Consensus on new climate finance goal remains elusive

• Developed countries say they have mobilised and transferred $115 billion in 2021-22 – though developing countries claim that target has not yet been met – but as per the Paris Agreement, a new target above $100 billion must be agreed upon by 2025.

Highlights:

• The NCQG represents the financial commitment by developed nations to support developing countries in their transition to sustainable energy, curbing greenhouse gas emissions, and adapting to climate change impacts. It builds upon the earlier pledge of $100 billion annually, which has remained unmet, and aims to set a more ambitious target post-2025.

Major Disagreements

Developing Nations' Stance:

• Propose trillions of dollars annually by 2025 to support climate action and adaptation.
• Emphasize grants and low-cost loans to ensure accessibility and fairness.
• Demand contributions proportional to historical emissions and per capita GDP of developed nations.

Developed Nations' Stance:

• Avoid strict definitions of financing modes (e.g., grants vs. investments).
• Advocate broader inclusion of private-sector investments as part of climate finance.

Distinction Between NCQG and Climate Finance:

• Developing nations demand a clear demarcation of NCQG from general climate finance, which often includes profit-driven investments.
• For instance, global climate finance flows reached $1.3 trillion annually (2021–2022), but much of it does not directly benefit vulnerable regions or communities.

Allocation to Vulnerable Groups:

• Least Developed Countries (LDCs) and Small Island Developing States (SIDS) insist on a fair share of the funds.
• Concerns arise from historical trends, where public finance formed only $20 billion of the earlier $100 billion target.

Accountability and Transparency:

• Developing countries stress the need for clear frameworks to ensure timely and equitable fund disbursal, unlike past commitments marred by delays and discrepancies.

Voices from the Negotiations:

• India:
  • Union Environment Secretary Leena Nandan called for a structured approach to NCQG, demanding $1.3 trillion annually, with at least $600 billion in grants. She criticized reliance on private-sector investments, which often fail to address the needs of vulnerable populations.
• Marshall Islands:
  • Tina Stege, the climate envoy, expressed frustration over the lack of urgency in the negotiations. Highlighting the existential threat faced by island nations, she lamented the disconnect between the draft text and real-world climate challenges.

Key Challenges

• Balancing Equity with Feasibility:
  • Developed nations argue that massive commitments may be difficult to meet without leveraging private capital, while developing nations view this as a dilution of their demands.
• Reconciling Growth with Justice
  • Historical emitters face mounting pressure to shoulder a larger share of the financial burden, but geopolitical tensions often overshadow such deliberations.
• Urgency vs. Delays
  • The lack of a concrete agreement by 2025 could derail progress on the Paris Agreement goals, pushing the world closer to the feared 2.7°C warming scenario.

Looking Ahead:

• As the negotiations enter their final hours, finding a middle ground is critical. A possible compromise might include:
  • Setting a transitional NCQG with phased targets (e.g., $1 trillion annually by 2030).
  • Ensuring a minimum percentage of grants in the total finance package.
  • Instituting robust accountability mechanisms for fund allocation and impact measurement.

Prelims Takeaways

• New collective quantified goal (NCQG)