Who will foot the bill for climate change?

Rich and poor were deadlocked on Wednesday over how to raise aid to help developing countries cope with global warming, in another setback at United Nations climate talks in Warsaw seeking progress towards a 2015 deal.

Bolivia and other developing countries accused the rich of failing to show willingness to discuss aid or compensation for losses and damage owing to global warming, such as rising sea levels or creeping desertification.

The two-week Warsaw talks, due to end on Friday, are trying to lay the foundations for a new global climate accord meant to be agreed in 2015 and enter into force from 2020.

"I think we will find a resolution," US climate envoy Todd Stern said of calls by emerging nations for a mechanism to cover loss and damage. The rich fear it would be costly and make them legally liable for droughts, heat waves and storms.

For many poorer countries, the devastation of Typhoon Haiyan in the Philippines has raised the urgency of compensation.

Global economic losses caused by extreme weather have risen to nearly $200-billion a year over the past decade and look set to increase further as climate change worsens, the World Bank said this week.

"The compensation that those countries require is something that is absolutely fundamental and crucial," said India's environment minister, Jayanthi Natarajan.

But many richer countries are reluctant to foot the bill and are focused on spurring growth in their stagnant economies.

"We cannot have a system where there will be automatic compensation whenever severe weather events are happening at one place or other around the planet," said European Union climate commissioner Connie Hedegaard.

Money, money, money
Climate finance has long been one of the most contentious issues at UN talks, or money put aside to help developing countries cut emissions and adapt to a changing climate.

Industrialised nations have promised to raise the allocation to $100-billion a year by 2020 for developing countries, from $10-billion a year in 2010-2012.

Charity Oxfam estimates that climate aid has come to between $7.6-billion and $16.3-billion so far this year.

At the talks, Japan promised $16-billion over three years and on Wednesday Norway, Britain and the United States pledged $280-million to sustain the world's forests.

Green groups complain that much of the funds are not new sources of finance and there is no clarity on how and when new money will emerge.

"We see no roadmap for finance, only repackaged old money or money redirected from other budgets," said Dipti Bhatnagar at Friends of the Earth International.

Green Climate Fund
Negotiators have set up a Green Climate Fund to channel some of the $100-billion, but it is still empty and cannot deliver any money until the second half of next year.

The International Energy Agency has estimated that $1-trillion a year of additional investment is needed to 2020 for the energy sector alone to shift to and deliver cleaner sources.

"Much of the action is going to happen at the domestic level," said Jane Wilkinson, director of the Climate Policy Initiative, which has estimated that global climate spending fell by 1% last year to $359-billion as an economic slowdown hit state and private-sector budgets.

Polish Environment Minister Marcin Korolec, presiding at the talks, lost his job on Wednesday in a Cabinet reshuffle but will remain as host of the UN meeting. – Reuters

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