The European Union said on Tuesday it was kicking off climate projects in poor countries backed by billions of dollars in aid from the continent, following through on a pledge made at last year’s UN climate summit in Copenhagen.

But half of the EU’s funding would involve loans instead of grants to the poor, a move quickly criticized by environmentalists. The aid also focuses more on curbing greenhouse-gas emissions than on helping poor countries deal with the effects of climate change.

In an update presented at the new round of climate talks in Cancun, Mexico, the EU said it had mobilized 2.2 billion euros (2.9 billion dollars) out of the EU’s 7.2-billion-euro pledge of so-called “fast-start” financing by 2012.

Aid from rich nations to pay for developing countries’ efforts to tackle climate change will be a central issue in the Cancun talks, which began Monday and run until December 10. Wealthy nations last year in Copenhagen pledged 30 billion dollars to poor countries by 2012, but only about half the money has so far been mobilized.

The EU’s chief negotiator in Cancun, Artur Runge-Metzger, defended the use of loans as helpful for many clean energy projects that had high start-up costs but would actually save money over time. While some of the repaid loans would go back into other climate projects, he acknowledged some of the money could also flow back to cash-strapped EU budgets.

“There’s a lot of actions that in actual fact, if you implement them,... improve the overall efficiency of your economy,” he said.

“Using a grant for such a situation would be a waste of money because the investment pays for itself.” Runge-Metzger said the loans would only go to countries that were not highly indebted already, thereby making sure the borrowing countries could pay the money back, without pushing debt-ridden governments further into trouble.

Tove Ryding of Greenpeace criticized the arrangement, saying loans were the wrong tool for industrialized societies to help poorer countries that have not caused global warming but are feeling its effects.

“That would be the same as if I take my car and I drive it into your car, and then I offer you a loan to repair the damage,” Ryding said.

Projects aided by the EU will range from tackling deforestation in the Democratic Republic of Congo to coastal protection in the Maldives to helping climate-friendly development in rural China.

Oxfam criticized the proposal for having the wrong priorities: nearly 50 per cent will focus on lowering industrial carbon emissions of developing countries, while 30 per cent will go toward helping poor countries adapt to the consequences of a warming planet.

Oxfam climate policy advisor Tracy Carty noted leaders had agreed in Copenhagen to put half the money toward climate defenses: “The EU’s report underlines how the adaptation gap must be addressed with the utmost urgency.” Peter Wittoek, another top EU negotiator at the summit, said the EU’s funding pledge sent a “strong signal” of its commitment to the fast-start process. The money would foster “concrete action on the ground, starting now,” to help developing countries cut their pollution and adapt to the effects of global warming.

Wittoek noted the money had come “in spite of the difficult economic situation and the budget constraints all of us are under.” Among the decisions government ministers hope to reach during a two-week meeting in Cancun is the establishment of a “green fund” to channel the climate aid pledges from rich countries. But talks have been held up, partly by disagreements over how to increase the transparency of climate projects in the developing world.

The stepped-up aid is a key demand of poorer countries that are already feeling some of the effects of climate change such as rising sea levels and more intense storms. Governments in Copenhagen set a goal of providing 100 billion dollars in climate aid per year by 2020.