Climate 101: NCQG, the Most Important Climate Goal You’ve Never Heard of
A recently revised global climate finance target — the New Collective Quantified Goal on Climate Finance, or NCQG — may be one of our best ways to address climate change.
There’s a new acronym on the scene. We know, we know. In the alphabet soup of international organizations, treaties, and energy shorthands, another acronym can get lost in all the climate jargon.
But this one is different — it represents the most important climate finance goal you’ve probably never heard of: the New Collective Quantified Goal on Climate Finance, or NCQG. And we’re here to tell you why you should keep it on your radar.
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.
This was the commitment developed countries made 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.
If there’s one acronym to memorize for COP27, it’s the NCQG — the most important climate finance goal you’ve probably never heard of.Tweet
Why Do We Need a New Goal?
For a number of reasons, the $100 billion was contentious from the start. Let’s get to biggest point right away: The goal has never been reached.
In 2020, developed countries managed to hit $83.3 billion in funding, and while the amount has increased each year as stipulated, it has not done so fast enough. 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.)
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 last year’s COP26 in Glasgow, the deliberations for a new goal began with the establishment of a work program that should conclude its work by COP29 in 2024.
Although the structure and scope of the new goal are yet to be determined, one thing is clear. This time, Parties are taking into account the pitfalls and lessons learned from the $100 billion goal.
This new goal will be heavily informed by the input of developing countries and other relevant stakeholders, and developed countries will not be the sole contributors. It will be collective in that it will lay out joint efforts for both mobilizing and delivering the funds. It will also have to be quantified — based on science, data, and evidence to reflect the needs of the countries receiving climate finance.
Climate finance: Can I get a definition?
There is no established, comprehensive 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 impact. 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, particularly 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?
We haven’t gotten to the number yet, but there’s research on what developing countries’ needs actually look like and what’s achievable. The currently estimated needs of approximately $600 billion per year are based on what these countries have set as their nationally determined contributions to emissions reductions and adaptation efforts.
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’s going to be a lot that goes into resetting the 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 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? Likely not on its own — but it can lay out a roadmap and guidelines that make the system far more functional, efficient, and effective.
Will the NCQG Be Discussed at COP?
The NCQG is on the official COP27 agenda, which means that you’ll be hearing about it as part of the negotiations during the two weeks in Sharm el-Sheikh. There are a lot of different parts to the NCQG, 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.
Over the course of the past year, a series of technical expert dialogues (TEDs) have been held to inform this process and make progress on key issues. One of these TEDs and a high-level ministerial dialogue on the topic will be held at COP27. There, the conversation around access to finance will be a priority.
Mahlet Eyassu Melkie, a senior associate at RMI who has facilitated several expert dialogues and who leads work on RMI’s Informing the NCQG Process, contends progress is possible at COP27 if parties take the outcomes of these discussions and draft key elements of the NCQG decision. Creating a working document that they can come back to next year, she adds, would go a long way in terms of streamlining and shortlisting what the NCQG needs to cover.
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.
The Informing the NCQG Process seeks to provide 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.