NCQG(New Collective Quantified Goal)

United Nations Framework Convention on Climate Change (UNFCC) Parties have made new submissions for the New Collective Quantified Goal (NCQG) under the Paris Agreement.

Background:

• COP29 in Baku, Azerbaijan, set for November 11-24, 2023, will focus primarily on climate finance.
• COP27 in Sharm el-Sheikh established a Loss and Damage Fund for climate disasters in developing nations.
• COP28 in Dubai emphasized the Global Stocktake (GST), recognizing the need to transition from fossil fuels and promising to triple global renewable energy capacity by 2030.

About New Collective Quantified Goal (NCQG):

• Purpose: Increase funding from developed countries to support climate action in developing nations, starting from 2025.
• Current Status:
  • Technical aspects of NCQG were finalized at a minister-level meeting in Copenhagen, Denmark, earlier this year.
  • The goal addresses the shortfall in the previously set target of mobilizing $100 billion annually, which has not been met.

Financial Requirements and Challenges

• Scale of Needs:
  • Developing countries need about $6 trillion annually until 2030 for climate action plans, per the UNFCCC secretariat (2021).
  • A transition to a low-carbon economy may require $4-6 trillion annually until 2050.
• Current Challenges:
  • Actual annual climate finance is well below the $100 billion target.
  • There is a significant need for funding in adaptation and loss and damage, which are currently underfunded.
  • India’s Position: Advocates for at least $1 trillion per year from developed countries in the form of grants and concessional finance starting from 2025.

Economic Implications

• The G-20 New Delhi Leader’s Declaration highlighted the need for $5.8-5.9 trillion for transitioning to a renewable energy-driven economy by 2030.

Key Issues in Current Climate Financing:

• Over 80% of climate finance was concentrated in OECD and East Asia Pacific regions between 2011 and 2020.
• Mitigation receives the majority of funding, with adaptation comprising only 8% of total climate financing in 2019-2020.
• Nature of Finance: About 94% of climate investments are through debt or equity, which are return-seeking.

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