Green groups urge climate fund to exclude fossil fuels after AP report on coal plant support

Environmental groups are demanding tighter rules on climate finance for poor nations after an Associated Press investigation showed Japan bankrolled coal-fired power plants with money earmarked for fighting global warming.

On the sidelines of U.N. climate talks in Lima, green groups on Wednesday urged the recently launched Green Climate Fund to exclude money for fossil fuels.

"If revelations that we are seeing with Japan would come to light with the GCF, it would be massively damaging to that institution," said Brandon Wu of ActionAid USA, who is an observer on the fund's board.

Rich countries have pledged about $10 billion to the fund, which is meant to become a key source of finance to help developing countries counter climate change.

The AP reported Monday that Japan included $1 billion in loans for new coal plants in Indonesia in the climate finance it reported to the United Nations in 2010-12. Japan says those plants are cleaner than older coal plants, though they pollute more than other energy sources.

That three-year period was meant to jump start flows of climate money that rich countries have pledged to scale up to $100 billion a year by 2020. But U.N. talks haven't established any rules defining what climate finance should be used for.

"Technically Japan has not broken any rules and that tells us that the rules are broken," Wu said.

More than 300 environmental advocacy groups, including global organizations like Greenpeace, WWF International, and scores of groups in developing countries, signed a letter calling on the Green Climate Fund's board to explicitly rule out "financing fossil fuel and other harmful energy projects or programs."

Its next meeting is in February.

Even modern coal plants like those funded by Japan in Indonesia release about twice as much heat-trapping carbon dioxide as plants that use natural gas. Green groups say climate finance should be reserved for renewable energy sources with near-zero emissions, including solar and wind power.

U.N. officials acknowledged the rules need to be strengthened.

"We need to define what is climate finance and what is not," said Seyni Nafo on the U.N. climate agency's Standing Committee on Finance.