Climate 101: NCQG, The Key Climate Goal Behind the Acronym
A new global climate finance target may be the only way to meet our climate goals — but it must be ambitious
In a world of climate acronyms, one has been getting more airtime this year. Yes, we know: the alphabet soup of international organizations, treaties, and energy shorthand can make it hard to keep track of what’s important and what everything means.
This one’s important.
This one represents the most important climate finance goal you may never have heard of before this year: the New Collective Quantified Goal on Climate Finance, or NCQG.
This is its year.
Why Do We Need a New Goal?
New is the operative word here. Back in 2009, climate negotiators established a climate finance goal, commonly referred to as $100 billion per year by 2020 or simply “the $100 billion.”
Developed countries made a commitment to collectively mobilize US$100 billion a year to help developing countries achieve their climate goals. The goal was supposed to be fulfilled by 2020, and has since been extended to 2025.
For a number of reasons, the $100 billion was contentious from the start. Let’s get to the biggest point right away: It has been a challenging goal to meet, and the speed and scale of finance required has fallen short.
That said, in 2020, developed countries managed to hit $83.3 billion in funding, and finally crested $115.9 billion in 2022. But while the amount has been met as stipulated, it has not done so fast enough to keep up with the skyrocketing needs of countries on the frontlines of climate change. It is also considered by many to be insufficient, especially when considered in the context of the billions of dollars of damage wreaked by climate-fueled natural disasters each year — to both poor nations and wealthy ones. It is likely that trillions — rather than billions — are needed.
The other major issue is that the $100 billion, the first climate finance goal of its kind, was established by developed countries as a political goal, but without the process needed to rigorously quantify countries’ needs for climate finance and without clarifying what “climate finance” means. (See call-out box, below.) It was also notoriously hard to access. (You can learn more about the initiative RMI founded to meet this access challenge here.)
The gaps left by this goal were acknowledged in 2015 during the Paris Climate Agreement, where decisions specified that a new goal needed to be set by 2025 that considers the needs and priorities of developing countries. Finally, at the UN’s annual global climate change conference, or COP, held in Glasgow in 2021, the deliberations for a new goal began with the establishment of a work program that will conclude its work this year: at COP29, in Baku, Azerbaijan.
Over the course of the past three years, experts from around the world have been working to narrow down the technical aspects of the goal, such as its structure and scope. While these have yet to be determined — that’s the hard part, and what the negotiations at COP29 will settle on — one thing is certain. This time, Parties are taking into account the pitfalls and lessons learned from the $100 billion goal.
It is clear to experts and contributors around the world that this new goal must be heavily informed by the needs, priorities and input of developing countries and other relevant stakeholders. It will also have to be quantified — based on technical inputs from experts.
The hope is that it will be based on the needs and priorities of the developing countries receiving climate finance.
Climate finance: Can I get a definition?
There is not one agreed definition of climate finance. Broadly, it’s understood as finance that aims to either mitigate emissions or reduce the vulnerability of humans and the environment to climate change impacts. Within the international political and climate space, it’s understood as the flows from developed to developing countries for mitigation and adaptation activities.
However, it gets murky when you consider that developed countries are already contributing to development projects in the Global South in the form of official development assistance (ODA). While some development projects can achieve climate goals and vice versa, ultimately, climate commitments and development aid are two different obligations. Yet, in some cases, developed countries will repackage their ODA finance into climate finance.
As you can imagine, this open-to-interpretation definition creates massive problems and is especially damaging to the trust between the Global North and Global South. It also creates issues in tracking actual flows of climate finance, and can lead to underreporting or overestimating. In the context of our shortfalls in reaching the $100 billion and deliberations toward a new climate finance goal, the lack of a clear definition for climate finance presents a major challenge for the international community.
So, What’s the New Number?
What the new number will be is the million — or trillion — dollar question. There’s research on what developing countries’ needs actually look like and what’s achievable. The most recent Needs Determination Report estimates that roughly US$5–$6.9 trillion is needed to implement developing countries’ mitigation and adaptation plans — about US$455–$584 billion per year.
This value could be considered as a point of reference for the goal, but of course there are countries who object to the amount as unrealistic. There will be a lot that goes into that target, including the type of financial instruments, the role of different actors, scope of the goal (support for adaptation, mitigation, loss and damage), and what sort of contributions and whose contributions will count toward it.
The biggest issue developing countries experience with climate finance is that of access. While the amount of climate finance available to developing countries has indeed increased (while still falling short), it is very challenging for capacity-constrained countries to access these funds.
The climate finance system has become exceptionally complex, bureaucratic, and challenging to navigate — meaning that countries that desperately need support to survive and thrive in a climate-impacted world will sometimes wait years for critical funds to be disbursed. And donor countries, who want to see these funds making an impact, worry that they’re not reaching the projects that will make the greatest impact.
Will this single goal solve the maze that climate finance has become? It is an opportunity to improve the system — a reset button. It can lay out a roadmap and guidelines that make the system far more functional, efficient, and effective. Equally importantly, it can provide recognition and a template for meeting the scale of support that is needed to effectively tackle the climate crisis.
What will happen at COP29?
The NCQG is the primary focus of the COP29 agenda, which means that you’ll be hearing a lot about it as part of the negotiations during the two weeks in Baku. It’s a negotiation that has already been contentious, and will continue to be as the many different aspects of the NCQG get hammered out: from the numbers to the process of assessing and updating the goal itself to defining climate finance and determining what — and who — counts as contributions/contributors.
The end result, provided there is no negotiation stalemate (which is possible), will be a new climate finance goal. And the next steps will be implementing it. Finance underpins all climate solutions, ambition, and goals. Its speedy mobilization and access will be critical to actually meeting those goals.
Simon Stiell, UN climate change executive secretary, said, “At COP29 in Baku all governments must agree to a new goal for international climate finance that truly responds to the needs of developing countries. COP29 must be the stand-and-deliver COP, recognizing that climate finance is core business to save the global economy and billions of lives and livelihoods from rampaging climate impacts.”
Mahlet Eyassu Melkie, a senior associate at RMI who has facilitated several expert dialogues for the UNFCCC and who leads work on RMI’s Informing the NCQG Process, agrees that this is a moment for bold ambition. “This is the culmination of years of work and input from experts, leaders, and climate finance practitioners, not to mention those on the frontlines of climate change themselves. We’ve seen tremendous collaboration across dozens of meetings, ministerials, dialogues, and negotiations. This is an opportunity to build trust between developed and developing countries: to set an ambitious goal that takes into account the needs and priorities of developing countries with clear accountability, monitoring, and tracking — to ensure we leave no one behind.”
Where can I learn more?
Outside the official TEDs, developing countries, non-governmental organizations, and climate finance experts have been using their voices to raise key issues and provide critical feedback to the deliberations. RMI’s Climate Finance Access Network (CFAN) is part of this conversation.
Through our “Informing the NCQG Process” CFAN and its partners have provided science-, evidence-, and equity-based input to inform the key conversations surrounding this new goal by bringing together climate finance experts to develop technical papers exploring different aspects of the NCQG. To keep up on the latest and learn more about the NCQG, follow our webpage here.
RMI staff, including CFAN’s embedded climate finance advisors from the Pacific and Caribbean, will be at COP29 to follow the negotiations and stand ready to support the new goal.
