New Collective Quantified Goal on Climate Finance (NCQG) must correct failures of the $100-billion goal

BY SAADA MOHAMED

For years in the global climate discourse, one demand has been : climate finance to support climate action. Throughout this year, finance has been at the heart of negotiations. This call will only grow louder in the next few weeks.

This year marks a significant midpoint of the critical decade to 2030 for climate action. It is, therefore, fitting that COP29 is fashioned as the “climate finance COP”.

Negotiators are expected to agree on a new global climate finance commitment. This goal is known as the New Collective Quantified Goal (NCQG) on climate finance.

What is NCQG and why does it Matter?

This new goal is set to replace the existing $100 billion annual climate finance goal committed in 2009 by developed nations to support climate action in developing countries up until 2025.

This commitment is premised on the obligations set out in the Paris Agreement and UN Convention owing to developed countries’ historical emissions and their financial capacities.

The NCQG is the instrument that breathes life into the 2015 Paris Agreement to strengthen the global response to climate change.

A heating planet… failed multilateral climate processes

Overlapping extreme weather events are being experienced globally, with death and destruction multiplying. Several projections show that 2024 will be the hottest year on record.

Africa, home to half of the global population living in extreme poverty, continues to endure severe and unprecedented climate disasters driving a grave humanitarian emergency.

This underscores the urgency of climate finance to address the escalating climate crisis.

But even as these crises surge, multilateral climate processes have failed to make progress on climate action. This global inaction has significantly derailed efforts to limit global warming to below 1.5°C. Sadly, years of intensified global climate advocacy and diplomacy have come to nought.

Any chance of adequately responding to the vagaries of climate impacts has been curtailed by the delayed delivery of reliable, adequate and quality finance. The lack of political will has also complicated climate action. This trend has worsened the vulnerability of frontline communities and driven up the costs of late action.

What must Baku do?

For the NCQG talks in Baku to be complete and fruitful, Parties must recognise that the current climate finance architecture is aggravating existing economic and social disparities. For several reasons.

Firstly, the current $100-billion goal is only a fraction of what is needed to address the evolving needs of developing countries. The finance required now runs into trillions of US dollars annually. It is only by availing these funds that countries will be able to implement their climate ambitions by 2030.

Secondly, the goal is overwhelmingly skewed towards mitigation outcomes which overshadow concrete adaptation actions. The Parties must appreciate that adaptation is the lifeline of developing countries.

Moreover, the goal creates competition between climate action and critical development priorities. This is because climate finance is largely drawn from the inadequate official development assistance as opposed to being new and additional.

But what is even more alarming is the fact that climate finance under the $100-billion goal is predominantly delivered as loans often at market terms. This situation further compounds the severity of the debt burden under whose weight Africa is caving in.

Instead of addressing historical climate injustices, this climate finance commitment has driven developing countries into acute indebtedness. It also puts poor and vulnerable countries at a crossroads: whether to pursue climate action or critical socioeconomic development.

The NCQG must remedy failures of the current climate finance architecture to be truly transformative. To do that, it must address the ambiguity in the design, including adequacy, quality and inaccessibility.

Ambiguity around the $100-billion goal created inconsistent expectations, many of them unmet.  The result has been erosion of trust in the climate negotiations.

The design of the NCQG should draw lessons from these past mistakes. Doing so will help to avoid a climate finance regime inconsistent with climate needs or impedes effective global ambition and action.

The NCQG presents a critical moment for the world to drive course correction towards enhanced ambition, support, and international cooperation. It is also a moment to reflect on climate support as sole obligations of developed countries.

What does an ideal NCQG look like?

As the world heads to Baku, the ideal NCQG would be one that adequately reflects the evolving needs and priorities of the developing countries. At the very least, it must trigger a commitment to provide trillions of dollars commensurate with the urgency and scale of action needed in this critical decade.

It must also be enshrined in public grant-based finance at scale as its core component to equally address all needs, particularly for adaptation and loss and damage.

A responsive NCQG should prioritize provision of debt-free climate finance. Such finance must be delivered in the form of grants.

Being a mobilization goal, the NCQG should incentivize reform of the global financial architecture. This would upscale overall resources for both climate and development objectives.

Most importantly, the NCQG must facilitate enhanced direct access to and transparency for the fund. It must also increase the proportion of climate finance that reaches local levels for climate interventions by frontline communities.

To this end, what lingers on everyone’s mind is whether Baku will deliver a comprehensive, ambitious, fair, equitable, and effective goal. Will COP29 yield a finance goal that incentivizes accountability and international cooperation required in this decade of climate action?

To realise a livable planet where everyone thrives, the NCQG must usher in a new era of accelerated climate ambition and action in keeping with the principles of a just and equitable transition.

Parties are duty-bound to positively respond to the reality of climate impacts and the resulting need.

Humanity cannot falter this time.

Saada Mohamed is a climate finance associate at Power Shift Africa