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What Needs to Happen for the New Climate Finance Goal to Succeed?

Progress has been made toward defining the New Collective Quantified Goal on Climate Finance, but as COP28 approaches, the stakes are getting higher.

As climate change increasingly brings extreme weather, claiming lives and harming the economies and infrastructure of developing countries, the need for financial support to combat and mitigate these impacts has only increased. Now, in the second year of the process of setting the New Collective Quantified Goal on Climate Finance (NCQG), it’s time for countries to change gears and focus on outcomes. Over the past year, the government of Germany has supported RMI’s Climate Finance Access Network to coordinate a group of NGOs and think tanks in providing substantial input into the NCQG work program. Three technical papers, three expert panel convenings, and participation in multiple discussions and events later, we look to share some of the insights we have gleaned ahead of SB58 — the June 2023 UNFCCC session in Bonn, Germany.

Acronyms to Know

  • CMA – Conference of Parties serving as Meeting of Parties to the Paris Agreement. This is the meeting of the governing body of the Paris Agreement.
  • COP – Conference of Parties. These yearly conferences are where key climate negotiations take place.
  • HLMD – High Level Ministerial Dialogue. These dialogues occur during each COP and are a chance for ministers to weigh in on the NCQG process.
  • NCQG – New Collective Quantified Goal on Climate Finance. This is the new climate finance goal to replace the $100 billion a year commitment to developing countries in 2025.
  • TED – Technical Expert Dialogue. These technical meetings provide a platform for experts to exchange knowledge and share best practices on specific topics related to climate change.
  • UNFCCC – United Nations Framework Convention on Climate Change. This is the UN treaty established to coordinate the global response to the threat of climate change.
Establishing some context: 2021–2022

At COP15 in Copenhagen, developed countries agreed to the goal of mobilizing $100 billion yearly to support climate actions in developing countries. In the adoption of the Paris Agreement in 2015, this goal was extended until 2025. The international community also recognized that a new finance goal reflective of developing countries’ evolving needs and priorities should be set prior to the 2025 deadline.

It wasn’t until 2021, in Glasgow, that Parties initiated the formal process of setting this new global finance goal. They established an ad-hoc work program on the NCQG that includes four annual technical expert dialogues (TEDs) and an annual High-level Ministerial Dialogue (HLMD) designed to run through COP29 in 2024. Setting the new financial target got off to a slow start in the first year: Even though Parties had in-depth discussions in the TEDs, made submissions, and had a high-level engagement at the Ministerial level, there was no concrete outcome at COP27 in November 2022. The lack of content in the decision adopted at COP27 to guide further deliberation of setting the goal frustrated many developing countries. This brings us to 2023, and an increasingly tight timeline.

What should we expect this year?

There are four TEDs happening in 2023, each focusing on different decisive issues for the NCQG. The first, TED5, was held in Vienna in March to address the timeline and the structure of the Goal. Parties and non-party stakeholders had no time to make submissions on the topics ahead of TED5, but were nevertheless able to identify opportunities and challenges of the options presented along with the guiding questions. The dynamic format of TED5, which divided participants into different working groups and offered clear guiding questions, allowed participants to have candid and focused discussions.

The summary report of TED5 and the workplan of the co-chairs for 2023 was published at the end of March 2023. This report captured the discussions that were held during TED5 including clustering and merging some of the options discussed, and identified areas requiring subsequent discussions. For instance, the co-chairs in their report have clustered the different options into short (five year), medium (10 year), and long (25 year) timeframes along with a combination of medium timeframe with an aspirational target to align with net-zero targets by 2050. The 2023 work plan of the co-chairs identified topics for the upcoming three TEDs, which will help Parties and other stakeholders to prepare in advance.

Topics for Upcoming Technical Expert Dialogues
TED6: Quantity and Mobilization and Provision of Financial Resources
TED7: Quality and Transparency Arrangements
TED8: Stocktake

The annual High-level Ministerial Dialogues are an opportunity for engagement from policymakers, something that is critical given the new goal will require significant political buy-in if Parties are going to deliver on their commitments. Unfortunately, recent dialogues at this level consisted primarily of Ministers delivering statements rather than exchanges on high-level issues in need of ministers’ guidance. The upcoming HLMD would be better serviced by active participation from Ministers who can offer their insights into the issues being considered. A COP28 decision on the NCQG should capture and crystalize incremental progress toward a consensus in 2024 and ensure the decision to be taken is more than procedural.

What can be improved?

Though “nothing is agreed until everything is agreed” when it comes to UNFCCC processes, it is important that Parties already start considering narrowing and/or merging options in the TEDs instead of still having them all on the table at COP29 when the new goal is mandated to be set. While topics may vary, many of them are interlinked and Parties may have to consider them again in other TEDs and negotiation sessions. For instance, the topic of timeframe is linked to the structure of the goal, while the review and revision of the goal is linked with the transparency arrangements.

With that in mind, here are some suggestions how the process could be improved:

  1. Parties should give the mandate to the co-chairs to narrow down the options based on the discussions at the TEDs. The narrowed down options could be included in the co-chairs’ summary reports after each TED.
  2. Parties should continue to triage at the TEDs which issues require political direction and which ones should be handled on a technical level. This will provide guidance for the discussions during the HLMDs.
  3. Parties should encourage broader participation from other stakeholders including the private sector, academia, and civil society especially from the Global South. This would allow non-party stakeholders — particularly the civil society and academia in the Global South — to engage in the process including producing technical materials to be used in setting the goal.
  4. In the HLMDs, Ministers should be given high-level questions and have a set-up of small breakout groups where they can speak to the topics and have discussions while not delivering statements.
  5. The timing of the HLMD also matters. It should be in the early days of the CMA, so that negotiators take the guidance provided by their Ministers and flesh out the technical details at their level.
  6. Parties should not wait until 2024 to decide on each and every element of the goal. The COP28 outcome should include a substantial decision on the NCQG capturing progress made during the TEDs and at the COP including the outputs from the HLMD.

In a recent panel discussion, we brought together experts to reflect on where things stand in the progress of determining the NCQG. A primary takeaway became clear, as articulated by Sofia Vargas of Colombia’s Ministry of Finance and a chief finance negotiator: the new climate finance goal cannot be developed in a vacuum. The suggestions offered above, and by our expert panelists, will help ensure this is achieved.

New to the NCQG? Start with our explainer!