With millions of the poor already facing the impacts of a changing climate, adaptation is a globally urgent - and costly - issue. The Adaptation Fund, created under the Kyoto Protocol, has unique features that could herald a new era of international cooperation on adaptation. Its governance structure, for instance, offers a fresh approach to fund management under the UN climate convention. The Fund's Board has also developed a constructive working atmosphere, and further progress is expected before the 2009 climate summit in Copenhagen. But developing countries' demand for adaptation funding is huge: conservative estimates put it at US$50 billion a year. The Fund's current structure and funding base are clearly only a first step towards filling that gap. And despite its significant progress over the last 18 months, many countries, particularly in the developed world, remain sceptical about this approach. Looking in detail at the Fund's evolution offers insight into its future potential as a model for adaptation finance.