TWN Info Service on Climate Change (May24/01)
2 May 2024
Third World Network

DIVERGENCES ON CONTRIBUTORS AND RECIPIENTS OF NEW CLIMATE FINANCE GOAL  

Delhi, 2 May (Indrajit Bose) — Divergences between developed and developing countries arose over who are to be contributors and recipients of the new finance goal, at discussions during the first meeting under the Ad Hoc Work Programme (AHWP) on the New Collective Quantified Goal on Climate Finance (NCQG) under the Paris Agreement (PA), which convened in Cartagena, Colombia from 25-26 April 2024.

(In Dubai last year, Parties decided to conduct at least three meetings under the AHWP in 2024 to come up with substantive framework for draft negotiations text for consideration, by the 6^th meeting of the Conference of Parties to the PA [CMA 6] to be held in Baku, Azerbaijan end of the year.)

Developed countries were of the view that the contributor base be determined based on evolving capabilities of Parties with the capacity to pay; level of emissions; countries’ gross domestic product (GDP) and gross national income (GNI). They also said there needs to be a discussion on who would receive the money.

Further, the United States (US) referred to the NCQG as being a “voluntary goal” for those that “choose to pay”, arguing that Article 9.3 of the PA has a “should” provision and not a “shall” provision. (Article 9.3 of the PA reads: “As part of a global effort, developed country Parties should continue to take the lead in mobilizing climate finance…taking into account the needs and priorities of developing country Parties…)

Developing countries responded that they had not decided to change principle of common but differentiated responsibilities and respective capabilities (CBDR-RC) to CBDR-ERC (evolving respective capabilities). They said the NCQG is a continuation of the USD100 billion annual goal, and the obligations of the developed countries do not change. They cited Article 9.1 of the PA to reaffirm the developed countries responsibility and said that all developing countries should be eligible to receive finance and they did not recognize the term “recipient base”.  (Article 9.1 of the PA reads: “Developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention”.)

During the discussions, disagreements emerged on the following areas: mandate of the NCQG; the structure of the goal; how countries view quantum, who would contribute to the goal and who would receive funding; whether loss and damage and Article 2.1 (c) of the PA (on making pathways consistent with low greenhouse gas emissions and climate resilient development) are part of the goal; the role of private sector actors, multilateral development banks (MDBs) and international financial institutions (IFIs) in the achievement of the goal; whether the goal would be revised after a certain timeframe; among others.

The meeting was Co-Chaired by Zaheer Fakir (South Africa) and Fiona Gilbert (Australia). Fakir said the aim of the meeting was to gather comprehensive views on the structure and key elements for the substantive framework. The Co-Chairs had also prepared an input paper for the meeting which had “no status”. Discussions during the meeting were categorized into general remarks, context, transparency, qualitative aspects, quantitative aspects and crosscutting matters.

Developing countries were united throughout the meeting, and all the G77 and China sub-groups, reiterated common messages and supported each other. These included the Africa Group, Like Minded Developing Countries (LMDC), the Arab group, Alliance of Small Island States (AOSIS), Least Developed Countries (LDCs), Independent Alliance of Latin America and the Caribbean (AILAC) and Group SUR (Argentina, Brazil, Uruguay and Paraguay). They reiterated that the framing for the context of the NCQG should contain Article 2 of the PA, and that the work is in the context of poverty eradication and sustainable development, as well as equity and CBDR-RC as the guiding principles.

Developing countries also stressed that loans should not be counted as climate finance, and that the transparency arrangements must make clear that the resources are additional and present a progression and different from the official development assistance (ODA) and other humanitarian assistance. They also said that loans at market rate and private finance flows at market rate of return cannot be termed as climate finance under the NCQG; rather they represent a reverse flow from developing to developed countries. They were also united on the point that the NCQG should provide a clear agreement on burden sharing among developed countries to establish their ‘fair share’ of their collective obligation to provide climate finance, which allows predictability, transparency, and accountability.

In response to developed countries that there is not enough public finance, some developing country groups said hundreds of billions of dollars were being allocated to countries to support wars, while climate finance is facing a challenge of being met from public sources; and that public finance is used for other purposes, when there is political will.

On the mandate of the NCQG, developing countries considered the goal in the context of the whole of Article 9 of the PA, including Article 9.1 which obliges developed countries to provide financing for mitigation and adaptation to developing countries. Developing countries also underscored the goal to be framed in accordance with the principles and provisions of the UNFCCC, namely, equity and CBDR-RC. However, developed countries were of the view that the mandate stems from Article 9.3 of the PA, and not the Convention.

