Bali conference close to deal on saving forests

A breakthrough on deforestation is set to be the first success of the UN climate talks in Bali. Diplomats were confident last night that the "road map" to a new climate-change treaty would contain a crucial reference to forests.

That would be an important first for a sector omitted from the Kyoto treaty the world's only previous attempt to deal with the build-up of heat-trapping gases in the atmosphere. Deforestation is recognised as the second leading cause of climate change and is responsible for a third of carbon emissions from the developing world.

Hilary Benn, the Environment Secretary, who joined the negotiations yesterday, said Bali could make history by giving countries with tropical forests incentives to stop cutting them down. "It looks like we can get something on deforestation," said Mr Benn. A deal, which would be finalised on Friday, "would signal that the world is getting serious about the cause of deforestation", he said.

The breakthrough emerged as the World Bank announced an initiative to fund pilot projects in rainforest nations that could become the building blocks for a much larger scheme when, and if, the road map leads to a successor to Kyoto. Wealthy countries yesterday made pledges to the 150m Forest Carbon Partnership Facility, with the UK contributing one-tenth of that budget.

"[It] signals that the world cares about the global value of forests and is ready to pay for it," said Robert Zoellick, the World Bank president. "There is a fast-emerging consensus that if we don't do something about forests we drastically reduce the options for combating climate change."

Last year's Stern Review on the economics of climate change put the cost of halting global deforestation which accounts for one fifth of carbon emissions at 2.5bn. Mr Zoellick said yesterday's announcement was a "modest" step in that direction and a much larger system of incentives would have to follow.

There is no incentive for poorer countries to halt deforestation and the developing world has pointed out that rich nations chopped down their trees during industrialisation.

Climatologist describe tropical forests as a cooling band that helps regulate temperatures, generates rainfall and acts as a thermostat for the planet. Yet 30 million hectares of tropical forest, an area the size of Greece, is being destroyed every year. The fund aims to create financial incentives for poorer nations so forests are worth more standing than felled.

Delegates admit in private that methods for deterring deforestation are not yet clear and that they will emerge by trial and error. "This is about doing something," said Mr Benn, "about getting it going."

Critics of the World Bank, including Friends of the Earth, accuse it of tokenism, pointing out that 90 per cent of its energy funding, 4.4bn since 2000, has gone to fossil-fuel projects which contribute to global warming. Poorer nations, led by China, India and Brazil, say greenhouse gases were put there by rich countries and emissions cuts must come from them. But a forests deal would be the first agreement by developing countries seriously to reduce emissions.

The "avoided deforestation" projects being considered would fund sustainable development.