After the failure of the Copenhagen conference, climate finance has become the buzzword of international climate negotiations. A "fast-track" volume of 30 billion US dollars has been promised by industrialised countries for emissions mitigation and adaptation activities in developing countries. A frantic race for access to these funds has begun without any consideration how an effective allocation could be achieved. This could lead to a backlash against climate finance in general once the first headlines about misuse of funds appear. This volume explores ways to safeguard effectiveness of climate finance. Looking into the past decade of climate policy, the authors show that market mechanisms can be a surprisingly attractive and transparent way to promote emissions mitigation in the Global South.