On the structure of the NCQG, developed countries called for the goal to be multi-layered, with an overarching investment goal underpinned by different elements to get to the investment goal. Developing countries proposed to keep things simple and not go into complex layers. Some developing country groups gave the example of the UNFCCC’s Standing Committee on Finance’s ‘Biennial Assessment and Overview of Climate Finance Flows’ report (BA) and said the BA is an example of a multilayered approach and each successive edition of the BA states that it is not possible to provide aggregated information due to the use of different methodologies. They said they do not support a multilayered NCQG and instead advocated to draw lessons from the USD 100 billion annual goal and ensure finance flows to developing countries.

On the quantum, developing countries cited figures ranging in the trillions of dollars in accordance with their needs and priorities; however, the developed countries did not speak to any number. The US said USD 100 billion should be mentioned since that is the baseline.

On loss and damage, developing countries were of the view that as per their emerging needs, the NCQG should include loss and damage as a sub-goal.  However, Switzerland said it does not see loss and damage being included due to “liability” issues.

Developed countries on the other hand said that the NCQG is about fulfilling Article 2.1 (c) of the PA, but developing countries said the article is not part of the NCQG mandate and that a separate process is underway to determine discussions on the said article. Developed countries also emphasized on the need for enabling environments in developing countries to attract private sector finance, and focused on calls on the private sector, IFIs and MDBs to mobilise climate finance.

Developing countries countered saying that private sector would not venture into risky markets, and would not invest in adaptation and loss and damage. They added that the focus of the NCQG should be on public resources that are grant-based and highly concessional. They also said they must have a discussion on the dis-enablers of finance, which included high cost of capital, high transaction costs and unilateral measures by developed countries such as the carbon border adjustment mechanism (CBAM). Some developing country groups termed the CBAM as “punishment” on developing countries.

Developing countries were also of the view that the goal should be revised after a certain timeframe following a periodic review. Developed countries however said they do not agree with the goal being revised, adding that revision is different from a review, which is a “check-in” at best, and that they would not agree to revision of the goal.

In terms of next steps, the Co-Chairs are expected to come up with an iteration of the “substantive framework for draft negotiations text.” The second meeting of the AHWP will take place in conjunction with the Bonn session of the UNFCCC’s Subsidiary Bodies between 3-13 June.

Highlights of interventions by developing countries

Egypt for the Africa Group said the message from the NCQG would impact the second round of nationally determined contributions (NDCs). It said it does not agree to new references such as “recipients” and added that the Co-Chairs include only those elements that are in line with the Convention and the PA in their next iteration. It also said the NCQG should not be a top-down target but be based on the needs and priorities of developing countries. The decision structure must reflect the guiding principles of the Convention and the PA, including Articles 2.1, 2.2, 3, 4.5, 9.1, 9.3, 9.5, and 9.7; as well as decisions from Glasgow to Sharm el-Sheikh to Dubai on providing support for NDCs and national adaptation plans (NAPs), and reflect the evolving needs of developing countries. Egypt further said the second element of the goal would be the quantum based on the needs and suggested a timeframe of 5 years for the goal, aligning with the NDC and Global Stocktake (GST) processes. On sources, Egypt said it is clear in the Convention and PA on who will provide the resources and those with clear responsibility should be able to tell how much they are willing to contribute. It also said that there is no shortage of finance, but there is a shortage of political will. It added that the context must reflect that hundreds of billions of dollars were being allocated to countries to support wars and it should be reflected that climate finance is facing a challenge from public sources; yet the latter is being used for other things when there is political will.

Referring to an “un-enabling environment” (i.e. factors that are not enabling) as a qualitative element which needs to be highlighted in the NCQG, Egypt said the cost of capital was a major challenge for developing countries. It also said that despite constraints, developing countries are very ambitious and have gone beyond their national capacities thinking that the finance will flow but the global system is punishing developing countries. It gave the example of the CBAM, and referred to it as a “punishment process”.

The Africa Group also said they would like in the qualitative elements to reflect what is and what is not climate finance. It also said market rate loans should not be counted as climate finance and there should be mention of grant equivalent and concessional finance. The goal must consider fiscal constraints of developing countries and the finance should respond to needs of all regions in a balanced manner.

Calling for accountability, it added that the burden sharing process among developed countries should be clear in terms of their contributions to the NCQG. It referred to several reports to state that of the USD300 billion required annually for adaptation, the Africa Group was talking of just USD 9-19 billion in 2019. It said developing countries are contributing at least 5% of their GDP in adaptation and loss and damage.

