Â Germany has set upÂ a $500m climate fund to micro-finance projects such as new supermarket freezers or biomass heating in developing countries to help cut greenhouse gases, Environment Minister, Norbert Roettgen said.
Roettgen said the purpose of the fund, inspired by Decemberâ€™s Copenhagen climate conference, is to drum up funds from public and private investors while hedging their financial risk.
Starting this fall, it will provide loans for individual energy efficiency or renewables projects through local banks in countries including Brazil, China, India, Indonesia, Morocco, the Philippines and South Africa.
â€œThis is an important example that climate change policies have become earnest and concrete,â€ Roettgen said.The announcement comes at a time when Roettgen is struggling to live up to the financial pledges he made in Copenhagen â€” a problem shared by other industrial countries and heatedly debated at U.N. climate change negotiations where developing nations have expressed distrust of rich nationsâ€™ promises.
While Germany has offered euro1.3bn in new funds as part of a $30bn aid package to poorer nations between 2010 and 2012, German media reported that the countryâ€™s 2011 budget will not provide additional money but instead reshuffle older pledges.
Roettgen said final decisions on the 2011 budget are still pending. He stressed that â€œthe pledges we made remain intact,â€ but added that â€œhow that will be implemented in the budget has not been decided yet.â€
In contrast, the money for the new fund comes from a so-called International Climate Initiative started in 2008 and financed by Germanyâ€™s European Emissions Trading Scheme revenue.
Roettgenâ€™s ministry will spend only $28m, with another $75m coming from the government-backed KfW banking group.The rest of the $500m is to come from public and private investors by 2015, and some have already shown interest, KfW manager Norbert Kloppenburg said.
Spain is seriously considering investing euro30m ($36.5m), and the European Investment Bank and the World Bankâ€™s International Finance Corporation are planning to come up with $150m, Kloppenburg said.
But he also stressed that the aim is to bring in funds from private investors, which will be hedged against losses with help of the public funds.