Climate Finance and Governance

Abstract

This chapter examines the meaning of ‘climate finance’ under international law and academic scholarship. It makes the observation that while the term is widely used in contemporary literature, the meaning of ‘climate finance’ is hardly fixed. Economists, social scientists, and lawyers have understood and defined climate finance in different ways. A significant number of authors use climate finance in the context of business and investments. Some authors use climate finance in the context of development goals and poverty reduction. Some authors discuss climate finance by referring to an obligation of developed countries to provide recompense to developing countries. In order to make sense of the dissonance, the chapter traces the change in the meaning of climate finance under international law from its origins under the Rio Declaration to the Paris Agreement, and further to present conceptions under recent instruments and literature. It argues that there has been a shift in the way climate finance has been conceptualised and that the very meaning of climate finance has been a site of political contestation. What started as an obligation of developed countries grounded in the principle of common but differentiated responsibilities has, in modern imaginings led by developed countries and international organisations, taken shape largely as investment and debt, and intertwined with development objectives.