Q+A - Climate change finance -- how does it work?

By David Milliken

ST ANDREWS, Scotland, Nov 8 (Reuters) - Discussing how to pay for efforts to combat climate change was a major theme at Saturday's meeting of finance ministers and central bankers from the Group of 20 leading economies.

Ministers made little visible progress in sorting out the thorny issue of how rich countries should help poorer ones fight global warming, but did agree that a big increase in funds was needed. [ID:nL7173783]

Following is a guide to the financing issue ahead of a United Nations summit on climate change in Copenhagen next month:

WHAT IS CLIMATE CHANGE FINANCE?

It covers a broad range of proposals to fund schemes in the developing world which reduce emissions of carbon dioxide and other gases that cause climate change.

The schemes are usually based on funding from governments and investors in richer countries -- in part because a dollar of spending can achieve a greater reduction in emissions in the developing world. Possibilities for cheap reduction of emissions in developed countries have largely been exhausted. Moreover, spending money on fighting climate change is not a priority for many developing countries, which blame industrialised nations for the problem. They argue spending on health, education and other poverty-reduction measures bring more immediate improvements to the quality of life.

Some schemes aim to mitigate the effects of climate change -- for example by boosting flood defences -- where this is cheaper or more urgent than trying to reverse global warming.