Climate finance will be key at Bonn Climate Conference

Subject: Environment

Section: International Convention

Context:

While the $100 billion climate finance goal — first pledged in 2009 — may be met this year, discussions on its successor, the New Collective Quantified Goal (NCQG) on climate finance, will continue at Bonn, where the Sixth Technical Expert Dialogue (TED) will deliberate on the “quantum” of money for the new goal as well as “mobilization and provision of financial sources”.

Details:

According to an estimate by the Organisation for Economic Co-operation and Development, a total of $83.3 billion was provided to developing and emerging economies in 2020 — $16.7 billion short of $100 billion.
The Stern-Songwe report of 2022 estimated that $1 trillion per year will be needed in external climate finance by 2030 for emerging and developing economies other than China. The UNFCCC Standing Committee on Climate Finance estimated the needs of developing countries to be from $5.8-11.5 trillion.
The currently evolving debt crisis in the Global South underlines the urgent need for more grant-based climate finance, without which developing countries will be pushed deeper into debt, negatively impacting their development.
The International Energy Agency stated that the high cost of capital and rising borrowing costs reduce the economic attractiveness of clean energy investment in developing countries, even if they possess rich renewable resources.

What is the New Collective Quantified Goal (NCQG)?

By decision 1/CP.21, para. 53, Parties decided that, 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.
The NCQG is expected to be operational by 2025 and will be designed to consider the needs of developing nations.
At COP26 in Glasgow, an ad hoc work programme for the NCQG for 2022-24 was set up.
Under this programme, Parties agreed to have four TEDs annually through 2024 to guide the technical work to inform political deliberations at COP.

Technical Expert DIalogue (TED):

The theme of discussion will be “quantity, mobilization and provision of financial sources”.

Climate finance:

According to the UNFCCC Standing Committee on Finance, climate finance is that which “aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts”.
But there is no standard, internationally agreed definition of what can be counted as climate finance or even what should be reported as “new” or “additional” climate finance.