By Timothy Gardner

NEW YORK, Dec 7 (Reuters) - Former U.S. President Bill Clinton unveiled a plan on Friday to make New York's public housing environmentally friendly by joining government and business to trim greenhouse gas emissions and energy bills.

Under his initiative, banks will finance retrofits of public housing with efficient hot water heaters, lighting, heating and air conditioning systems, and loans for the retrofitting would be paid by savings from lower energy bills, Clinton told reporters at a public housing complex in the city's Bronx borough.

"New York City has a chance to lead not only the United States but also the world," he said.

The United States is the only rich country in the world that has not ratified the Kyoto Protocol that seeks to cut climate-changing gases.

Both Democratic and Republican candidates vying to compete in the 2008 U.S. presidential election, including Clinton's wife, New York Sen. Hillary Clinton, favor regulating the gases.

The former president, who last year formed the Clinton Climate Initiative to pool the buying power of the world's largest cities to fight the gases blamed for climate change, worked with the New York City and federal governments to bring the program to public housing.

Alphonso Jackson, secretary of the U.S. Department of Housing and Urban Development, said in the Bronx that he hoped the plan would expand to other U.S. cities. He said a 5 percent reduction of the energy used in U.S. public housing could save $2 billion over the next decade.

Mayor Michael Bloomberg said New York's 26,000 public housing buildings, home to nearly 700,000 people, are an average of 40 years old. The boilers, heating and cooling systems are nearing the end of their expected lives, he said.

He said the retrofits could trim public housing energy costs, which run about $500 million per year, and trim public housing emissions by 206,000 tonnes of carbon dioxide equivalent per year.

Under the Clinton Climate Initiative announced last year, Citigroup <C.N>, UBS <UBSN.VX>, Deutsche Bank <DBKGN.DE>, ABN AMRO <AAH.AS> and JPMorgan Chase <JPM.N> agreed to arrange $1 billion each for energy efficiency retrofit programs with New York, London, Tokyo, Sao Paulo, and Johannesburg among the first 15 cities to take part. (Editing by Ellen Wulfhorst and Bill Trott)

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