By Paul Taylor

BRUSSELS, Jan 9 (Reuters) - The European Union and the World Bank are discussing raising a major long-term loan to help poorest countries fund essential measures to combat climate change, the EU's development chief said on Wednesday.

Industrialised countries would borrow the money on the international capital markets and advance it to developing states to help reduce their emissions of greenhouse gases and protect them from environmental damage, Development Commissioner Louis Michel told reporters.

The size of the fund had not yet been discussed but it could involve the "colossal sums" needed to help poor countries fight against global warming, he said.

"I don't agree to use existing development funds to finance the fight against climate change in the least developed countries," Michel said.

"My aim is to create a global loan with the World Bank -- we are working with (World Bank President) Bob Zoellick -- to help the LDCs (Least Developed Countries) fight climate change."

Michel said rich countries would reimburse the loan over a long period, and some of that funding could be raised from the private sector through taxation or other levies.

The EU wants to position itself in the vanguard of the fight against global warming and its impact.

The design of the project is similar to a proposal floated by British Prime Minister Gordon Brown when he was finance minister for an International Finance Facility to fund life-saving vaccines for children in poor countries.

That plan made a modest start in November 2006, issuing bonds to finance immunisation against preventable diseases such as polio and measles.

Michel said developing countries such as low-lying Indian Ocean, Caribbean and Pacific island states faced the threat of extinction because of rising sea levels if predictions about global warming came true.

They could only take measures to counter that threat with an urgent injection of funds from rich countries, he said. (Editing by Stephen Weeks)

AlertNet news is provided by