Climate funding is the provision of financial means from developed countries to developing countries to fund climate change adaptation and mitigation measures.
Article 4.3 of the UN Framework Convention on Climate Change (UNFCCC) states that developed countries are willing provide funding for the “agreed full incremental costs” of developing countries' climate change mitigation and adaptation measures. This refers to the transformaion of a traditional business plans into climate-resilient economic strategies. Additional costs e.g. of turning a company's energy infrastructure from fossil-fuel-run machinery into low-emission machines. The UNFCCC, the Kyoto Protocol and other follow-up agreements and projects by the Conference of the Parties (COP) have developed key principles that may be applied when dealing with financial interaction between developing and developed countries. Other important principles in this issue are provided by the correspondent human rights catalogues or environmental law. The most prestigious one is probably the Rio Declaration. These principles are of course not (yet) part of national legislations. However they are meant to give an orientation as normative guidelines.
Who finances climate projects?
The idea of climate funding is relatively young. Therefore the structures and processes in this field are not yet settled, there is not yet a set of central and powerful actors. Money is provided by various actors and various means, some in the form of UNFCCC financing mechanisms, some in totally different ways and through different channels. There is a tendency towards bilateral climate funding. Some countries have set up climate change funds. Coordination mechanisms to improve access and inclusiveness are underway. The system is becoming increasingly transparent in the sense of requirements to obtain and conditions to receive prolonging climate finance. It is not clearly defined what kind of projects are entitled to get climate funding. Bilateral agreements are particularly difficult to monitor.
Adaptation Finance: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7910.pdf
Mitigation Finance: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7911.pdf
The green Climate Fund: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7918.pdf
Latin America: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7920.pdf
Asia and Pacific: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7915.pdf
Sub-Saharan Africa: http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7914.pdf