World leaders are gathered in Cancun for the meeting of the U.N. Framework Convention on Climate Change where they are examining ways to find a common environmental agreement.
The European Union at the conference outlined plans for "fast-start" funding to help developing nations address the short-term challenges of climate change.
Delegates at last year's climate conference in Copenhagen, Denmark, agreed to provide $30 billion in "new and additional" financing for developing nations, though industrial powers are slow to come forward with the money.
Artur Runge-Metzger, a top negotiator for the EU in Cancun, said loans might be a better solution than grants.
"You don't need grants," he was quoted by the EU Observer as saying. "It would be a waste of money because the individual pays for itself."
Critics, however, said loans would only burden developing countries with more debt, which would inhibit their ability to keep pace with the rest of the world.