Financial gloom clouds environment trust fund

By Deborah Zabarenko, Environment Correspondent

WASHINGTON (Reuters) - The world financial crisis could cast a pall on the Global Environment Fund, which uses billions of dollars in government money to tackle ecological problems, the fund's climate change chief said on Monday.

The agency gets money from various governments, but funding has essentially been flat over the 17 years of its existence, barely keeping up with inflation, Robert Dixon told the Reuters Global Environment Summit.

Now, as the science of global warming becomes more conclusive and the predictions for world temperature rise more extreme, Dixon is keenly aware of the tough economic picture that could choke funding.

"We're hopeful for a significant replenishment (a new round of donations)... We'll see," he said. "We're mindful that our money comes from treasuries around the world, public sector treasuries ... it's a gloomy time."

Despite the gloom, Dixon suggested a way forward through public-private partnerships.

"Perhaps the financial crisis reinforces this: maybe we shouldn't necessarily just look to governments to provide the financial solution and to find all the solutions necessary for a sustainable energy future, an environmental future," he said.

GREEN TECH'S "VALLEY OF DEATH"

That is especially true of emerging environmental technologies, he said: "Let's face it -- the technology's in the private sector, and it's the private sector that holds patents, it's the private sector that creates things, it's not governments."

The fund was set up by countries that signed the U.N. Framework Convention on Climate Change, among other international agreements, and is administered from Washington. So far, it has allocated $2.4 billion on projects aimed at curbing climate change, with $14 billion in co-financing from governments and private companies, Dixon said.

While governments can provide regulation and policy, Dixon said, technology and resources come from the private sector.

As an example, he noted that 86 percent of the financial flows that deal with clean energy technologies worldwide come from the private sector.

One of the fund's key functions is to get new technologies out of what Dixon calls, with mordant humor, "the valley of death."

He described that doleful valley: "When you innovate, you've done something new, then you're disappointed because nobody's rushing to your door to buy it from you because in fact the world doesn't know about it or doesn't understand how it could fit into the clean energy continuum."

Getting these technologies out of obscurity into widespread use is an appropriate role for governments and the fund, he said. He noted that the fund is involved in some 2,000 projects meant to get technologies from laboratories to users.

Some of Dixon's top project show the breadth of the fund's reach: brick-making kilns that are alternatively fueled and efficiently insulated; a program that protects "carbon on the stump" (living trees that sequester climate-warming carbon); and pilot projects on helping developing countries adapt to the effects of global warming.

(For summit blog: summitnotebook.reuters.com/)