IMF staff float ‘Green Fund’ to help poor countries tackle climate change

“By providing a unified resource mobilization framework, with up-front agreement on burden-sharing and the capacity to meet the financing needs identified at Copenhagen, the Green Fund could facilitate progress toward a binding global agreement on reducing greenhouse gas emissions and allow developing countries to begin scaling up their climate change responses without delay,” the paper states.

The staff paper circulated Thursday says a new global mechanism is needed because the traditional avenues of raising aid for developing nations – such as donor conferences – have a “checkered history.” Meanwhile, prospects for raising money through various carbon taxation and trading schemes are uncertain and could take years to scale-up, the paper notes.

But the prospects for the Green Fund seem highly uncertain too – Reuters reports that IMF member countries have thus far rejected the Green Fund framework that IMF Managing Director Dominique Strauss-Kahn has been seeking. That’s why the proposal was released only as a “staff paper," Reuters said. The paper has a disclaimer stating that it doesn't represent the formal view of the IMF or its executive board.