Paris climate deal must swell new U.N. fund - director

By Megan Rowling and Alister Doyle BARCELONA/OSLO (Thomson Reuters Foundation) - A new global deal on climate change, due to be agreed in Paris this year, must pave the way for an ambitious rise in funding for developing countries as their climate-related costs grow, the head of the U.N.'s key climate fund said. Many countries see boosting the size of the fledgling Green Climate Fund (GCF) as central to the accord, which is expected in December, Héla Cheikhrouhou, executive director of the fund, told the Thomson Reuters Foundation in an interview. "Clarity about the growth pathway of the level of financial resources through the Green Climate Fund is going to be an essential ingredient of a successful agreement," she said from South Korea, where the fund is based. Late last year, 33 governments pledged almost $10.2 billion to the GCF, but turning those promises into actual contributions is a slow process. As of Thursday, around 40 percent of the pledges were covered by legal agreements specifying when they will be delivered, short of a 50 percent target set for April 30. Cheikhrouhou said she did not know how much cash the fund would have in its coffers by the time of the U.N. climate negotiations in Paris. But she hoped governments would outline plans there and at other key international meetings on sustainable development in July and September to give more to the fund. Following an initial round of pledges in 2014, the GCF has invited additional donations during its first fundraising cycle which runs to 2018. By then, the total contributed to the fund should be "significantly more than the $10 billion", Cheikhrouhou said. The fund will channel finance to countries vulnerable to climate change to help them adapt to its impacts, such as extreme weather and rising seas, and to develop cleanly. Its director said developing countries, beginning with Mexico and Gabon, had indicated they were relying on support from the GCF to implement the voluntary commitments all nations have been asked to submit for the new climate change deal. $100 BILLION 'CONFUSION' Back in 2009, rich governments promised to mobilise $100 billion a year in climate finance by 2020 to support vulnerable countries. So far they have provided annual aid in the low tens of billions of dollars. Cheikhrouhou said the expected Paris agreement - which will not take effect until 2020 - was unlikely to set a new target higher than the $100 billion goal. "Right now all the focus is on reaching some level of understanding on how to achieve the $100 billion - I do not believe anyone is thinking beyond that," she said. There is still much confusion about what types of finance can count towards the $100 billion per year goal, and how it will be reached from current levels, she added. Once the GCF begins to approve projects for backing this autumn, that will help provide some clarity, she added. She did not rule out using the fund's resources for technologies that could make fossil fuel energy cleaner. Green groups have urged the GCF to state it will not invest in coal and other fossil fuels. Cheikhrouhou said technologies supported by the fund must be compatible with recommendations from the U.N. climate panel that the world has to live within a carbon budget, two thirds of which has already been used up. "Our mandate is to promote a paradigm shift away from business as usual ... to low-emissions development," she said. The overall financial burden on developing nations is getting heavier, as they are expected to become more resilient to climate change impacts, to prepare and respond to disasters, and to achieve sustainable development, Cheikhrouhou said. "This cannot be a zero sum game - there has to be growth in the level of finance going to the developing countries," she said. The increase in support can be expected to come from the budgets of wealthy nations, the private sector and new sources of finance, she said. Past suggestions for alternative sources - yet to be considered by the fund's board - have included green bonds and levies on plane tickets and the tourism industry, for example. "We must find a new and innovative solution to grow the pie (in order) to build a more resilient future for developing nations," Cheikhrouhou said. (Reporting by Megan Rowling in Barcelona and Alister Doyle in Oslo; editing by Laurie Goering)