Many poorer nations are missing out on clean energy investments due to red tape

Developing nations urged to reform to win climate funds

Poorer nations could miss out on clean energy investments if they do not agree to new climate rules and cut red tape.

A U.N. finance guidebook urges developing nations in Africa, Latin America and Asia to take certain steps to attract funds which could help them fight climate change,

"We are very concerned about the uneven distribution of investments," Yannick Glemarec, director of environmental finance at the U.N. Development Programme, told Reuters of the UNDP guidebook, "Catalysing Climate Finance".

A U.N. estimate showed private sector investments in clean energy technologies could surge to $450 billion by 2012 and to $600 billion by 2020.

The guidebook laid out advice such as identifying technologies for cutting emissions, reforming bureaucracy and designing incentives such as feed-in tariffs to guarantee stable electricity prices for renewables such as wind or solar power.

Among examples of red tape, a plan to introduce electric three-wheel rickshaws in Sri Lanka to help curb pollution was delayed, partly because the Motor Traffic Act at the time had no rules for allowing electric vehicles on the road.

The guidebook said it was taking a different tack from many initiatives for combating global warming that focus on major economies such as the G20, which account for more than 80 per cent of world greenhouse gas emissions.

"A failure to provide fair access to climate financing to all developing countries would have severe political, financial and climate change consequences," it said.

Global capital markets representing about $180 trillion in financial assets have the size and depth if the right policies are followed to make investments attractive, it added.

Developing nations must realise that it is not enough, for example, to tell a foreign investor that they have winds suitable for generating electricity, Glemarec said.

Governments also have to plan access to the grid, cut delays in granting permits, set up predictable laws on pricing and improve local expertise, for instance to ensure maintenance without flying in staff from the other side of the world.

"At least 83 countries have some type of policy to promote renewable power generation," the guidebook said. 

In the most common policy, at least 50 countries had feed-in tariffs in 2010, more than half of them adopted since 2005.

Drawing on experience from more than 1,000 projects in 140 nations, the UNDP also cautioned that abrupt removal of subsidies, such as on kerosene, or a sudden hike in electricity prices, also had to be designed to avoid harming the poorest.

Wider participation by all nations was a key to help reach a goal, set at a U.N. climate conference last year in Mexico, of limiting a rise in temperatures to below two degrees Celsius (3.6 F) above pre-industrial times.

"The world may have no more than 100-150 months to dramatically change its energy supply trajectory and limit temperature rise to a 'safe' two degrees Celsius," the report said.

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