. "In America, even with climate change, all politics is local," said Segal.

The prospect of such a weak US move on climate change has not gone down well. "Countries are losing patience with the US. There may be sympathy for Obama, who clearly faces a difficult domestic situation, but it is now clear that the US wants to take another path on climate change and is demanding everyone goes with it," said a source in one European embassy last week.

This point was backed by Liz Gallagher of Cafod, the Roman Catholic development agency. "The talks cannot go back to where they were. The rest of the world has realised that the US will not change and the only way to progress may be to leave the US behind and show them that they will lose out in the green race."

This difference in attitude is likely to reach a showdown in Bonn next month over which negotiating text is used for future discussions. The US wants to adopt the weak accord agreed in Copenhagen, while most developing countries – including China, India and Brazil – say it has no legal standing and that the talks must continue with the far stronger framework that was agreed at Kyoto a decade earlier.

Significantly, this latter group is backed by the distinguished UN climate chief Yvo de Boer. "I think we'll continue on the two-track approach. For the developing countries, the presence of the Kyoto protocol is very important," he said. He is also supported by more than 200 of the world's largest environment and development groups, including Friends of the Earth International, Christian Aid, Third World Network, Jubilee South and the World Development Movement, which have called for a total rejection of the Copenhagen accord and urged countries to resume twin-track talks.

However, other observers believe the US has in effect forced its views on the world because no rich country is prepared to take it on.

"We are in a world of disarray. The US is laughing and there is no evidence that rich countries have the appetite to take on the US and go it alone. It is a mess," said Martin Khor, director of the South Centre, an inter-governmental developing country think tank based in Geneva.

It is a depressing backdrop for Wednesday's talks in London, but it does not mean that all is lost.

"If the US agrees to limit its emissions in only a modest way, that will be an immense improvement on America's previous stance," said the Grantham Research Institute's Ward. "And while it may seem daunting to talk about raising a trillion dollars for developing nations to deal with the impact of global warming, we should note that this represents an investment that is far lower than the one that was required to save the world's financial system in 2008.

"Had it gone down, the consequences would have been grim. But if we don't face up to global warming, then the impact will be far worse. This point is not lost on the Advisory Group on Climate Change Financing and I think that we will get global action to tackle global warming very soon. We should not be too downhearted yet."