Page last updated at 23:03 GMT, Sunday, 18 May 2008 00:03 UK

Anger over climate change loans

By Roger Harrabin
BBC environment analyst

A man with two ox and a cart
The money is aimed at helping poorer countries deal with climate change

Development campaigners have accused the UK government of making a stealth cut to an 800m fund designed to help poor countries adapt to climate change.

Ministers said they were proud to have set a moral lead when the Environmental Transformation Fund was launched.

The government now says an unspecified amount will go out as interest-free loans but insists it never pledged all the money would be used as aid.

One campaign group attacked the loan element of the fund as "outrageous".

The 800m total was confirmed in last year's Budget. The word "loan" was not mentioned at the time, so it was assumed by campaigners the money was aid.

It is outrageous that the UK is prepared to make poor countries even more heavily indebted trying to combat a problem they did not cause
Saleem ul-Huq

The International Institute for Environment and Development, based in London, has criticised the decision.

Spokesman Saleem ul-Huq said: "Rich countries like the UK have caused the climate problem and poor countries are predicted to suffer most.

"It is outrageous that the UK is prepared to make poor countries even more heavily indebted trying to combat a problem they did not cause".

He welcomed the principle of the fund but said it was not nearly enough, and insisted that loans should be ruled out.

Funding package

Development campaigners say they believe the UK's Department for International Development (DfiD) expected the whole sum to be grant aid but had been undermined by the Treasury.

DfiD said this was not true and insisted that no-one had ever promised that the money would all be aid.

A government spokesman said it wanted some of the loan cash to be recycled.

"A proportion of our fund will be grant money, including the 50m for Congo Basin project," he said.

"But loans, especially if they have a very large grant element - like ours will - enable larger and deeper investments and can then be used again by other countries, creating a higher impact."

The UK's money will go into a multi-lateral fund administered by the World Bank.

More cash is expected from the US and Japan, which hopes to give the fund a formal launch at the G8 in June.

Many developing countries are suspicious of the Bank, which they see as autocratic.

But the British government stressed that decisions on how the fund should be spent would be shared taken equally between the Bank and its recipients.

The money will be spent to reduce deforestation - the cheapest way of cutting carbon emissions - implementing clean technologies and adapting to more extreme weather.

Darling of the greens?
10 Oct 07 |  Science/Nature
World Bank 'must act on climate'
11 Apr 07 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific