Climate finance beyond $100 billion: Are we close to agreeing on a new climate finance target?

Subject: Environment

Section: International Convention

Context:

Discussions on the New Collective Quantified Goal (NCQG) on climate finance were conducted in Geneva from September 30-October 2, 2023, through the 7th Technical Expert Dialogue (TED 7) under the Ad Hoc Work Programme of the United Nations Framework Convention on Climate Change (UNFCCC) on NCQG.

Details:

Current climate finance goal is: $100 billion, decided by developed countries in 2009 at the 15th Conference of the Parties (COP) to UNFCCC held in Copenhagen.
So far, the Organization for Economic Cooperation and Development (OECD) has provided data on the progress of the $100 billion goal.
The primary objectives of TED 7 were twofold: Options for ways to reflect qualitative elements of NCQG, and options for setting up transparency arrangements to track progress towards achieving NCQG.

Enhanced Transparency Framework (ETF) of the Paris Agreement:

Starting no later than 2024, as part of the enhanced transparency framework (ETF), all countries who have ratified the Paris Agreement will follow a single, universal transparency process. The information gathered under the ETF will provide a clear understanding of climate change actions and support, and ultimately contribute to the global stocktake process that will periodically take stock of the implementation of the Paris Agreement.
By design, the ETF covers all aspects of the Paris Agreement, including tracking progress of implementation and achievement of nationally determined contributions under Article 4.
Challenges with the ETF (one of the primary modes of tracking climate finance progress) mentioned by OECD included:
- Data inconsistencies due to differences in methodology followed by different parties
- Data gaps due to the lack of agreement on which sources of finance are to be included in NCQG and
- Gaps between when information on projects is reported and actually available for review

Recommendations to address transparency gap in climate financing:

The call for a definition of climate finance
Transparency of tracking progress around private finance flows and providing publicly accessible data in formats that may be understood by non-state actors across the world.
The use of online tools for continuous reporting on project completions.
A demand for setting a quantum of $1.1 trillion per year from developed to developing countries, excluding arrears from the $100 billion promise.

Article 2.1(c) & Article 4 of the Paris Agreement:

Article 2.1(c) calls on governments to ‘make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’.
This is a pre-condition for achieving the Agreement’s adaptation and mitigation goals, including limiting global warming to 1.5°C above pre-industrial levels.
Mitigation (Art. 4) – The Paris Agreement establishes binding commitments by all Parties to prepare, communicate and maintain a nationally determined contribution (NDC) and to pursue domestic measures to achieve them.

New Collective Quantified Goal (NCQG):

In accordance with Article 9, paragraph 3, of the Paris Agreement, the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) shall set a new collective quantified goal (NCQG) from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries, prior to 2025.
NCQG is set up around the following elements:
- Ad hoc work programme
- Submissions by Parties and non-Party stakeholders
- High-level ministerial dialogues
- Stock-takes and guidance by the CMA

Source: DownToEarth