Maya Jackson Randall

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Bush administration's plan for a multilateral clean energy technology fund should help advance broader United Nation's climate change talks, a top U.S. Treasury official told lawmakers Thursday, a day after various groups declared their opposition to the program.

The clean technology fund, which President George W. Bush touted in his State of the Union speech in January, would do more than make an immediate impact on greenhouse gas emissions, said Treasury Under Secretary for International Affairs David McCormick in prepared congressional testimony. "I believe that it will contribute to building the kind of trust between developed and developing countries that will be necessary if a new U.N. climate arrangement is to be reached."

His comments come just as officials from around the world are meeting in Bonn, Germany to try to create a climate change agreement to take effect after the Kyoto Protocal ends in 2012. The Kyodo accord required signatories to cut greenhouse gas emissions.

The Clean Technology Fund is a multilateral program the Bush administration has proposed as a way to reduce pollution by backing the development of clean energy facilities in developing nations. Greenhouse gas emissions are expected to grow at an alarming rate in developing countries such as Brazil, China, India and Mexico as their economies and energy demands grow. And the costs to build environmentally-friendly technologies are expected to be significant. The World Bank estimates it will cost $30 billion a year to deploy clean technologies in the developing world's electricity sector, alone.

The president's fiscal year 2009 budget includes a $400 million appropriations request for the U.S.'s initial contribution to the Clean Technology Fund. In addition, the administration wants Congress to commit $2 billion to the fund over the next three years. The fund, which would be administered by the World Bank, would include a mix of loans, grants, equity investment and credit guarantees to finance the technologies.

In his testimony before a House of Representatives subcommittee Thursday, McCormick said that while the U.S. would remain the lead donor, the ultimate goal is to have members of the Group of Eight countries contribute up to $10 billion over the next three years.

Still, environmental groups have criticized the fund, describing it as a way to finance coal plants and other energy facilities that still emit pollutants into the air. In fact, 121 groups Wednesday issued a declaration opposing the fund.

"The Clean Technology Fund has no definition of clean technology," said Kenny Bruno, International Program Director for Oil Change International. "What they are really proposing is a 'slightly less dirty' technology fund, which will include financing of coal plants that are somewhat less polluting than the dirtiest plants out there."

Meanwhile, Friends of the Earth President Brent Blackwelder, who is also expected to testify at the congressional hearing, argued that the World Bank is unqualified to manage climate funds because of its long-term practice of financing carbon emissions from oil and gas. Instead, the funds should be administered by the U.N. Framework Convention on Climate Change, an international treaty to reduce global warming that's linked to the binding Kyoto Protocol global warming agreement.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255, maya.jackson- randall@dowjones.com

    (END) Dow Jones Newswires   06-05-08 1345   Copyright (c) 2008 Dow Jones & Company, Inc.