Climate change is seen as the most pressing environmental problem of our time by many companies, policymakers and other stakeholders. It is currently also at the forefront of attention in view of attempts to conclude a successor to the Kyoto Protocol that expires in 2012. In bail-out plans and policies to address the economic recession and credit crisis, climate aspects have figured prominently as well. This article examines recent policy and economic developments and their relevance for business and climate change, considering the implications of the economic slowdown, declining oil prices and bail-outs. Dilemmas in the economy-climate-policy nexus in the current setting are also placed in the broader context related to innovating for climate change, to highlight some of the competitive, technological and market issues that need to be taken into account to break the present dead-lock that hinder radical moves to a low-carbon economy.