Referring to Canada’s intervention, Egypt said it had not agreed to changing CBDR-RC to CBDR- ERC and that it was not supportive of framing the NCQG in reference to Article 2.1 (c) of the PA, or in relation to the Convention on Biological Diversity (CBD). (See developed country interventions below).

Saudi Arabia for the Arab Group said the NCQG decision must reflect Articles 2.1, 2.2, 3, 4.5, 9, especially 9.1, 9.3, 9.5 and 9.7 of the PA and should not attempt to change responsibility and must be consistent with Article 4 of the Convention. Outlining the elements of the substantive framework, the Arab group proposed the following: principles, timeframe, quantum, structure, qualitative elements, transparency, access and scope in the NCQG.

The Arab Group also called for the NCQG to reflect the historical responsibility of the developed countries, equity and CBDR. It said ambition of developing countries had increased over the years but the delivery of finance had not been commensurate. It proposed 2025-2030 as the timeframe of the goal, following which it would be renewed. The scope of the goal would be adaptation, mitigation and loss and damage. Under structure, it said there must be formulation (of text) articulating the responsibility of developed countries to provide support and the quantum would be USD 1.1 trillion per year, while not including the arrears of the USD 100 billion annual goal, which should also be delivered.

On quality, the group proposed grant based and concessional finance to support NDCs, NAPs and be consistent with national priorities. The group also said the qualitative aspect must also include negative impacts of unilateral trade measures and called on developed countries to undertake burden sharing arrangements to deliver the goal and reform their budgetary processes to support developing countries. It also said loans should not be counted as climate finance, and under transparency, it said it must be clear that the resources are additional and present a progression and different from the ODA. It also said that the forward-looking reporting under Article 9.5 needs to improve.

Saudi Arabia reiterated that if NDCs are supported, all will be able to deliver the goals of the PA. It said it had heard that all needs cannot be met by developed countries but it had not heard how much the developed countries are willing to commit to. It also said that there were calls for others to contribute, however, where was the leadership to follow, it asked. It also asked how would Parties ensure that the private sector contributes. “Will they give away their profit-earned cash to risky markets for little return? How will this happen?” it asked.

In relation to calls for policies to promote the “enabling environment”, it underlined the need for these policies to be aligned with sustainable development and poverty eradication and to consider the net economic impact of response measures. “Cross border impacts must be considered as well from both punitive top-down measures as well as uneven incentive packages in developed economies and their impact on trade and development,” it added further.

Saudi Arabia suggested two options on referencing MDBs, the financial architecture and the private sector. It said one option must clearly outline that the NCQG is not the entirety of climate finance; that it is the part that demonstrates developed countries’ commitment, and a second option to not mention them (i.e. the international financial architecture, MDBs and the private sector) as part of the context.

It said it saw the evolving needs of developing countries, which is linked to loss and damage, as a standalone item and not linked to capacity. It also said the context must reflect disagreements over progress of achieving USD 100 billion annual goal, include lessons learned from that goal, and reflect the undelivered amounts from the USD100 billion. It also reiterated that there is no common interpretation of Article 2.1c of the PA and that the Sharm el-Sheikh dialogue (on the said Article) was extended and strengthened and the decision on the way forward will take place at COP30 in Brazil, adding that “We therefore, do not support any reference to Article 2.1c as a standalone.”

 

Saudi Arabia added that grant-based support as well as alignment of support with national plans were its two highest priorities. It also said focus on climate specificity is also important to include and access needs to be a standalone element in the goal. It also suggested calling on developed countries to cease unilateral measures in line with Article 3.5 of the Convention and added that domestic resources are not part of the NCQG. It added that budgetary approval processes in developed countries remain slow which has prevented funding allocations and called on developed countries to institute budgetary process reform. It also said support must drive sustainable development and economic growth in developing countries. “We must remember the right to development is a human right,” it said.

On calls by developed countries to enhance demand for climate investments, it said that there is a need to address substantial and coercive incentive packages in advanced economies that are driving investments away from developing countries. A qualitative element of delivery that could be quantified is how much one dollar from developed countries will mobilize private investments, it said. It cautioned though that private sector actors have a fiduciary responsibility to their shareholders and may not invest in riskier markets.

