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Expert comment: Did COP29 end with a good New Collective Quantified Goal decision?

This piece was originally published on 24 November on the ODI Global website.

Introduction

As the ODI team packed their bags for Baku two weeks ago, we highlighted the key sticking points in negotiations over the New Collective Quantified Goal on climate finance – known as the NCQG. These included: how much (the quantum), from whom (the contributor base), for whom (access) and additional elements that would enhance the quality of finance being provided to where it is needed the most.

This blog is a follow up: did we get a good NCQG decision?

The quantum of climate finance

Reaching a deal on the NCQG quantum was, in part, held back by developed countries’ reluctance to put a number out. A number dropped on the last Friday of the COP, hours before the summit was due to close: $250 billion a year by 2035 from a wide variety of sources. This was lifted to $300 billion in the final decision.

The initial proposal led to much outrage. A goal of $250 billion a year in over a decade lacked ambition – particularly when that figure encompasses both public and private sources, and all climate outflows from the multilateral development banks (with some ambiguity over whether those outflows attributable back to developing country shareholders would be counting towards the goal and de facto resulting in developing countries contributing to the goal). Going into COP29, analysis by NRDC, ODI Global, GermanWatch and ECCO concluded that developed countries would reach $197 billion by 2030 even under a business-as-usual scenario.

The quantum was lifted to ‘at least’ $300 billion in the final decision with the complement of a ‘Baku to Belém Roadmap to $1.3 trillion’. Such a roadmap, to be reported on by the Presidency at the next COP in November 2025, should seek to identify how to scale up quality climate finance to developing country Parties.

While this roadmap is couched in the the context of finding $1.3 trillion a year for developing countries by 2035, few are likely to be surprised by its ultimate contents. We can imagine it will include improvements in private finance mobilization and the ongoing reforms to the MDBs, new taxes, voluntary additional contributions from developed countries’ public budgets, for example.

The terms and conditions of the $300 billion will ultimately show if it represents a greater fiscal effort than the 2009 goal to mobilize $100 billion by 2020 from developed to developing countries. In the context of recent political developments, the burden of this fiscal effort may also shift. In his first term as President, Trump withdrew the US from the Paris Agreement. He is now reportedly under pressure to withdraw from the UNFCCC. ODI Global analysis suggests that the US should be responsible for 45% of the quantum, whatever that number might be. If the US does not contribute to the NCQG, the $300 billion represents a more ambitious goal for the remaining developed country bloc.

Fair share of climate finance goal, based on historic responsibility for climate change, capacity to pay and population.

The contributor base

Developing countries have long provided climate finance to other developing countries on a voluntary basis, but their contributions go largely unrecognised as they do not report on this provision. ODI Global analysis finds that China, India and Brazil collectively provided nearly $5 billion in 2022 just through their multilateral contributions, in addition to their extensive but unreported South-South cooperation. However, developed countries wanted the NCQG to go beyond voluntary contributions, and see some developing countries assume obligations for climate finance.

The compromise reached was that the NCQG decision needed to reflect this solidarity without changing the status of developing countries. In the final text, developing countries are encouraged to contribute to the $300 billion, voluntarily, as is their reporting of contributions. Uncertainty remains as to whether MDB outflows that are attributable to developing contributions – as they too contribute to these institutions – will be counted towards the goal or not. In parallel, the text makes reassurances that additional contributions by developing countries to the goal will not not affect their development or recipient status for other aspects of the Paris Agreement.

Moreover, some developing countries sent important signals around solidarity and climate finance during COP29. China indicated its willingness to continue its South-South climate finance flows, and shared information on its provision and mobilization since 2016, while Singapore, a developing country under the climate convention, also announced a $500 million pledge at COP29 to support decarbonization in Asia.

Tony Kamninga quote card-14

Access to climate finance

Scarce concessional finance plays an outsized role in lower-income countries and small island states, but these are also the countries that struggle the most with the fragmented climate finance architecture and its high transaction costs. The NCQG decision sets an overall direction for enhancing access to climate finance, with over a page out of the five pages of text devoted to this critical challenge.

Despite the number of paragraphs dedicated to enhancing access, the decision language is around urging and underscoring implementable actions to this end, which was weaker than hoped to see rapid and concrete action. It is well understood that some actors, who operate beyond the mandate of the UNFCCC, could only be ‘called upon’, but it is hoped the many shareholders and board members of these institutions in the room take note. A special review of access to climate finance was included in the decision text by 2030, that holds some hope that there is collective willingness to ensure climate finance gets to those who need it the most, in particular for the least developed countries and small island developing States.

