Q & A: The future global climate finance goal (aka NCQG) - what is it, why is it important and what does it entail?
One of the main outcomes of COP26 is the process to agree a new global climate finance target. In the following Q&A, Eurodad's climate finance expert answers some of the most frequently asked questions about the new collective quantified goal on climate finance.
One of the main outcomes of COP26 is the process to agree a new global climate finance target - also known as the new collective quantified goal on climate finance (NCQG). The last climate finance goal was a political agreement amongst developed countries that was not based on the needs of developing countries. So it was imperative that at COP26 a process was carved out that was based on transparency and included the most vulnerable. In 2022 this process kicked-off with the first Technical Expert Dialogues (TED) on the NCGQ, held from 24-25 March in South Africa. The next TED on the NCQG will take place from 13-14 June alongside the UNFCCC Bonn climate change conference.
Why does this process matter?
The entire climate finance architecture needs to be reframed to focus on debt-free and economically-just climate finance flows rather than on profit-driven investments. The process to set the NCQG provides the first opportunity in over 10 years to do just that. Climate finance providers (public and private) must learn from both the real-world experiences of pre-2025 climate finance flows, and take into account the evolving climate action needs of developing countries in the global south. This is to ensure that post-2025, solutions can be implemented to ensure that there is no climate finance gap.
How will countries decide on the new NCGQ?
At COP26, countries agreed on a process to determine the scope and substance of what the new goal should be. As part of this, it was decided to establish an ad-hoc work programme that would run from 2022 to 2024, with the ultimate aim of setting up a new collective quantified climate finance goal by 2024. To facilitate this work there will be four Technical Expert Dialogues (TED) per year (one TED per UNFCCC meeting, plus two additional dialogues). Individuals can register to take part as observers, including civil society. Regular public consultations will also be held. Additionally, there will be several High-Level Ministerial (HLM) dialogues, starting in 2022 and ending in 2024. After each HLM a summary of the discussions and recommendations will be reflected on by countries at each COP up until 2024.
Four themes were used to guide the discussions that took place during the March TED (24-25 March). Broadly speaking, the themes focused on past experiences (and failures) of mobilising climate finance to determine what needs to happen to ensure that future goals are actually met. Climate finance is a cross-cutting issue, and lack of agreement in this area has stalled UNFCCC negotiation outcomes in other issue areas. So looking back on past experiences to ensure robust progress going forwards is all a part of the journey to get the NCQG right to ensure that other areas get it right too.
What are the main issues being discussed?
During the March meeting, developing countries from the global south were clear that the failure to achieve the existing global climate finance goal of USD $100 billion per year by 2020 has led to an erosion of trust on the promise for all countries to have the resources to tackle climate change. This resulted in renewed calls from developing country groupings for the quantity of the NCQG to be in the trillions, as the costs of addressing and adapting to climate change have grown. Additionally, developing countries want to ensure that the NCQG can be reviewed and adjusted upwards, in line with evolving needs. As such, we can expect a push for the NCQG to be designed in alignment with the review cycles of the Global Stocktake (GST), which is essentially the Paris Agreement’s progress tracker and ambition assessment mechanism.
Transparency of climate finance flows was one of the few common issues that countries had. However, the devil is in the detail. Whilst developed countries called for transparency of ‘where’ the finance goes and ‘how’ it’s used; developing countries called for transparency on disbursement of climate finance, and common definitions of what climate finance is. There was also general consensus that current public climate finance streams should be strengthened to ensure that predictable and adequate finance can be provided. As such, innovative sources such as fossil fuel subsidy reform and Special Drawing Rights (SDR) were both suggested by country groupings as a way to boost public climate finance streams.
After the March meeting a reflection note was published and will be used as input to future Technical Expert Dialogues (TED) on the NCQG. The note includes a list of ‘possible topics for further discussion’, one of which is the topic of the ‘needs and priorities of developing countries’. This is a crucial issue that will require more than one round of discussion.
What’s next in the NCQG process?
The second TED (13-14 June) will build on the first TED and “[i]dentify a roadmap, including milestones, and areas for elaboration in 2022 against the backdrop of the landscape of issues identified at the first technical expert dialogue”. A technical paper on information shared during the 2022 TEDs and the submissions to the public consultation on the NCQG will be prepared for COP27 - the next deadline for submissions to the public consultation on the NCQG is 15 August. The outputs from the TEDs will also inform the Ministerials on the climate finance goal, the first of which is expected to take place during COP27. The Ministerials are a big opportunity to ensure that both technical and political elements are addressed at a high-level, potentially allowing for agreements to be reached. Eurodad is following this process, follow us on Twitter for more updates on the nuts and bolts of the NCQG.