Loans make up half of new EU climate aid for 2010

CANCUN, Mexico (BestGrowthStock) – The European Union said on Tuesday it provided 2.2 billion euros ($2.87 billion) in extra aid in 2010 to help developing nations combat climate change and defended the use of loans for half the total.

The United Nations said a flow of new funds, promised at a summit in Copenhagen last year, could be a “golden key” to unlock progress at the November 29 to December 10 talks in the Caribbean resort of Cancun, Mexico, on measures to slow global warming.

A report issued on the sidelines of talks among almost 200 nations said EU nations, facing deep austerity at home, were on track to provide 7.2 billion euros for 2010-12 as part of a total $30 billion promised by rich nations in Copenhagen.

It said the cash went to projects, including a Danish scheme to help protect the coasts of the Maldives in the Indian Ocean and a Dutch project to help Indonesia generate more hydro power.

“In 2010 the EU has mobilised fast-start funding of 2.

The total just short of a planned 2.4 billion, partly after a shortfall from Italy. About 48 percent was in grants, the other 52 percent loans or equity investments.

The EU said the total comprised both grants and loans on easy terms and acknowledged there was no common definition of how the money met a promise in Copenhagen that it all be “new and additional” funds. Many developing nations say the cash is recycled from past promises.

Artur Runge-Metzger, the head of the European Commission delegation at the talks in Cancun, said loans can help poor people afford measures such as new building insulation, which pay for themselves via lower heating bills.

“It is a revolving fund. You insulate your house and you save the money and then the fund can be lent to someone else,” he said of the system.

Steven Herz, a climate finance expert at Greenpeace, said that loans “can make more sense than grants” to help energy efficiency projects, but their use had to be tightly monitored.

“In general, the problem is knowing whether the fast start funds are new and additional,” he said.

Among EU pledges were 1.5 billion sterling ($2.33 billion) by Britain for 2010-12 and 1.3 billion euros each by both Germany and France.

Promises by all developed nations have risen close to $30 billion, half of the total by Japan.

Loans make up half of new EU climate aid for 2010