Climate Financing: A New Collective Quantified Goal (NCQG)

At the recently finished Bonn climate summit in Germany, the New Collective Quantified Goal (NCQG) emerged as an important commitment in global climate financing.
The conference, which serves as a precursor to the next Conference of Parties-28 (COP28) in Dubai, has shown substantial financial shortfalls for climate action.

At the 2009 COP, wealthier countries pledged $100 billion each year to developing countries until 2020.
Climate change mitigation costs are estimated to be in the billions, if not trillions, of dollars.
The 2015 Paris Climate Agreement emphasised the importance of establishing an NCQG for climate funding by 2025.
The NCGQ, dubbed the “most important climate goal,” seeks to account for the needs and priorities of developing countries.
It should take into account scientific data, respond to rising funding for Loss and Damage, and involve developed countries raising their commitments.

Out of the planned $100 billion each year, developed countries contributed $83.3 billion in 2020.
According to Oxfam’s study, these estimates may be overstated by up to 225% due to inaccurate and dishonest reporting.
The 2009 aim of $100 billion lacked clarity in terms of the concept and source of ‘climate finance.’

(A) Accessibility and Sustainability of Climate Finance

While climate finance monies have expanded, they are still mostly inaccessible to developing countries.
The majority of climate money is in the form of loans and equity, putting developing countries in a crippling debt problem.
Only about 5% of climate money is provided as grants, significantly limiting the capacity of developing countries.

(B) Developed Countries’ Perspective

Developed countries say that the NCQG should be viewed as a global aim shared by all countries.
According to this viewpoint, developing countries bear the weight of mitigation, adaptation, and loss and damage.
Experts are concerned that poor countries will be unable to pay the costs while simultaneously assuring long-term infrastructure development.
As a vital component of climate finance, developed countries urge for the mobilisation of private-sector investments and loans.

Countries have until 2024 to reach an agreement on the NCQG.
While no official figures are available, estimations show that transitioning to a low-carbon economy will necessitate annual investments ranging from $4 trillion to $6 trillion.
Instead of a single aggregate figure, some advocate defining various targets or sub-goals for emphasis areas such as mitigation, adaptation, and loss and damage.
The emphasis should be on increasing concessional finance, reducing debt, and transforming the NCQG into an equitable, people-led transition process.

Source: https://unfccc.int/sites/default/files/resource/BSI_NCQG_Submission.pdf