Will the world stop emitting enormous quantities of carbon soon enough to avoid catastrophic disruptions of global climate systems? As with so many other issues, the answer is likely to depend on money. In the jargon of climate policy wonks, "climate finance" is about funding "climate mitigation and adaptation measures."
Experts agree that the only way to prevent disastrous climate change is to put financial incentives and funding mechanisms in place quickly enough to shift the bulk of global investment from high-carbon to low-carbon infrastructure projects. So far example, developing solar power instead of coal, electric vehicles instead of diesel or gasoline-fueled cars, and so on.
"Climate finance" is mainly concerned with the challenge of making that happen - and also with funding projects to help countries adapt to climatic changes that can no longer be avoided. Flood defenses for coastal cities, for example, or necessary changes in agricultural practices in regions where growing seasons will get hotter and drier.
Better protection for carbon locked in soils and vegetation, such as the Amazon rainforest or Indonesia's peat bogs and forests, also takes money.
In Paris in the first week of December, United Nations member countries will come together to agree on a new climate framework - including new climate finance measures - in a major renewal of the 1992 UN Framework Convention on Climate Change (UNFCCC).
"With oil- and coal-rich countries at the table alongside wealthy industrialized countries and vulnerable, resource-poor developing countries, it's very difficult to reconcile divergent interests," said Athena Ballesteros, climate finance director for the influential World Resources Institute (WRI), a nongovernment policy think tank in Washington, DC.
Much of the horse-trading has been about exactly how wealthy developed countries intend to deliver on a promise made at a previous UNFCCC conference 2010 in Cancun, where industrialized countries agreed to channel $100 billion per year in funding to developing countries by 2020 through a "Green Climate Fund" (GCF).
Five years after Cancun, the GCF has finally gotten through its launch phase - just in time for the Paris summit. The wheels of international climate policy turn slowly, especially when a multitude of countries have to sort out who's going to pay, who's going to get paid, and how to ensure the money is spent effectively.
On November 6, GCF announced its very first round of funding. GCF will provide $168 million in partial support of eight projects. These are worth $624 million in total, because all have co-funding from other sources. Among the recipients are a project to "build resilience of wetlands" in the province of Datem del Maranon in Peru, an "energy efficiency green bond" scheme for Latin America and the Caribbean, and an "urban water supply and wastewater management project" in Fiji.
But WRI's Ballesteros told DW that what's much more important than the details of GCF's spending is whether the bulk of the world's private investment money can be redirected away from carbon-intensive investments toward climate-friendly spending - and whether major nations' tax policies can be similarly shifted.
That's why in recent years, financial market players worried about climate destabilization have launched projects like the Climate Bonds Initiative (CBI).
"Green Bonds" or "Climate Bonds" are debt instruments issued by developers to raise money for projects that have been certified by independent auditors as environment- or climate-friendly.
"CBI has been working with experts to develop climate bonds certification standards sector by sector - separately for solar power, wind power, low-carbon transport, and so on," CBI spokesman Andrew Whiley told DW.
"The goal is to provide a reliable, labeled means for institutional investors to be able to demonstrate they're shifting their portfolios in a climate-friendly direction."
That's crucial, because much of the world's infrastructure investment money is raised by issuing bonds. Decisions about which bonds to buy are made by managers of pension funds, insurance funds, hedge funds, sovereign wealth funds.
Investment portfolio managers' role as bond purchasers gives them enormous financial power - but they don't have the time or ability to evaluate in any detail what happens to the money they allocate. Shifting their bond purchases in a green direction is a necessary step for achieving climate safety.
While certified green bonds remain a very small proportion of all bonds sold - just $40 billion for 2015 - CBI hopes that by setting up green bonds standards and recruiting influential financial industry players in support, it's laying the groundwork for the green bond market to grow rapidly in future.
Activists have also been pushing investment managers to "divest" from coal companies, with some recent successes. Allianz, a giant insurance and asset management company based in Germany, announced in November that it would pull out of all coal investments.
Public development banks like the European Investment Bank (EIB) or Germany's KfW bank are another important lever for redirecting large-scale funding into climate-friendly investments. EIB announced in October that at least 25 percent of all its new lending during the rest of this decade would be for climate-related projects - that's about 19 billion euros a year, totaling around 100 billion euros by the end of the decade.
EIB's climate-relevant categories of lending will include sustainable transport, renewable energy, energy efficiency, cleantech innovation, and climate change adaptation priorites like flood defense construction.
But institutions like KfW have sometimes been criticized for "green" projects that some critics say aren't authentically green. For example, a dam in Panama co-financed by KfW under the clean development mechanism of the climate framework is being criticized for a lack of transparency, and for potential harm to local ecosystems and communities.
In the 75 percent of EIB funding that isn't directly aimed at climate-friendly projects such as renewable energy infrastructure, the climate will nonetheless be taken into consideration, according to Jonathan Taylor, EIB's vice president for Environment and Climate Action. For example, EIB will encourage building projects to include energy-efficiency measures and solar panels on rooftops.
Lending to developing countries
With 90 percent of EIB's lending going to projects in Europe, its new pro-climate lending policy won't solve the challenge of making rapid infrastructure development in Africa or Asia climate-friendly.
But EIB isn't the only development bank working on a climate finance strategy. Since 2011, the major multilateral development banks - including the World Bank, Asian Development Bank, and African Development Bank, among others - have used a common methodology to jointly track and report on their climate finance portfolios.
The African Development Bank (AfDB) has provided about $7 billion of climate-related lending over the past four years, and has committed to nearly tripling its annual funding of climate adaptation and mitigation projects by 2020. That means AfDB's climate spending will increase to 40 percent of its total new investments by 2020, compared to 26 percent on average from 2011 to 2014.
However, AfDB President Akinwumi Adesina said in October that "the current climate financing architecture is not providing the finance Africa needs. Much more needs to be done to increase Africa's access to climate finance."
Redirecting subsidies and price signals
Still another category of finance that dwarfs the sums that will be channeled through the UN's Green Climate Fund is composed of the tax breaks and subsidies currently pumped by governments around the world into supporting fossil fuels - some $300 to $500 billion a year, according to WRI's Ballesteros.
Apart from pushing institutional investors to divest from investments in coal and other fossil fuels, climate activists have been pushing governments to adopt policies that would shift subsidies away from fossil fuels and into clean energy systems instead.
Market mechanisms like carbon prices and emissions trading systems also have a potential role to play. By putting a tax on fossil fuels and thus on carbon emissions, countries could both incentivize energy users to use less fossil fuel and raise more money to invest in clean energy systems - if the carbon tax revenues were funnelled into clean energy systems research, development and deployment.
Unfortunately, however, market mechanisms won't be on the table at COP21, because ideology has got in the way, WRI's climate finance expert told DW.
"ALBA countries - the 'Bolivarian' group including Venezuela and Bolivia, among others - are on the extreme left in terms of economic policy," Ballestaros said. "They're absolutely against including anything capitalist or any market mechanisms in the agreement. All the market mechanisms were removed from mention in the final text as a result."
That doesn't eliminate a role for carbon pricing or market mechanisms - but these will have to be implemented at the national level or in multinational regions like the European Union, rather than at the global level.
The most important goal for climate finance, according to Ballesteros, is to use any policy levers available to "send strong signals to private investors that will get them to shift from carbon-intensive to low-carbon investments."