If more money is the answer,what was the question? Thinking critically about climate finance

Abstract

Climate politics are increasingly conducted through the medium of climate finance. Climate finance in all its guises is seen to be an enabler of deals, targets and commitments vital to advancing efforts to tackle global heating as well as the means to compensate for loss and damage associated with climate change. Critical questions about who and what the finance is for and whether indeed lack of finance (as opposed to its misallocation) is the main barrier to more ambitious action are often overlooked. Through an engagement with Gareth Bryant and Sophie Webber’s book Climate Finance, this essay foregrounds questions of power, regulation and distribution since the reason the international community has failed to bend the emissions curve has less to do with the lack of finance running through the veins of the global economy and more its misallocation to fossil fuelled extractivist ventures in a highly unequal global economy.

Introduction

Climate politics are increasingly conducted through the medium and refracted through the prism of climate finance. Climate finance in all its guises is seen to be an enabler of deals, targets and commitments vital to advancing efforts to tackle global heating. It is thought to be the means to compensate for loss and damage associated with climate change, incentivise mitigation efforts and pay for adaptation to the effects of climate change made inevitable by chronic inaction to date, to bridge North-South differences and create new outlets for capital accumulation for ‘green finance’. It is also a magnet for vulture capitalists dealing in ‘weather derivatives’ and ‘catastrophe bonds’ and capitalising on the very crisis that finance capital has been instrumental in fuelling. Selling crop insurance to poorer farmers to mitigate climate risks they are exposed to, but played no part in creating, affords one such example (Isakson, 2015). On one level of course, climate finance has always been a flashpoint in the UN climate negotiations, a condition for action on the part of states in the global South and the centre of controversies around whether funding is ‘new and additional’ and not redirected from existing aid budgets (Roberts and Parks, 2006). But it is fair to say that it is increasingly the central issue in global climate politics as the scale and speed of action now required becomes ever clearer.

Yet dominant approaches to understanding and engaging with climate finance often operate within a bounded repertoire of dominant discourses that flow seamlessly from identifying finance gaps (what the authors call ‘gap talk’) to quickly concluding that only private finance can fill the gap and therefore needs to be mobilised and de-risked at unprecedented speed and scale, generally in the form of states absorbing risks and providing guarantees that profits will be generated for private actors (Gabor and Sylla, 2023). Such discourses are replete with assumptions. Bryant and Webber helpfully describe and carefully analyse six ‘positions’ regarding the ways different forms of finance and strategies for deploying it from capital (investment, bonds and asset finance) and risk (disclosure and ESG) precision and speculative markets (carbon markets, insurance and geo-engineering) to the big green state (fiscal and monetary policy) are said to provide solutions to the climate crisis. If more money is the answer to the crisis, the question is what was the question? Arguably, the reason the international community has failed to bend the emissions curve has less to do with the lack of finance running through the veins of the global economy and more its misallocation to fossil fuelled extractivist ventures, something which only what the authors call the ‘climate justice finance’ position entertains as a point of departure.

Such framings tend to obscure questions of regulation and redistribution, more politically sensitive questions of tax and debt (Green, 2021; Newell, 2024), let alone reflections on the role of finance in a world in which reduced production and consumption are imperative (not just different variants of existing such patterns and the creation of new classes of financial assets) and questions of what count as legitimate and sustainable forms of wealth creation at this juncture. Narrower framings around de-carbonisation serve a particular purpose. If carbon (rather than fossil fuels or unequal access to and control over systems of energy provision) is defined as the target of climate finance, an array of techno-fixes from carbon capture and storage to geo-engineering and carbon dioxide removal technologies and centralised ‘low carbon’ solutions (like nuclear energy) become the investable and ‘bankable’ solutions precisely because they avoid confrontations with the holders of incumbent power. They offer a ‘plug and play’ approach to energy transition which leaves existing power structures intact (Newell, 2021). This is the prefigurative work of financial actors and ‘market makers’: to render ecosystems and project sites visible and legible to investors in climate finance through the lens of returns and bankability, exchange and commensurability so that they can be ‘unlocked’ and ‘tapped’ where previously they were beyond the gaze of finance capital.

