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

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. 

These discussions provide developing countries a chance to partake in the negotiations on how much climate funding is needed per year from developed countries, in line with escalating climate risks. 

The current goal of $100 billion is not a ‘negotiated’ goal. It was decided by developed countries in 2009 at the 15th Conference of the Parties (COP) to UNFCCC held in Copenhagen. And in no year since then has this goal been met; the timeframe for achieving it was extended. The new goal or NCQG is to be decided prior to 2025.

Through the TEDs, Global South countries have tried to advocate for specific measures by which the new global finance goal can truly be needs-based, which it has not been historically. Experts mentioned that in addition to the failure of achieving the first goal, new estimates predict the need for roughly $ 5 trillion by 2030 for meeting climate goals, an estimate multiple times higher than the current $100 billion.

Building on previous dialogues, the primary objectives of this TED were twofold: Options for ways to reflect qualitative elements of NCQG, and options for setting up transparency arrangements to track progress towards achieving NCQG. 

On the first day, several suggestions focused on ensuring the delivery of the finance goals is met, to the largest extent possible, through grant-based and concessional finance, and the need for climate finance to support Nationally Determined Contribution (NDC) efforts. 

The second day focused on assessing transparency arrangements in order to track progress towards achieving the goal. So far, the Organization for Economic Cooperation and Development (OECD) has provided data on the progress of the $100 billion goal. 

Discussions began with what is considered a good tracking system, and the benefits and challenges associated with the Enhanced Transparency Framework (ETF) of the Paris Agreement. Challenges with the ETF (one of the primary modes of tracking climate finance progress) mentioned by OECD included: 

1. Data inconsistencies due to differences in methodology followed by different parties
2. Data gaps due to the lack of agreement on which sources of finance are to be included in NCQG and 
3. Gaps between when information on projects is reported and actually available for review

Some participants felt that ETF is largely about tracking progress on broader climate finance, and does not have adequate scope to truly track progress on NCQG. 

Other major challenges in transparency of tracking progress included the shroud of confidentiality around private finance flows and the lack of publicly accessible data in formats that may be understood by non-state actors across the world. 

Recommendations for addressing transparency gaps included, first and foremost, the call for a definition of climate finance that is agreed upon. Other suggestions such as the use of online tools for continuous reporting on project completions, and capacity building for developing countries to ensure they can report on projects regardless of periodicity were also made.

The talks on transparency concluded with several participants stressing the need for UNFCCC to be at the core of monitoring progress of the new goal, primarily as an attempt to address the existing confidentiality issues related to OECD’s monitoring, private sector funding, outflow from multilateral development banks, among other things. 

On the third day, discussions were held on other technical issues as well as elements needing political consideration. Participants offered their suggestions for consideration at the High-Level Ministerial Dialogue on Climate Finance at the Pre-COP meeting likely to be held later this month. The points that participants wished are discussed by Ministers included (but were not limited to): 

• Detailing the scope of the NCQG and moving towards clear definitions and quantum in the next meeting 
• Inclusion of adaptation and loss and damage in NCQG mandate
• Need for increasing public concessional finance
• Reflecting on adverse impacts, response measures and unilateral measures and how these create finance deficits in developing countries 
• Ensuring different channels of resources can integrate principles of equity and Common but Differentiated Responsibility to effectively address the needs of developing countries

There were diverging views on the contentious Article 2.1(c) of the Paris Agreement, with some arguing it does not have a role to play in the context of NCQG, and others suggesting it should be seen as a linked issue.

Concluding remarks at the TED included a demand for setting a quantum of $1.1 trillion per year from developed to developing countries, excluding arrears from the $100 billion promise.

The discussions will feed into  the finance conversation at COP28, where the items in focus are likely to be the doubling of adaptation finance, the delivery of the $100 billion target and the setting of a post-2025 goal for climate finance — the NCQG.

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