The impacts of climate change are becoming more severe all around the world. To combat the issue, one of the most significant global efforts currently underway is the initiation of the New Collective Quantified Goal on Climate Finance (NCQG).
Nations will look to adopt the new finance goal for global climate action at this year’s Conference of Parties (COP29) in Baku, Azerbaijan, in November.
This climate finance goal is set to be finalized by 2025, initially conceived in 2021. The new global finance goal is being designed to ensure that the financial resources needed to fight climate change are mobilized effectively, especially to help developing countries in the climate crisis.
But what exactly is the NCQG, and why is it so important in the global fight against climate change?
First, let’s briefly discuss climate finance before we get to NCQG.
What is Climate Finance?
According to the United Nations Framework Convention on Climate Change, climate finance
“refers to local, national, or transnational financing—drawn from public, private, and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change.”
Climate finance is to help countries address climate change by both reducing greenhouse gas emissions (mitigation) and adapting to its effects.
Wealthier nations of the world, under the UNFCCC, Kyoto Protocol, and Paris Agreement, are responsible for helping developing and vulnerable countries in climate change actions.
The Global Environment Facility (GEF) and Green Climate Fund (GCF) manage this support in financial terms. The Standing Committee on Finance (SCF) improves coordination, tracks, and evaluates progress.
A goal to mobilize $100 billion in climate finance annually by 2020 was set in 2009 at the Conference of Parties at the Copenhagen Climate Summit. Under the 2015 Paris Agreement, this goal was extended to 2025, with plans to set a new finance target beyond 2025, starting from a base of $100 billion per year, while considering the needs and priorities of developing nations.
Governments are negotiating for a new set of goals planned for 2025 and onwards.
This new finance goal for climate change is called the New Collective Quantified Goal on Climate Finance or NCQG.
What is the NCQG?
The NCQG is a new global climate finance target that will be set by the Conference of the Parties under the Paris Agreement. It builds upon earlier promises to provide at least $100 billion annually in climate finance by 2020, which was only achieved in 2022.
The new goal will be set from a yearly baseline of $100 billion.
The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA).
The CMA, or Conference of the Parties serving as the meeting of the Parties to the Paris Agreement, is the group of all the countries that have agreed to the Paris Agreement.
The Paris Agreement 2015 is the landmark international agreement to fight climate change by reducing greenhouse gas emissions.
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015. It entered into force on 4 November 2016.
Its overarching goal is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.”
Source: UNFCCC
The CMA meets once a year.
| Location | Session | Conference | Date |
|---|---|---|---|
| Baku, Azerbaijan | CMA 6 | UN Climate Change Conference | Nov 2024 |
| Dubai, United Arab Emirates | CMA 5 | UN Climate Change Conference | Nov-Dec 2023 |
| Sharm el-Sheikh, Egypt | CMA 4 | Sharm el-Sheikh Climate Change Conference | Nov, 2022 |
| Glasgow, United Kingdom | CMA 3 | Glasgow Climate Change Conference | Oct – Nov, 2021 |
| Madrid, Spain | CMA 2 | UN Climate Change Conference | Dec 2019 |
| Katowice, Poland | CMA 1-3 | Katowice Climate Change Conference | Dec 2018 |
| Bonn, Germany | CMA 1-2 | UN Climate Change Conference | Nov 2017 |
| Marrakech, Morocco | CMA 1 | Marrakech Climate Change Conference | Nov 2016 |
Countries that haven’t signed the Paris Agreement can still attend CMA meetings as observers, but they can’t vote or make decisions.
The CMA may be similar to the COP (Conference of the Parties), but while the COP focuses on climate issues more broadly, the CMA specifically handles matters related to the Paris Agreement. The CMA’s mandate is to oversee and promote the effective implementation of the Paris Agreement. This responsibility is given to it by the COP.
This funding will focus on two key areas: mitigation and adaptation.
The United Nations Framework Convention UNFCCC implies “meaningful mitigation actions” and “transparency on implementation.”
The needs and priorities of developing countries will be taken into account in implementing climate change mitigation efforts.
The new goals in response to climate change aim to fight the issue in the context of sustainable development and eradicating poverty. Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
The CMA will look to make the finance flow consistent with targeting climate-resilient development. Lowering greenhouse gas emissions is already the key focus following the Paris Agreement. Climate diplomacy is looking for more measured approaches in lowering greenhouse gas emissions that do not threaten global food security.
