Momentum continues to build for the creation of a “Clean Technology Fund” that would provide financial support “to assist developing countries in transitioning to low carbon economies.” Championed by the U.S., the U.K., and Japan, and likely to be managed by the World Bank, the fund may total US$5.5 billion, based on current commitments from G8 countries. World Bank President Robert Zoellick projects that the fund could be finalized at the G8 summit in July, according to Reuters.

In the contentious global climate negotiations, a Clean Technology Fund could be seen as a “win-win” for both developing countries and for brokers of clean technologies. Technology transfer and financing is a central theme of the second meeting of the Ad Hoc Working Group on Long-Term Cooperative Action to support the Bali Roadmap, which convened this week in Bonn, Germany. Delegates emphasized the role of technological responses to mitigate and adapt to climate change, the need for “innovative funding mechanisms,” and the possibility of establishing a multilateral fund.

While unlikely to derail the development of the Fund, during a hearing today convened by a Subcommittee of the US House Committee on Financial Services, Congressmen and environmental groups raised some concerns about the Fund’s structure and questioned whether the World Bank was the appropriate fund manager.Luis Gutierrez (D-IL), Chair of the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology, brought up the question of the lack of a clear definition for “clean technologies” that would be eligible to receive financing from the Fund, and asked if clean coal technologies would be eligible. US Treasury Undersecretary David McCormick responded that developing countries participating in the Fund would be required to have national plans to develop low-carbon economies as prerequisite to receiving funds, and that much of the Fund financing would help to retrofit existing energy infrastructure to reduce emissions.

Full Committee Chairman Barney Frank (D-MA) said he supported the Fund so long as it does not draw U.S. funds away from poverty alleviation programs. Rep. Frank also raised questions about the World Bank’s capacity to administer the Fund effectively.

Brent Blackwelder, President of Friends of the Earth, said the Fund should not offer further subsidies to coal technologies. David Wheeler at the Center for Global Development said the Committee should insist that U.S. support for the Fund require that it focuses on driving down the costs of renewable technologies like wind and hydropower so they are cost-competitive with fossil fuels. Several witnesses from environmental NGOs noted that the World Bank still funds fossil fuel-based energy projects, and emphasized that, as an administrator of the Fund, it should be required to “green” its own investments.

The US House Committee on Financial Services website provides an archived webcast and witness testimony for the “Examining the Administration’s Proposal to Establish a Multilateral Clean Technology Fund” hearing.

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