What might the new global climate finance target look like?

Elements of the new goal

Based on these mandates, over the past two years governments have used technical expert dialogues and annual climate negotiations to discuss what the goal should look like, with the co-chairs of the process drawing up a long list of possible options for the elements of the new goal.

Over the next seven months, the country's negotiators will need to make progress in smoothing out options so that at COP29 ministers can focus on key policy decisions.

Here are some of the key questions to solve, drawing on knowledge from the $100 billion experience:

quantity

The new target should be over 100 billion dollars per year and take into account the needs and priorities of developing countries. Estimates of needs from both bottom-up assessments and top-down modeling reveal that total global climate investment needs amount to many trillions dollars per year. Some countries have suggested expressing the goal as a percentage of gross domestic product or gross national income, rather than in dollars, and others have floated the idea of ​​measuring the goal in terms of results achieved, such as emissions reductions and growth of resistance to climatic influences. . A key question is how to disaggregate overall needs assessments: how much should be public and how much private finance, what part should be met through international funding and what part domestically? These questions are technical and political, touching on debates about the most effective mix of market and planned economies, principles of equality and national circumstances. Approaches to linking overall estimates of climate finance needs to specific sources of finance can assist negotiations.

NATURE

$100 billion was a single numerical goal that included multiple components: mitigation and adaptation, public and private resources mobilized, bilateral and multilateral delivery channels, and a wide range of financial instruments. This made it difficult to track progress and find an appropriate balance between each of these sub-components. Therefore, a number of countries have suggested that the new target include sub-targets and potentially take a layered approach, with smaller targets nested within larger targets. Governments will have to decide what the sub-targets and layers might be. They may include thematic objectives such as on adaptation, mitigation and loss and damage; funding sources such as public, mobilized private finance and innovative sources; and geographic extent, such as international flows, domestic resource mobilization and global totals.

quality

The $100 billion commitment did not say much about the qualitative elements, such as the types of financial instruments that could be used or the ways countries should be able to access financing. Many climate-vulnerable countries are struggling with sovereign debt crises, greatly exacerbated by growing climate impacts, and face significant barriers to accessing affordable climate finance. Therefore, a number of governments have argued that the new goal should include qualitative elements, such as principles for financing, targets for improving access and the inclusion of marginalized groups. Some quality criteria can also be partially expressed in quantitative terms, such as targets for grant-based funding or allocations to particularly vulnerable countries.

Contributors

The $100 billion commitment was for developed countries to mobilize finance for developing countries. The terms developed and developing countries have never been explicitly defined under the UN Framework Convention on Climate Change, but 39 countries have joined in reporting how they are meeting the $100 billion target. These countries have contributed about half of cumulative emissions in the atmosphere and own a large share of global wealth, so you have a significant responsibility for the climate crisis and the capacity to provide support. The mandate for the new goal does not specify which countries will be responsible for its realization; governments will need to determine the base of contributors. Developed countries have argued that since a number of other countries now have similar or higher levels of wealth and emissions (either measured in aggregate or per capita terms), these countries should join them in contributing to the goal new. This may include different sets of sites that contribute in different ways to different elements of the goal. Some governments have also argued that the goal should include private sector funding and innovative funding sources, such as taxes on shipping and aviation. A key question is who will be held accountable for contributions from these sources, given that the goal is being negotiated by sovereign states and non-state actors would not be formal Parties to the commitment.

Linking to the Paris Agreements long-term objective for finance

The $100 billion target predates the Paris Agreement and focused solely on mobilizing finance from developed countries to developing countries. The 2015 Paris Agreement included, as one of its three long-term goals, Article 2.1c which aims to make financial flows consistent with a path towards low greenhouse gas emissions and climate-resilient development. This was significant, as it was the first time that UN climate negotiations set a financial target that reflected the full scale of efforts needed to address climate change; including public, private, domestic and international financial flows. Article 2.1c also looks beyond increasing climate positive finance to the imperative to phase out funding for activities that are incompatible with climate goals, such as fossil fuels. The mandates for the new goal instruct negotiators that the purpose of the goal is to contribute to the acceleration of the achievement of Article 2 of the Paris Agreement, including financial target 2.1c. Therefore, a key question will be how the newly quantified goal relates to the long-term goal. This could be by having elements of the new goal that address the broader scope of financial flows, such as reforming fossil fuel subsidies, or linking quantitative targets for securing and mobilizing international climate finance to the wider transition. global towards net zero and resilient economies.

Time frames and review

Developed countries had more than a decade between reaching the $100 billion target and needing to meet the target, and the commitment spans six years, from 2020 to 2025. The new target must be met before 2025, but the timeline will cover is not set. Governments have suggested various options, including five years (the same frequency as NDC submissions and global stocks under the Paris Agreement), 10 years and 25 years (ie 2050, when the world must reach net zero emissions). Some countries have suggested a combination of a long-term target and interim targets. Related to time frames is the question of whether and how the goal would be revised over time. Given how long the current negotiations on the goal have taken (nine years between the creation mandate and planned completion, and three years of actual negotiations), the frequency, criteria and process for reviews will be key questions to answer.

Monitoring and reviewing progress

The quality and consistency of climate finance reporting has been one of the major challenges in assessing progress towards the $100 billion target. or the new system on how countries report on efforts under the Paris Agreement comes into effect this year. For the first time, all countries will report every two years using the same guidelines. This new process can hopefully lead to an improvement in the consistency and quality of climate finance reporting. However, some countries have suggested the need for revisions to these rules in light of the new goal (reporting guidelines are in any case up for review in 2028), and others have suggested the creation of other reporting and tracking systems for the goal, with potentially more frequent reporting. New systems could also include the task of an independent entity trusted by all countries to assess progress towards the goal.

This is by no means a comprehensive list and is only an overview of the main debates on each issue; We'll dive deeper into these questions and our recommendations in future parts.

Next steps

It is essential that negotiators be prepared to have frank and focused discussions on the key elements of the goal at this year's three technical meetings and identify a set of broken-down options that can be included in the framework for a draft negotiating text. For more contentious areas where technical negotiators can get stuck, government leaders should provide political guidance. Ministers will meet in the third quarter of 2024 for a high-level ministerial dialogue, but before that there will be many other venues, including the Petersberg Climate Dialogue, the G7, the G20 and the UN General Assembly where heads of state and ministers will have critical opportunities to find common ground.

Preparation is the key to success. While the new climate finance goal undoubtedly touches on topics that are particularly sensitive to governments in a year where over half the world's population will go to the polls, delaying discussion of the issues is unlikely to lead to an ambitious outcome. high at COP29. . Governments must engage openly, explaining their needs and constraints, and seek common ground for a clear, ambitious and achievable goal that empowers all countries to do more to tackle the climate crisis.