NCQG became part of the global climate change discussion in 2021 to fulfill Article 2 of the Paris Agreement, which set a target to keep global average temperature rise below 2°C above pre-industrial levels. The new finance goals also look to limit the global average temperature increase to 1.5°C above pre-industrial levels.
These ambitious targets would help reduce the risks posed by climate change and enhance the ability to adapt to these changes.
Why is the NCQG Necessary?
The world has long recognized the importance of addressing climate change. Global average temperatures are on a rapid rise trajectory, primarily due to industrialization, fossil fuel burning, population growth, resource consumption, deforestation, etc.
Meaningful action in adapting to new challenges requires substantial financial resources. Trillions of dollars are required in climate change finance.
Countries involved in the Paris Agreement have agreed that the NCQG would help accelerate progress toward limiting the global temperature rise to well below 2°C, with efforts to keep it under 1.5°C.
Scientists tell us that staying within this temperature range is critical to avoiding the most severe consequences of climate change. These consequences are already wreaking havoc all over the world.
Extreme weather events, rising sea levels, and large-scale disruptions to ecosystems and agriculture have intensified.
How Will the NCQG Be Set Up?
The process of setting the NCQG began in 2021 with the creation of an ad hoc work program that focuses on technical discussions about the goal. These discussions are set to run from 2022 to 2024 through a series of Technical Expert Dialogues (TEDs), which are held four times a year.
These dialogues include input from Party and non-party stakeholders such as governments, climate experts, civil society organizations, youth voices, and the private sector.
One dialogue per year is arranged in conjunction with the first regular session of the subsidiary bodies. Another dialogue happens with the session of the CMAs.
The other two remaining dialogues are organized in separate regions to make these technical discussions more inclusive and balanced.
In 2022, TEDs sought to identify the NCQG’s goals with the needs and priorities of developing countries in mind. They identified ways to improve access to climate finance. Key climate issues, roles of public and private actors, lessons learned, and new experiences were also discussed at all four TEDs throughout the year.
In 2023, discussions advanced on key elements such as the financial goal’s structure, mobilization, transparency in implementation, and future plans.
Each year, a report is prepared to provide the summary and key findings of these expert discussions. These reports inform high-level ministerial dialogues (HLMDs), which will guide the final decision-making process.
Co-chairs of the ad hoc work program will hold regular consultations with constitutional bodies, such as the Standing Committee on Finance and United Nations agencies. Climate finance experts, the scientific community, and the private and public sectors will be consulted on the matter as well.
In 2024, the CMA will officially set the NCQG based on the work done during these dialogues.
Key Activities and Consultations of NCQG
In addition to the expert dialogues, several other key activities are shaping the development of the NCQG:
- Annual Reports: Co-chairs of the ad hoc work program produce annual reports summarizing the discussions and findings from the technical dialogues.
- Regular Consultations: The co-chairs also engage in regular consultations with a wide range of stakeholders, including United Nations agencies, finance experts, academics, and civil society, to ensure all voices are included in the decision-making process.
- Ministerial Dialogues: High-level political engagement is critical to the success of the NCQG. The first HLMDs were held in 2022 and 2023.
The CMA is tasked with closely monitoring and evaluating progress through stock-takes and technical reviews.
The goal for the CMA is to create a financial framework that is attainable, ambitious, and capable of supporting the world’s climate financial goals.
Key Challenges for NCQG
The success of the NCQG depends on an inclusive negotiation process that includes developing countries, the private sector, and civil society. It must balance ambition with accountability and transparency to help developing nations. There is a need to clarify the donor base.
Effective monitoring and accountability are crucial to avoid previous challenges. This requires transparent reporting and a fair finance distribution framework.
The NCQG aims to close the climate finance gap, support vulnerable communities, and boost global cooperation and private investment. The other agreements to be made at COP29 will also be key.
“The effectiveness of the NCQG will rely on robust monitoring and accountability mechanisms. Without clear guidelines and transparent reporting, the new goal could face the same challenges as its predecessor.”
Conclusion
The New Collective Quantified Goal on Climate Finance (NCQG) is a global plan to raise at least $100 billion per year in mitigation and adaptation measures against climate change. NCQG to be in action from 2025 onwards.
Its main purpose is to support efforts to reduce emissions, adapt to climate impacts, and promote sustainable development. The goal is set through ongoing discussions, with the final agreement to be made at 2024’s COP or COP29.
The NCQG will identify the financial sources needed to address climate change gaps. The goal will take into consideration upcoming challenges in the fight against climate change. With this goal, global climate actors can better track and evaluate sustainable development and climate finance flow.
