The World Bank should stop exploring options for financing the development of clean energy because it does not have enough strength in the field, South Korea said on Monday. "The Banks ideas would seem to be poor value to developing countries," Finance Minister Kwon O-kyu told the Development Committee of the World Bank and the International Monetary Fund.

British finance minister Gordon Brown first raised the idea of fresh cash for cleaner energy in April, calling for a seed fund of US$20 billion for alternative energy. The World Bank has since prepared a draft of two proposed funds: the Clean Energy Financing Vehicle consists of low-interest loans; the Clean Energy Support Fund would be based on grants.

Both ideas endorse low-carbon technologies and carbon emission reductions. The Clean Energy Financing Vehicle proposal calls for an initial capitalisation of US$10 billion, but Kwon said spending so much money on carbon credits would pose large but unquantifiable financial risks. Work done to date on the two initiatives had revealed sufficient problems that the Bank should just stop, he said.

"The Bank has no comparative advantage in this area...," he said, adding that the bank should focus instead on improving access to clean energy. Kwon was speaking for a group of Asia-Pacific nations including Australia, a big energy producer that has not signed up for the Kyoto Protocol on curbing greenhouse gases. Japan chimed in and questioned the need for spending much money on proposed mega financing vehicles, adding that it was more important to promote steps to save energy.

"The development of new technology is admittedly one of the key aspects of achieving a low-carbon economy," Kazuyoshi Akaba, Japan s senior vice finance minister, said in a speech to the Banks development committee. "But as demand for energy is expected to increase and improved energy efficiency is becoming a challenge, it is imperative for the World Bank to focus on the development of existing technology for energy efficiency." Brown s drive for new cash follows a request by the Group of Eight in July 2005 to the World Bank to develop a new global framework for climate change that would remain effective long beyond the 2012 expiration of the Kyoto Protocol.

Hilary Benn, Britains international development secretary, backed the bank to keep analysing options for developing new financing instruments "where they are needed to fill gaps".
(Por Alan Wheatley and Yoko Nishikawa, Planet Ark, 19/09/2006)