India for the Like-Minded Developing Countries (LMDC) said the NCQG must be in accordance with the principles and provisions of the Convention and its PA, namely equity and CBDR-RC and Article 9 of the PA. This translates into the goal being delivered by developed countries to developing countries in line with the existing and evolving needs of developing countries, said India. It added that it did not agree with any feature relating to “domestic resources of developing countries” in the discussion. The NCQG is about how developed countries will provide support to developing countries, it said. It also said that “it makes no sense for the NCQG to be outcome-based”. The only outcome that can be traced as part of the goal is whether the quantum committed by developed countries is commensurate to the needs of developing countries, it clarified.

India said references to contributor base and differentiation across the beneficiaries are not at all acceptable and that these represent tactics to divert attention away from the mandate. It also said inclusion of Article 2.1 (c) of the PA in the NCQG is not appropriate since discussions are already undergoing on the article as part of the Sharm El-Sheikh dialogue due to lack of consensus over its interpretation. It also said the NCQG must refrain from discussions on enabling environment and domestic policy measures of developing countries. India called for the NCQG to include loss and damage response alongside mitigation and adaptation to address developing countries’ existing and evolving needs.The NCQG should provide a clear agreement on burden sharing among developed countries to establish their ‘fair share’ of their collective obligation to provide climate finance, which allows predictability, transparency, and accountability, said India.

The NCQG must include access features, including simplification of access modalities and the lowering of co-financing requirements, it said further, adding that the NCQG must address “dis-enablers” of climate finance such as the high cost of capital, high transaction costs associated with access, unilateral measures, among other things. The LMDCs also called for the NCQG to be delivered via the provision of public finance in a grants-based or concessional manner and for the NCQG’s transparency arrangements to incorporate the climate finance definition. “Loans at market rate and private finance flows at market rate of return cannot be termed as climate finance under the NCQG. Rather they represent a reverse flow (of money) from developing to developed countries if we consider the repayments,” it said further. On the timeframe, it said it prefers a mix of short-term timeframes and developed countries must report how much they will provide under Article 9.5 of the PA.

India also said the group had already proposed a quantum of over USD1 trillion per year, based on the current needs and which can be updated based on the availability of new needs. Responding to some of the interventions of the developed countries, India said suggestions about a layered approach with innumerable imaginary layers seem meaningless and do not have any backing by the Convention and its PA. “We believe that it is time for developed countries to put firm numbers on the table in line with their historical responsibilities,” it said, adding that the LMDC would not support any references to domestic policies. “These are matters under the jurisdiction of sovereign governments. We have already given our NDCs. These discussions are about how developed countries can support developing countries’ ambitious commitments,” said India.

On cross-cutting elements, the LMDC proposed including climate finance definition and what is not to be counted as climate finance under the NCQG; affordable fund flows driven by concessional finance; a mix of short-term time frames and a combination of annual and cumulative targets which will be important to take care of the evolving needs of developing countries and any shortfalls in annual fund flow; and  alignment with NDCs/NAPs and national plans of developing countries, which will be relevant for both quantum and transparency.

Nepal for the Least Developed Countries (LDCs) said the NCQG must be in accordance with Article 9 of the PA and the principles and provisions of the Convention. On the context, Nepal said the NCQG must take into account the outcomes of the GST and recognise the importance of just transitions and resilience building that promote sustainable development and eradication of poverty in developing countries. The NCQG must clearly be based on the priorities and needs of developing countries and consider NDCs and NAPs, and long-term greenhouse gas strategies. It said it expects an ambitious quantum, and that the NCQG must include loss and damage with an equal footing to mitigation and adaptation, to address the evolving needs of developing countries. Quantum is key and there needs to be clear sub-goals for adaptation, mitigation and loss and damage, with balance in consideration. On qualitative elements, Nepal spoke to the importance of access and predictability and said issues such as the high cost of capital and high transaction costs must be addressed. It called for grant-based finance for adaptation and loss and damage and expressed concern about the debt burden of developing countries. On transparency, it said the definition of climate finance is key and they must be clear about what is and is not climate finance. It gave the example of a recent report where an MDB had funded an international hotel chain in the LDCs and called it climate finance. The LDCs also called for the Enhanced Transparency Framework (ETF) to be updated based on the NCQG outcomes and added that the review of the goal to update the NCQG based on a timeframe would be necessary.

