This paper provides an analysis of the International Emissions Trading Association (IETA) climate finance proposal in the context of the climate change negotiations. The IETA proposal is for selling their "green bonds" as a "new market mechanism". Like a conventional bond, the "green sectoral bond" is a debt instrument issued for a specific purpose, in this case for investments to meet bond-stipulated greenhouse gas reductions and whose principal must be paid back with interest over an agreed time period. Climate finance must not depend on the highly volatile and destructive financial and carbon derivatives markets and serve to enrich global carbon traders.

This paper is included in the Climate and Agriculture series published by IATP to coincide with the U.N. climate talks in Cancun.