* Deal a sign of action on climate after Copenhagen malaise
* Forest aid framework to help unlock aid to poor states
* Total pledges for forests now top $4 bln, growing slowly
* Private sector help needed as state finances strained
By Wojciech Moskwa and Gwladys Fouche
OSLO, May 27 (Reuters) - Rich and poor countries agreed on Thursday on guidelines for releasing aid to save forests, in the first concrete sign of global action on climate change since Copenhagen.
Norway said aid pledges to save forests rose by $500 million since the U.N. climate conference in Copenhagen last December, less than expected just weeks ago and showing the limits of more state funding amid economic crisis and financial market unrest.
Some say the modest increase in state aid for forests, whose conservation is seen as the cheapest way of lowering carbon emissions, underlines the need for private sector engagement.
The Oslo Climate and Forest Conference, attended by representatives of 52 countries,agreed on a non-binding framework to funnel aid promised by the rich world and set up monitoring standards to ensure money flows are based on solid results.
"The outcome of this meeting could be the first comprehensive component for a future international agreement on climate change (since Copenhagen)," World Bank chief Robert Zoellick said in a televised address from Washington D.C.
In Copenhagen global leaders failed to deliver a legally binding deal on man-made emissions. Rich nations did agree, however, to provide $30 billion from 2010-12 to help poor states combat global warming, rising to $100 billion a year by 2020.
The United States, Australia, France, Japan, Britain and Norway had specifically agreed on $3.5 billion from 2010-12 to save forests, a pool of money which has now grown to $4 billion, according to Norway which chaired the climate conference.
"There is no way to be able to mobilise that much money without mobilising the private sector," Norway's Prime Minister Jens Stoltenberg said, referring to a plan to spend $30 billion on forests and other fast-track green financing until 2012.
WORTH MORE ALIVE
Deforestation and forest degradation each year eats away forests equal in size to England and is responsible for 17 percent of global carbon emissions -- more than that made by the world's cars, trains and planes combined, according to UN data.
"Reducing deforestation and forest degradation can provide the largest, fastest and cheapest cuts in carbon emissions," Stoltenberg said, adding that deforestation efforts could achieve "a third in cuts of carbon emissions needed by 2020".
Norway, rich in oil, on Wednesday formally announced $1 billion in aid to Indonesia to help protect forests in the southeast Asian nation, which has been quickly clearing forests for palm oil plantations. It has a similar deal with Brazil.
Growing populations, agriculture and the timber industry have all reduced tropical forests from the Amazon to Indonesia, where it has become more profitable to cut down natural forests.
"Today, the market values forests more destroyed than standing. We must find a way to value forests more alive than dead," said Papua New Guinea Prime Minister Michael Somare.
To push people to protect forests, as well as to attract private sector financing, it is essential to set up a global price for carbon emissions, either via a market or a carbon tax.
"This is a good day, it rebuilds trust in the international community's ability to confront climate change," Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch, told Reuters.
"What is needed is a bit more assurance that the carbon price will be there and that the private sector will have input how the system of green financing is set up."
(Editing by Elizabeth Fullerton)