Samoa for the Alliance of Small Island States (AOSIS) said the legal obligations of the UNFCCC are different from other regimes (in the context of references to the CBD by the US) (See below). It said things have changed since the Convention, but one cannot not follow the Convention and the PA when it is not convenient to some Parties. It said the NCQG must respond to all of Article 9 of the PA, rather than picking and choosing elements out of it and that it should be the North star guiding conversations. It also said the goal must respond to the balance between mitigation and adaptation as well as be primarily grant-based and concessional for developing countries and respond to their evolving needs such as loss and damage. In terms of the operational aspects, Samoa said the discussion must focus on developed country obligations for the provision and mobilization of resources. On transparency, Samoa said developed countries must provide consistent and transparent information and that they cannot “engage in an intellectually dishonest exercise of double counting”. It said that it would be important to establish what counts towards the NCQG and what does not. It underscored the additionality of climate finance and added that ODA and humanitarian assistance cannot count as climate finance since it is a matter of justice. It also said the definition of concessionality and a clear understanding of repayment clauses are important in the context of climate finance. Justice and fairness are important, it added. Samoa also reiterated the importance of access and to make sure those that need the resources can access. The goal must also respond to the lessons of USD100 billion (annual goal) and address debt sustainability, predictability and fair burden sharing as well as dis-enablers such as high cost of capital and high transaction costs, and factor in that the islands do not have access to private markets. Samoa also said the goal and sub-goals should be articulated as floors of “at least whatever currency in trillions per year”. It said it sees a 10-year commitment period for the new goal, with periodic review cycles and a revision following the 10 years. It also said that if the temperature increases at the 10-yar period, it would mean more for the next round of NCQG since adaptation and loss and damage costs would be higher. It referred to including enabling conditions as crosscutting elements and said Parties should collectively address the dis-enablers.

Colombia spoke for Independent Alliance of Latin America and the Caribbean (AILAC) and said the NCQG must support developing countries in the implementation of Article 2 of the PA. It spoke to the importance of supporting and not penalizing ambition and stressed the importance of including loss and damage. It added that climate justice matters, since those who have contributed the least are suffering the most. It also said that Parties should not be pushed to choose between sustainable development, poverty eradication and climate action. It also said it would like to see in the context, limited fiscal spaces, high cost of capital, and unilateral measures that impact the delivery of PA goals. It also said that finance must be provided from developed to developing countries. On principles, it said that the NCQG must be in accordance with CBDR-RC and non-debt inducing, as well as be primarily grants based and concessional finance. Referring to calls by developed countries of a multi-layered NCQG, Colombia said it is complex to understand such concepts and the more important thing is to draw lessons from the USD100 billion goal and how the finance is going to flow to developing countries. In terms of quantum, it said that it is very important to consider what is not being counted as climate finance, and it would be important to recognize the ambition of developing countries. On transparency, Colombia said there must be no double counting. It further said they also need to look at modifying or tweaking common tabular formats (CTFs) to include information on loss and damage, before the next round of Biennial Transparency Reports (BTRs) and not wait till 2028 (for the review of the ETF). On thematic areas, it said the main areas would be mitigation, adaptation and loss and damage, and underscored the importance of human rights and gender responsiveness. “The needs of developing countries are not aspirational. They are real. So, the financing has to be real,” added Colombia further.

Speaking for group SUR (Argentina, Brazil, Uruguay and Paraguay), Argentina said the new goal must be concrete, measurable and based on best available science. Drawing from the lesson of the USD 100 billion goal, it said there should be a common methodology to track progress and it should be clear what to count and how to count it. It also said the goal must be in accordance with the principles and provisions of the Convention and its PA and referred to equity, CBDR-RC in this regard. It also referred to Article 9 of the PA and said the NCQG is a commitment of the developed countries and cautioned against any attempt to renegotiate the PA, and added that the sources and contributors base of the NCQG must reflect obligations in the PA. The NCQG must reflect the needs and priorities of developing countries articulated in their NDCs, NAPs and recognize that sustainable development and poverty eradication are the overriding priorities of developing countries. The new goal must be balanced between mitigation, adaptation and loss and damage and respond to developing countries’ evolving needs, it said. It also spoke about the importance of being able to access finance, adding that the goal must not impose additional conditions for developing countries and must be delivered through public finance, grant and concessional resources. It said the debt burden of developing countries must not increase and called for burden sharing among developed countries for the new goal to be clear. It also said the new goal must address “un-enablers” of climate finance such as “high cost of capital” and “unilateral measures”.

Several other developing countries including China, Cuba, Barbados, Morocco, Brazil, South Africa, Kenya, Guinea, Malawi and Singapore intervened in their national capacity.