Michai Robertson quote card-1

Finance for addressing loss and damage

Developing countries had wanted the NCQG to provide finance for climate mitigation, adaptation and loss and damage, and loss and damage remained in options in the early draft texts. However, the final decision affirms that the climate finance goal is aimed at accelerating the achievement of Article 2 of the Paris Agreement, which articulates long-term goals on mitigation, adaptation and climate consistency of finance flows.

The NCQG decision does acknowledge the gaps in responding to loss and damage, the need for urgent and enhanced action and support, and the importance of public and grant-based resources. It also ‘decides’ that a significant increase of public resources should be provided through the operating entities of the Financial Mechanism, one of which is the new Fund for Responding to Loss and Damage (FRLD). Some negotiation in the early hours of Sunday allowed the inclusion of the pursuit of efforts to at least triple the annual outflows from these funds by 2030, an effort to ensure particularly vulnerable countries have access to more grant-based resources than through other channels. However, given the range of options available, such text largely maintains the status quo on loss and damage finance.

Nonetheless, some developed countries signalled support towards addressing loss and damages during COP29. Australia and New Zealand made their first pledges to the new Fund for Responding to Loss and Damage, worth AU$50 million (US$32.6 million) and NZ$10 million (US$5.9 million) respectively. These are welcome commitments, particularly considering the possibility of an Australia-Pacific COP31 Presidency in 2026.

Over the next year attention must also be paid to ensuring that adaptation finance is not forgotten. The dire need for more adaptation finance had not been prominent throughout the three-year discussions on the NCQG. As we near the 2025 target year to double adaptation finance, how the Baku to Belém Roadmap to $1.3 trillion picks up the adaptation finance challenge should be front and centre.

So, what’s the verdict?

Two weeks ago, we stated that a good NCQG outcome would encourage ambition, enhance clarity and enable cooperation on climate action. How well did the NCQG outcome at COP29 deliver on these fronts?

Does the NCQG decision encourage ambition?

The text stresses the urgency of enhancing ambition and action in this critical decade, noting the IPCC findings and highlighting the costed needs reported by developing countries.

But the quantum does not reflect this urgency. The pledge of $300 billion a year by 2035 will not convince anyone that we will get to the $1.3 trillion a year needed by developing countries to respond to the climate emergency; historic public to private capital mobilisation ratios are more like $1 of public finance to 22 cents of private finance. There is also limited ambition on enhancing the quality of finance, with half-hearted calls on improving access and no specificity on what a ‘balance’ of mitigation and adaptation finance means.

As a block, developed countries have not demonstrated ambition on the quantity or quality of climate finance. The Baku to Belém process will need to build bridges to allow ambitious targets to be submitted in developing countries next round of NDCs.

Does the NCQG decision enhance clarity?

Our blog at the start of COP emphasized that the key to a good NCQG decision would be ensuring that each actor in the climate finance architecture knew what they had to deliver and for what they could be held accountable. We particularly hoped for a better narrative linking the core of public finance from developed countries to the $1.3 trillion needed by developed countries.

Getting to the much-needed $1.3 trillion a year will be hard, requiring concerted action and innovation by a wide range of actors. Getting beyond ‘urging’, ‘welcoming’ and ‘encouraging’ actors will be needed, and each actor in the climate finance system coming forward with strong commitments before the COP in 2025 will give more confidence that they have assumed responsibility for their share. Clarity on roles and responsibilities is also needed to realise other aspirations in the NCQG, such as the inclusion and extension of benefits to vulnerable groups, including women and girls. We have work to do to make sure everyone is on the same page and can be held accountable within or outside the multilateral system.

Does the NCQG decision enable cooperation?

We had high hopes that the NCQG decision coming out of Baku would act as a springboard for multilateral collaboration and cooperation that could scale climate action. Despite the NCQG being a three-year process, the COP29 dynamics were heavy and some Parties on both sides worked tirelessly to ensure that a deal was made. The lack of trust and many diverging beliefs were clear throughout COP, with debates over the NCQG decision dividing even the most long-established Party and civil society groups.

Increased climate cooperation ultimately depends on demonstrable ambition and enhanced clarity on scaling climate finance, which would demonstrate solidarity as countries prepared their next NDCs. The NCQG text as its stands does not send a sufficiently strong signal on critical areas of cooperation, such as reform to the multilateral development banks and International Monetary Fund. While the Baku to Belem Roadmap may provide the space for continued cooperation with actors outside the UNFCCC system to scale up climate finance, – read as a whole – the NCQG decision does not offer the step change in the quantity and quality of climate finance needed to deliver the Paris Agreement.

The road to Belem is now bumpier than before.

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