Bryant and Webber’s excellent book brings nuance and clarity to this complex and often muddled conversation by alerting us to the politics, power and ideology that run through all discussions of finance: not as an end in itself, but as a supposed means to address the multiple dimensions of injustice associated with the climate crisis. The authors perform an invaluable service by de-mystifying the actors, institutions and modalities that pull the strings of climate finance in all its forms and revealing the politics and interests at play. This helps the reader to understand why the current landscape of climate finance takes the form it does, but also where cracks and fractures exist in existing assemblages and hence where openings might emerge to repurpose climate finance towards more equitable and ecological ends if constellations of ideas, actors and institutions are challenged and reconfigured. Trends towards financialisation reflect and entrench the shifting preferences of elite actors regarding the role of finance in society, even if projected as non-negotiable ‘common sense’. This is reflected in donors providing disaster risk finance being encouraged to ‘see like an insurer’ (Taylor, 2022) and the increasing reliance by states on tools and techniques developed by private financial investors such as risk quantification, climate bonds, credit guarantees and green securitisation (Newell and Bray, 2025). But shifting geopolitical and ideological tides from the rise of China as a contender state to the neoliberal heartland of the US to the advance of economic nationalism and state capital (Babic, 2023) in many parts of the world point to competing and rival capitalist projects, some of which are less subservient to the whims of finance capital.

Bryant and Webber usefully disaggregate and untangle the ecosystem of climate finance, public, private and hybrid, aid, debt, loans, bonds and so on. The blurring and blending of different forms of finance itself presents a challenge of accountability regarding which finance is used, by whom, for what purpose and to what effect. Different sites of finance operate according to different imperatives, incentive structures and modes of operation across a diversity of economic geographies, which need to be understood before arriving at meaningful assessments about their role in tackling the climate crisis. ‘Infrastructural power’ exercised between public and private actors shapes both the definition of what counts as green and how finance is deployed in (un)equal and (non)green ways (Newell and Bray, 2025). But the organisation of finance in the global economy (including climate finance) also reflects and embodies broader concentrations of wealth and political and social power including its racial, class and gender dimensions and the colonial plunder on which many such financial asymmetries rest (Bhambra, 2020). Recognising this significantly magnifies the challenge of centring justice in climate finance debates as the authors do with their emphasis on reparations.

This broader view of finance is vital to move beyond a siloed understanding of climate finance as that which state agencies dedicate towards the achievement of climate goals, albeit increasingly in the service of private actors. As Bryant and Webber suggest, ‘the politics of climate finance as conventionally understood represent just a fraction of existing and necessary future investment flows and institutional configurations related to climate finance’ (p. 3). In the end, everything is climate finance: every decision to allocate (or not) capital to a particular activity, sector, project or infrastructure cumulatively either reinforces or undermines efforts to tackle the climate crisis. Bryant and Webber’s definition of climate finance embodies this, encapsulating all ‘strategies that mobilise financial ideas, instruments and institutions to reshape the relationship between capitalist economies and climate change’ (p. 14). In other words, no financial decisions can be abstracted and separated from the climate system in which they are located and shape. Climate finance ‘cannot be fetishized as separate from this broader system’, as they remind us (p. 14). They are fully attentive to these ecologies of finance: not just as a metaphor for connections across sites and scales, but also to the ways in which capital lands in particular lands, forests and oceans where human and more than human natures co-exist, often recalibrating value and ownership regimes (such as with carbon offsets or land grabs) and bringing dispossession in their wake (Leach and Scoones, 2015). As Marx showed, capital is value in motion and that value circulates through capitalist relations across the world (Marx, 1974).

Without this more systemic view of climate finance, any gains in emissions reductions or resilience secured by traditional modes of climate finance will be reduced to nothing by the relentless march of business as usual financing of unsustainable production and consumption devoid of constraint. Recognition of this, as Bryant and Webber show, leads to a very different, and in my view more productive and progressive, conversation about how to finance collective wellbeing and welfare on a warming planet using all available policy levers to prioritise public interest over private gain. In this regard, the focus in their book on the ‘big green state’, the role of central banks and monetary policy underscores the decisive role of the state as non-neutral mediator, broker and arbiter of compromises and settlements which seek to reconcile the tensions between goals of accumulation and legitimation that run through climate policy (Paterson, 2010). History is replete with examples of how states can re-set the rules of the game, rebalance economies, mobilise vast amounts of capital and in their entrepreneurial roles both support innovation and exnovation to actively discriminate between forms of finance required to meet broader social ends, helping to shape which investments become assets and which liabilities (Newell, 2025). If climate finance is to serve the ends of climate justice, the final position Bryant and Webber assess, the state will be a central site for contestations over the ideas, actors and institutions that should govern the world we want to live in by interests across the political spectrum. Despite the much vaunted promise of green finance to decarbonise growth, the fleeting and fickle nature of voluntary self-regulation by banks and asset managers, reflected in the recent abandonment of net zero pledges and alliances as soon as political headwinds allowed for reduced ambition, points to the need for finance, including its climate variant, to be the servant rather than the master in determining our collective future.