China expressed disbelief that some countries suggested that the NCQG is voluntary for all Parties (in an apparent response to the US comment). It reiterated the mandate of NCQG and said that decision 1/CP.21, paragraph 53 was agreed by all Parties (which states that developed countries intend to continue their existing collective mobilization goal in the context of meaningful mitigation actions and transparency on implementation from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries). It further said that developed countries had failed to achieve the USD100 billion annual target for 14 consecutive years and added that it was deeply disappointing that developed countries had failed to fulfill their commitments. “Our gathering here today is a testament to the intention and willingness of developed countries to adhere to this mandate. It is an imperative that developed countries fulfill their obligation to provide and mobilize climate support to developing countries, in line with the principles and provisions of the Convention and Article 9 of the PA,” said China.

Responding to interventions delinking the NCQG from the Convention, China said the PA is to enhance the implementation of the Convention and is to be guided by the principle of CBDR-RC. It also expressed its displeasure to hear the term “contributor”. Developed countries have polluted the world for over 200 years and bear the obligation to provide climate finance to address the issues they have caused, adding further that it was also not happy with the use of the term “recipients”, since developing countries have been suffering the impacts off climate change due to historical emissions and which has limited their right to development, impacting food security and efforts to eradicate poverty. It is high time developed countries delivered on their promises and commitments, said China, adding further that the NCQG must provide a clear agreement on burden-sharing among developed countries, ensuring their fair share of the collective obligation to provide climate finance. This goal should prioritise predictability, transparency, and accountability in funding allocation. It said while the private sector remains a crucial player, since it is not a party to the PA. It also said that it is essential that developed countries specify the extent of public sources they will deploy to mobilize private finance flows from developed to developing countries. “This will ensure that private sector involvement is effectively channeled towards climate action in alignment with commitments made by developed countries,” it added. It also said that to enhance the quality of climate finance, developed countries must adopt a unified definition and methodology. Loans provided at market rates and private finance flows expecting market-rate returns cannot be considered climate finance under the NCQG, it stressed.

China also said the timeframe of the NCQG must align with the NDC cycle, preferably set at five years. It, however, said it is open to considering a “two-year timeframe, in line with timeframe of Articles 9.5 and 9.7 of the PA”. It referred to the choice of ten-year timeframe as “a strategic move by some countries to evade their financial responsibilities under the PA”. China also asked developed countries if they will put forth quantified targets in their forthcoming submissions that reflect their equitable share and commitment. It also asked what purpose would a review serve if not to facilitate necessary revisions towards the shared objectives. It ended its intervention quoting a Chinese adage that "You can never wake someone who is pretending to sleep."

Cuba said the NCQG was being complicated by discussions that did not pertain to its mandate. It said Parties should build on what is already agreed, and those are the very clear principles and provisions of the Convention and its PA, namely equity and CBDR-RC and Article 9. It said the goal must support the implementation of NDCs, NAPs, enable ambition, and reflect the evolving needs of developing countries, and must be balanced between mitigation and adaptation efforts and loss and damage. It commented on the lack of sufficient support by developed countries and pointed to 14 consecutive years of failure to fully deliver what was promised. It said the needs of developing countries are in the scale of trillions of dollars per year, and “if the world does not listen to this reality, the needs are going to increase, they are increasing as we speak”. It further said substantive advances need to be on aspects such as quantum, timeframe and structure of the goal. Cuba said it would like to see a real commitment from developed countries to developing countries, with an NCQG that guarantees efficient and rapid access to developing countries, adding that the NCQG should be aligned with UNFCCC processes such as NDC cycles, NAPs, GST, but should also have input from cycles of the reports from the Intergovernmental Panel on Climate Change (IPCC), in order to reflect the needs of developing countries, so that even in a 10-year time frame, there should be, at least, a 5 year review to allow for further adjustment, based on the evolving needs of developing countries and the difference between the mobilized amount and the target previously set. It also said the NCQG must address “dis-enablers” of climate finance such as the high cost of capital, high transaction costs associated with access, and unilateral measures such as CBAM.

Barbados said the NCQG cannot be all things to all the people. It said Article 2.1 (c) goes against the island states and called out countries that said there is not enough public finance to take a reality check since much more than USD100 billion “has been found in the last weeks and months for other activities”. It said Parties were still arguing in 2024 whether the USD100 billion figure was met in 2020 and there is a need to learn from failures associated with that. It also said Parties should abide by the Convention and the PA and not only when it is convenient to them to do so. The world has changed, but the more it changes, the more it remains the same, added Barbados. It said failure to mitigate had resulted in the need for adaptation and addressing loss and damage and the NCQG should therefore address all the three themes and be guided by Article 9 of the PA. It also said they should stop worrying about layers and get to the basics and work collectively.

