Climate change mitigation and adaptation will both require major investment in developing countries. Industrialised nations know that they are going to have to make a financial contribution, but are taking a long time presenting figures and developing countries (LDCs) are starting to grow impatient. “Negotiating tactic,” say sources in Brussels. As the parties meet for the final round in Copenhagen, though, it is clear that this question is the real Gordian knot of the talks. At this point there is hope that the planet’s heads of state and government (some 50 are expected to be on hand in Copenhagen, on 17 and 18 December, including the entire European Council) will give the long-awaited signal.

Rich countries recognise that it is impossible, even indecent, if only out of an elementary concern for equity, to hamper the socio-economic development of the LDCs on the pretext that they will increase their greenhouse gas (GHG) emissions. They will need help achieving sustainable development, in other words, putting in place a low-carbon economy and the means needed to prevent and adapt to the harmful effects of climate change. This obligation implies significant investment of financial and human resources as well as technology transfers.

“No agreement without money,” repeat the LDCs, exasperated by the rich nations’ broken promises. “No money without effort,” reply the developed countries, including the European Union, arguing that if they have to put up funds, all countries, including LDCs, have to make an effort under the principle of ‘common but differentiated responsibility’. Industrialised countries continue to emphasise the term ‘common’, while the LDCs put the accent on ‘differentiated’. The EU has estimated the South’s needs at an annual €100 billion until 2020, to be financed by both public funds (some €22 billion to €50 billion a year) and the private sector, as well as the carbon market. The Union has pledged to “take on its share” of this financing, without specifying the amount it will actually put on the table. The other potential fund donors, including the United States, are no clearer on this point.

Apart from the fundamental issue of how much, there is also the question of managing these funds. An adjustment fund, created under the Kyoto Protocol, already exists, but has only been operational since the Conference of the Parties in Poznan, in December 2008, ie 11 years after signature of the protocol. During that time the LDCs received nothing but broken promises so it is easy to understand their anger and mistrust.

There are numerous proposals for new funds and financial arrangements. The G8 countries have announced their support for the creation by the World Bank of two climate change funds to which they would contribute US$6 billion. The first, the Clean Technology Fund, would grant low interest loans to poor countries that wish to set up environmental programmes (development of renewable energy or projects to reduce fossil fuel consumption). The second, the Strategic Climate Fund, would finance test programmes on innovative approaches to climate change management. The EU has proposed a ‘forest fund’ to combat deforestation and Mexico a ‘green fund’ to which all countries would contribute according to their means. There is one certainty, namely that developing countries consider it essential to have one or more mechanisms managed at international level (United Nations, World Bank) and in which they have ‘fair representation’ – in other words, where they can assert their rights and priorities.