Soros unveils $150bn climate plan
By Roger Harrabin
Environment analyst, BBC News, Copenhagen
George Soros says the proposal only needs political support to succeed
Billionaire investor George Soros has unveiled a proposal to provide up to $150bn of cash for poor countries to get clean technology.
He says it will help developing nations halt deforestation, adapt to climate change and have low-carbon energy.
Underpinned by gold reserves, the plan would more than double the amount of money on the negotiating table from rich countries to poor nations.
Mr Soros presented the proposal at the UN climate summit in Copenhagen.
He said his plan received a sympathetic hearing from key Western governments, but warned it would need a great act of political will to overcome obstacles.
“This overcomes part of the problems of financing,” he observed.
“It could be very important because climate change is a very real and existential problem for the world.”
Politicians cannot be distracted by the stolen emails row, Mr Soros says
Commenting on the “ClimateGate” scandal, in which emails and documents were stolen from a UK climate research centre’s computers, Mr Soros told BBC News that politicians should ignore the fallout and focus their attention on tackling climate change because the risks were so huge.
“If the choice is between cooking alive and wasting money unnecessarily I would rather waste some money, because long before we cook we are going to kill each other if we don’t deal with climate change,” he said.
“So the risk is that we won’t do enough because there are all kinds of delays that are already built into the system so we become aware of the danger too late.”
Mr Soros’s climate financial plan proposes to tap into the hidden vast reserves of cash that lie ready to keep rich nations’ economies afloat in time of crisis.
Poor nations want rich countries to provide more financial help
The cash is in the notional form of Special Drawing Rights (SDRs), also known as “paper gold”, issued by the IMF.
SDRs do not incur interest unless the money is released into circulation, and Mr Soros says the rich countries did not even use it at the every depths of the recent financial crisis.
He proposed that the rich countries hand their $150bn (£92bn) of SDRs to poor countries for immediate use to combat climate change.
As soon as the cash is released, it will incur interest from the IMF – currently at around 0.5%.
But this should be paid by the IMF gold reserve, which is currently worth more than $100bn.
This would mean developing countries were not saddled by debt payments, he explained.
Soros’s proposal shows exactly the kind of ambition and urgency we need to see from rich country governments themselves
He envisages that developing countries could make money from their low-carbon investments from the SDR fund by selling carbon credits on the carbon markets.
The gold could also guarantee loan repayments for climate projects if the carbon markets failed to take off as envisaged.
“All that is lacking is the political will to fight global warming by using SDRs,” he said.
The US government was supportive in principle, he claimed, but was reluctant to pursue the proposal because it would require approval in the Senate.
But even without US support, other rich countries could go ahead and provide $100bn of funding.
The current proposed funding under debate in Copenhagen is $10bn (£6bn) a year for three years.
There is no long-term funding on the table so far, because rich countries do not see a way of contributing more from their current balance sheets.
“The beauty of this is that it is off-balance sheet,” Mr Soros said. “This is a win-win for developed and developing countries.”
|// <![CDATA[// Mr Soros said that nations might say the scheme could not be done, but added that France and the UK recently used the SDRs to give $2bn to the poorest countries.
The plan was generally welcomed by environmental groups.
“We need the money,” a Greenpeace spokesman said.
Oxfam International’s senior climate adviser Robert Bailey said: “Finally someone is showing the kind of innovative thinking needed to make this deal worth its salt.
“Soros’s proposal shows exactly the kind of ambition and urgency we need to see from rich country governments themselves.”
But Friends of the Earth was much more cautious, partly because it feared that the Soros scheme might take pressure off rich nations and partly because it involved carbon markets, which it described as a “scam”.