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G8 eyes climate as summit includes emerging powers

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Reuters | 07/09/2009 6:08 PM

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L'AQUILA, Italy - Leaders of the world's richest nations and major developing powers met on Thursday in Italy to seek common ground on global warming and international trade, with the poorer countries looking for concessions.

Central Italy, showing location of L'Aquila

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U.S. President Barack Obama was scheduled to chair climate discussions, but hopes of agreeing ambitious goals have faded after China and India rejected demands to halve the emissions of greenhouse gases by 2050.

The second of a three-day Group of Eight summit expanded to include leaders of emerging economic powerhouses, reflecting the belief that global problems can no longer be dealt with by an elite club of the richest nations.

The fragile state of the world economy dominated the first day of the annual G8 summit, with the United States, Japan, Germany, France, Britain, Italy, Canada and Russia acknowledging there were still significant risks to financial stability.

They also agreed to try to limit global warming to 2 degrees Celsius (3.6 Farenheit) compared with pre-industrial levels and pledged to cut their greenhouse gas emissions by between 50 and 80 percent by mid-century.

"I hope we can agree the 2 degrees Celsius target with all the countries around the table today," said Britain's Gordon Brown shortly before Thursday's talks began.

The 17-member Major Economies Forum (MEF), which groups the G8 plus big developing nations, also looked set to embrace the 2 Celsius goal on Thursday, but was balking at further commitments ahead of a decisive U.N. climate conference in December.

"There is a reasonable chance of achieving consensus in the MEF on the 2 degree principle but it is not realistic to expect agreement today on emissions targets," said one G8 source.

Progress could be hampered by the absence of Chinese President Hu Jintao, who withdrew from talks to attend to ethnic clashes in China's northwest that have killed 156 people.

Indian negotiators said developing countries first wanted to see rich nation plans to provide financing to help them cope with ever more floods, heatwaves, storms and rising sea levels.

Temperatures have already risen by about 0.7 Celsius since the Industrial Revolution ushered in widespread use of fossil fuels. Italy's prime minister said everyone should share the burden of tackling the problem.

"It would not be productive if European countries, Japan, the United States and Canada accepted cuts that are economically damaging while more than 5 billion people in other countries carried on as before," Prime Minister Silvio Berlusconi said.

Economy, currencies, trade

Broader economic concerns were also high on the agenda on Thursday, with emerging nations complaining they are suffering heavily from a crisis that was not of their making.

China, India and Brazil have all questioned whether the world should start seeking a new global reserve currency as an alternative to the dollar. They have said they may raise this on Thursday after discussing it amongst themselves on Wednesday.

Indian Foreign Secretary Shivshankar Menon said developing economies in the so-called "G5" had suggested using alternative currencies to settle trade among themselves. The debate is very sensitive in financial markets, which are wary of risks to U.S. asset values, and is unlikely to progress far in L'Aquila.

However, a breakthrough on trade did look within reach.

The G8 and G5 hope to agree to conclude stalled Doha trade talks in 2010. Launched in 2001 to help poor countries prosper, the Doha round has stumbled on proposed tariff and subsidy cuts.

The G5 said it was committed to address outstanding problems on Doha which would provide "a major stimulus to the restoration of confidence in world markets." But it urged rich nations to tear down trade barriers and restore credit to poor countries.