Morocco said elements on redefining the contributor base and recipient base fall outside the core mandate. It said the NCQG process is not the occasion to challenge or debate fundamental interpretations of the Convention and PA. “This wider debate can happen elsewhere, but the NCQG process in 2024 cannot be held hostage to this,” it added. It urged Parties to remember the spirit of compromise from Paris and recalled that the PA enhances but in no way represents a rejection of the Convention. It also said that the PA is clear that developed countries must take the lead and NCQG provision and mobilisation is the way developed countries can take the lead, within the context of a global collective effort already underway. It called on the developed countries to step up their ambition in the provision of public finance this year, to meet the global crisis across mitigation, adaptation, and loss and damage. It said the wider finance system transformation is required, but the NCQG process in 2024 is not the place for this debate, adding that the correct place is under the Sharm el Sheikh Dialogue on Article 2.1c. 

Brazil said the decision should start by setting the legal framework for the NCQG, CBDR-RC, and the whole of Articles 2 and under 9 of the PA. It also said the NCQG must reflect strong call for urgent action, the need for enhanced ambition, GST outcomes, evolving needs, lessons from USD100 billion, quality of climate finance and having a clear definition of what should not be counted as climate finance. It also spoke about the importance of scaled up grant-based and concessional finance for developing countries and the importance of capacity building and technology transfer. It also said the context must include recognition that enhanced support will allow for higher ambition and not the other way round. It supported a strong call for the reform of MDBs and the international financial system.

South Africa spoke about the need for scaling up significantly grant and highly concessional instruments and said loans must be reported as backflows and not as climate finance. It also called for the inclusion of access features to ensure efficient and swift access for developing countries. It also spoke about equity distribution as being another element and highlighting factors that create un-enabling environment through unilateral measures. It gave the example of CBAM and said it reverses finance flows from developing to developed countries and transfers the climate action burden to the most vulnerable. South Africa also said the goal should have a time frame of 5 years that links to NDC and GST processes and referred to NCQG as being not a static but dynamic, recurring process. It further said it is not developing countries’ responsibility to attract private finance and that adding private sector and philanthropies will lead to unpredictability. It called for the recognition of historical responsibility of developed countries and stressed on CBDR-RC principle and highlighted the importance of just transition pathways. 

Kenya reflected on the inadequacies of the USD100 billion goal and the NCQG incorporating the importance of climate justice. It said the discussion must be about how the NCQG contributes to goals, within the context of Articles 2.1 (a) and (b) and Articles 2.2. 3, 7, 8 and 9. It said developing countries have ambition, which must be supported and real finance must be delivered to respond to the needs and priorities of developing countries in a country driven manner. It said it wants to see figures reflected in the decision text and that reviewing and updating the goal have to be in the context of the evolving needs of developing countries.

Guinea said the contributor base must be based on historical responsibility and the fair share of unmet resources. It also said the NCQG is the continuation of the USD100 billion goal and it must be reflected that the long term goals will be achieved with scaled up resources. It said the context must refer to science and carbon budget as well as the failure to deliver USD100 billion goal. It said the context begins from the Convention, where its principles must be stated and for the need to emphasise the necessity of public finance support as one of the key lessons learned, and the NCQG being a signal for ambition and not an additional burden for developing countries. It also said transparency arrangements should include an ex-ante and ex-post process and there must be a space to discuss progress made.

Malawi said the quantum must be based on the needs and priorities of developing countries and that the NCQG must not leave out loss and damage. It stressed that the goal should be predictable and accessible, be clear what is climate finance and must be able to be tracked. 

Singapore said the any attempts to reclassify or include developing countries into the fold of contributors goes against the PA. It said Article 9.2 encourages them to contribute voluntarily and that spirit must be maintained.

Highlights of interventions by developed countries

The US said the USD100 billion goal was set in 2009, where there was no PA. The world has come “extraordinarily far” since then, and referred to Article 9.3 of the PA, saying that the Article states “as part of a global effort”, and the NCQG therefore needs to reflect the “global effort”. It said it is not rejecting that “developed countries should take the lead” and that developed countries have taken the lead, as proved by the Organization of Economic Cooperation and Development reports. It said it was high time Parties “discuss (the) global approach” and that the NCQG was not synonymous to Article 9.1.

