World Bank aims to raise $6bn for climate funds this year

The World Bank has revealed fresh details of its plans to set up a multi-billion dollar fund to help developing nations adopt clean technologies with support from the US, UK and Japan, as well as private investors.

Speaking at a meeting of G8 environment ministers in Japan this weekend, World Bank vice president Katherine Sierra told news wire Bloomberg that the bank was aiming to raise $5.5bn this year to support technology transfer initiatives and a further $500m to fund efforts to establish greater "climate resilience" in those countries at most threat from global warming.

She added that the bank will agree to set up the funds at its July board meeting and will aim to raise the money by autumn, with the US, the UK and Japan expected to be the major contributors. Japan pledged earlier this year to invest $10bn over five years in combating climate change in developing nations, while president George Bush similarly announced plans to invest $2bn over three years in clean technology transfer initiatives.

However, some funding is also expected to come from the private sector with Japan's Environment Minister Ichiro Kamoshita observing that government funded action "has its limitations". "In order to upscale climate change actions in developing countries, private investments are indispensable," he added.

The announcement comes just days after the World Bank announced that 40 developing and industrialised nations had reached agreement on the formation of the two funds, which are expected to raise a total of $10bn over three years.

Gareth Thomas, minister for trade and development for the UK, welcomed agreement on the two funds, claiming they will provide "crucial support to developing countries to bridge the gap to 2012", at which point it is hoped a successor to the Kyoto Protocol will be in place that will further accelerate adoption of low carbon technologies in poorer nations.

The move is also expected to provide a major boost to the emerging global cleantech sector, which has long argued that expanding developing economies such as China and India represent attractive avenues for growth as much of the low carbon infrastructure – such as renewable power and energy efficient buildings – can be built from scratch and will not face the challenges associated with replacing incumbent technologies.

However, controversy continues to surround the Strategic Climate Fund for investment in climate adaptation measures after the World Bank admitted that at least part of the funding would be provided in the form of loans.

The Bank said that the loans would be "highly concessional" and would be offered in addition to grants. However, the policy has been widely criticised by development NGOs who have argued that it would effectively load more debt onto developing countries in order to help them cope with a climate crisis that has been primarily created by richer nations.