This article summarizes the emergence and current status of climate finance in international climate negotiations; sets forth the broad array of functions that global climate finance institutions must carry out; describes the institutions that are already in place; and outlines the agenda for future institution building that will be needed to implement an effective system of climate finance. The emerging global climate finance regime, where finance will be drawn from a multitude of public and private sources and provided in a variety of forms, raises critical challenges for governance. Arrangements must be made to promote transparency and accountability in both the provision and the application of funds and to ensure that finance is applied effectively and efficiently. There is also a need to develop linkages between different sources of funds, including between public and private finance and among different markets and instruments. The regime must develop and operate within an overall framework that enables trust to grow between donor and recipient countries.
