The purpose of this paper is to review the status of research into one of t
he most challenging and important problems facing physics today: how does t
he atmosphere moderate the radiative energy balance that determines the Ear
th's climate? Behind this question lies the whole basis for understanding t
he greenhouse effect, including coupled feedback processes: this understand
ing has consequences for major issues of public concern, climate change and
global warming. Following an introduction to the basic physics of the ener
gy balance and the greenhouse effect, a discussion is given of how the spec
trum of outgoing thermal radiation (by which the planet cools to space) dep
ends on internal parameters such as surface temperature and atmospheric hum
idity. This includes a discussion of the sign and magnitude of the water va
pour-climate feedback, and the 'super greenhouse effect'. It is shown that
the role of cloud in the energy balance is extremely important, although po
orly understood. Recent work to exploit the information contained in the re
solved spectrum of outgoing long-wave radiation (OLR) is described, includi
ng a new technique to search for the 'signal' of climate change within the
'noise' of natural climate fluctuations. Finally, some comments are offered
on the problem of the predictability of future climate changes.