How much should develop countries pay for climate action?

Subject: Environment

Section: Climate change

Context:

At a two-day meeting that concluded in Copenhagen, Denmark, on March 22 — the first minister-level climate meeting for this year — some technical work to arrive at the NCQG was finalized.

More on news:

The 2022 climate change conference in Sharm el-Sheikh decided to set up a Loss and Damage Fund to help developing countries recover from climate disasters.
The Dubai conference last year was all about Global Stocktake, or GST, a review of ongoing climate action, which resulted in the first ever explicit acknowledgment of the need to “transition away” from fossil fuels, and a promise to triple global renewable energy capacity by 2030.
This year, the focus is on finance. The expression that is likely to be heard most frequently in climate conversations and at COP29, scheduled for November 11-24 in Baku, Azerbaijan, is NCQG — or New Collective Quantitative Goal (on finance).

What is the New Collective Quantitative Goal?

The New Collective Quantified Goal on Climate Finance (NCQG) is a new global climate finance goal that the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) shall set from a floor of USD 100 billion per year, prior to 2025.
NCQG is a convoluted way to describe the new amount that must be mobilized by developed countries every year from 2025 onward to finance climate action in developing countries.
This new amount has to be higher than the $100 billion that developed countries, collectively, had promised to raise every year from 2020, but had failed to deliver.
NCQG is extremely important for developing countries, and discussions on this new amount have been ongoing for a couple of years at least.

How much money is required to ensure effective climate action?

The scale of annual climate finance flows has always been considerably less than the $100 billion that the developed countries had promised to mobilize every year from 2020 onward.
It would be only a small fraction of the money that is required to enable actions that would keep the world on the 1.5 degree Celsius pathway at least until 2030.
In 2021, UN Climate Change, the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), said in a report that developing countries would require a total of about $6 trillion annually between then and 2030 just to implement their climate action plans.

What are the prospects for a realistic new annual climate finance target?

In a recent submission made to UN Climate Change, India called upon developed countries to ensure that the NCQG was “at least US$1 trillion per year, composed primarily of grants and concessional finance”. India’s submission was one of several inputs that will feed into the ongoing discussions on the NCQG.
UN Climate Change, which organizes dozens of climate meetings every year and facilitates the implementation of various decisions and agreements, depends heavily on contributions from countries and voluntary organizations for carrying out its work.

How will this money be used?

The new amount, even if far from sufficient for the climate challenge the world faces, will be higher than the current commitment of $100 billion, since that is the mandate of the NCQG.
The way the new sum is distributed across different kinds of needs — mitigation, adaptation, loss and damage, and several others — will also be important. Climate finance flows are currently heavily skewed in favor of mitigation actions, while developing countries have been demanding that more money be made available for adaptation and other activities.

About COP29:

The 2024 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly known as COP29, will be the 29th United Nations Climate Change conference.
COP29 will be held in Baku, Azerbaijan.

About Loss & Damage (L&D) Fund:

First announced in 2022 at the conclusion of COP-27 in Sharm El-Sheikh, Egypt.
A ‘transitional committee’ was set up to decide the working conditions of the fund.
It will be based at the World Bank but managed by an independent secretariat.
The World Bank will be the “interim host” of the fund for a period of four years.
Payments are voluntary and a certain percentage has been set apart for a category of countries called Least Developed Countries and Small island developing states.
Commitments worth at least $450 million have already been made by countries.
Contributors include: European Union, United Arab Emirates, Germany, the United States, the United Kingdom, and Japan.