OSAKA (Dollar discussions: Page 8) Finance ministers from the Group of Eight industrialized nations gathered Friday in Osaka to address the rising price of oil, the food crisis and funding for a new climate change initiative to help developing economies lower their greenhouse gas emissions.
With oil trading at over $136 a barrel Friday, the Osaka meeting is expected to look at not only macroeconomic issues like world oil supply and demand, but also at the role of speculators in driving up prices.
The food crisis, which has sparked riots in some parts of the world, has led to growing international pressure on the G8 to act more urgently to address both short- and long-term structural problems in the food supply chain.
The G8 finance ministers’ meeting comes just over a week after a United Nations meeting in Rome pledged $6.5 billion to help alleviate the current crisis.
At a news conference in Tokyo earlier this week, Finance Minister Fukushiro Nukaga said that, due to the oil and food crises, the world’s short-term economic outlook is murky. He added that looking at ways to curb demand from consumer countries would be one goal of the Osaka meeting.
Japan, the United States and Britain, along with the World Bank, called on other members of the Group of Eight on Friday to contribute to an international climate investment fund designed to provide the newest and cleanest environmental technologies to developing countries.
“The Climate Investment Funds are being established through an inclusive and consultative process in support of the Bali Action Plan. They offer an opportunity to take action on climate change now, in both climate adaptation and mitigation,” World Bank President Robert Zoellick told reporters Friday afternoon.
The goal of the fund is to raise $10 billion. Japan has already agreed to contribute $1.2 billion, while the U.S. has promised $2 billion. Britain has agreed to provide £800,000 ($1.56 billion).
“Climate change is the world’s most urgent issue, and developing countries need support in meeting the problems of climate change. . . . Japan will play an active part in the fund and urge other countries to contribute,” Nukaga said.
The United Nations is set to negotiate a new climate treaty by the end of 2009 to replace the Kyoto Protocol, which expires in 2012.
The new treaty is expected to include commitments from both developed and developing countries to reduce their emissions. Japan, the U.S., Britain and the World Bank see this fund as a major step toward enticing developing countries to sign on.
“This fund will allow the world to get a head start while the U.N.’s post-2012 climate arrangement is being negotiated. I expect broad support from the G8 and from beyond the G8,” said U.S. Treasury Secretary Henry Paulson.