The Bush administration's proposal to contribute $2 billion over three years to a fund intended to help developing countries adopt cleaner forms of energy was greeted Thursday with skepticism by members of a House Financial Services panel and with hostility by environmentalists.
The U.S. contribution would start with $400 million requested in the FY09 budget. It would be part of a proposed $10 billion international effort called the Clean Technology Fund. The World Bank would manage the fund.
David McCormick, Treasury undersecretary for international affairs, said the fund was intended to reduce the growth of greenhouse gas emissions in developing countries by accelerating use of "existing clean technologies." It is also intended to stimulate private sector investment in those technologies and "to promote international cooperation on climate change in the broader context of pursuing a future climate change agreement."
McCormick said the CTF would not finance the total cost of any new energy project but was intended to cover enough of the added cost of cleaner energy sources to achieve "economic viability."
At the hearing of the Financial Services Monetary Policy Subcommittee, officials from four major environmental organizations criticized the project, arguing that the World Bank should not manage the fund because of its history of supporting "dirty" forms of energy and noting that the bank had presented no definition of what it would consider clean technology.
Friends of the Earth President Brent Blackwelder said those problems presented the risk that "limited public resources, including U.S. taxpayer money, could potentially be used to fund massive energy projects that are only somewhat less polluting than the dirtiest existing projects."
Blackwelder and officials from the Center for Global Development, the World Resources Institute and The Nature Conservancy were particularly concerned that CTF would be used to support supercritical coal plants, which, while cleaner than older coal burners, still produce carbon emissions.
McCormick conceded that new technology coal plants could be a minor part of the CTF-funded programs. But he insisted that developing countries would be building coal-powered plants anyway and the CTF could help move them into cleaner technologies.
Financial Services Chairman Barney Frank, sitting in on the sparsely attended hearing, observed that the proposal to contribute to the CTF was a sign of progress in the Bush administration in that it recognized the problem of climate change. Frank agreed that the World Bank "has not been seen as friendly to the environment," but it also has shown increased sensitivity to climate change.
Frank said he would be willing to go along with a short-term test of the CTF, providing that he has assurances that the $400 million would not be taken from the U.S. contribution to international anti-poverty programs and that the World Bank take seriously the mandate to reduce carbon emissions.
McCormick assured him the money was in addition to the usual poverty program funding.
Monetary Policy Subcommittee Chairman Luis Gutierrez, D-Ill., appeared concerned CTF would fund coal plants, but Monetary Policy Subcommittee ranking member Ron Paul, R-Texas, protested the idea of governmental organizations rather than the private sector trying to guide development.
This article appears in the June 7, 2008, edition of NJ Daily.