The US also said the NCQG is a PA goal and not relevant to the Convention. It suggested language that the NCQG aims to contribute to the long-term goals of the PA as mentioned in Article 2.1 a, b and c and that it is voluntary for Parties “that choose to contribute”, in accordance with Article 9.3 of the PA. It said Article 9.3 has a “should” provision, representing its voluntary nature. It also said it envisages repetition of the USD100 billion goal language in the context section, and a mention of efforts of all Parties to pursue climate action for 1.5°C and climate resilient future. The US said it sees language indicating finance in the context of efforts to scale up investments from all sources as well as policy efforts of all Parties to incentivize the finance.

On the context of the contributor base, the US said the world has changed and new countries have stepped up to support countries, and they must report their action and finance must go to those that need it. It said that in the PA, there are no annexes and therefore conversations about “lists” are not relevant to the NCQG.

Referring to the decision 14/CMA.2, the US said Article 2.1 (c) is also part of NCQG discussion and called for the NCQG to be a multilayered goal, inspired by the CBD, where the outermost layer would be a global investment goal where all Parties capture all investments and aim to achieve true scale. It also called for a specific layer of support for those “most ambitious or vulnerable” and said they expect challenging conversation about who will the support go to.

On quantum, it said it had different ideas about numbers and suggested that one option that needs to be on the table is USD100 billion, since that is the baseline. It also spoke about demand, supply and how Parties speak to the key players in the finance landscape such as MDBs, and international financial institutions (IFIs). It added that qualitative aspect should include elements such as policies and enabling environments to enhance demand for climate investments. It said the cost of capital could be included as well as disclosures. It also spoke to scaling up supply and the importance of private sector, blended finance, domestic resource mobilization and innovative sources. These can be quantified as well, the US added.

It also referred to access, enhancing effectiveness and calls to action for different groups of actors such as national governments, sub-national and local governments, multilateral climate funds, operating entities of the Financial Mechanism, MDBs, private sector firms and financial institutions. Referring to the conversation about definitions, the US said Parties must follow the nationally determined nature of the PA. Data collection is linked to conversation among providers of the goal and opportunities for contributors would determine what those arrangements will be. While there would be regular review cycle, the US said it is not anticipating revision of the goal in any context.

The European Union (EU) said the mandate of the NCQG is in accordance with Article 9.3, which speaks to a global effort. It said it sees a 10-year timeframe for contextualizing the quantitative elements. In the layered approach that the EU suggested, it said they must define a new contributor base and acknowledge that capacity has evolved since the early 1990s and everybody that fulfils the criteria should contribute. Among contributing developing countries, there could be options for some countries contributing and receiving finance, it said. On sources, it said the goal should include all sources of finance such as public, private, national, international, South-South flows and new and innovative sources of finance. It said developed countries should take the lead, but when someone takes the lead, “others are meant to follow”. It said as part of key elements, it sees support and investment, broad contributor base, multi-layered approach to sources, qualitative and quantitative framing, calling on multiple actors, gender responsiveness and enabling environment. It also said that it would be important to refer to broad financial systems and finance flows in the context as well as highlight the role of the MDBs, IFIs, enabling conditions, regulators, rating agencies, among others. It should also refer to the private capital mobilized through partnerships as well as needs and priorities of developing countries, role of NDCs and NAPs as well as impact and effectiveness elements. The EU said it sees the ETF as the backbone of transparency arrangements and that it will cover all relevant elements of the NCQG. It said updating the ETF would depend on the final composition of the goal and capturing the impact and effectiveness would be important. It agreed with Canada on the no revision option for the goal.

Switzerland said the preamble text must reflect past mandates such as Article 2.1 (c) and Article 9.3 of the PA. It said it would support a context paragraph or a set of paragraphs that speak to the entire goal. It said it sees the quantum part of the goal as a layered structure, with multiple quanta and an overarching investment quantum. It said the NCQG must specify what is meant by global efforts. The contributor based must be linked to capacities to pay as well as be emissions based. The NCQG must also say it is for whom and what. On the overarching investment layer, it said the core support must be associated to the contributor base and to also have a policy layer that speaks to the reduction of policies that are not helpful such as fossil fuel subsidies. It said after the quantitative block, the NCQG decision could have freestanding paragraphs specifying qualitative elements such as on access, gender responsiveness, debt sustainability.

It added further that the end of the decision should have a transparency paragraph anchoring transparency arrangements. It said revision of the goal was not an option and suggested a “no options” text in the decision on the issue of revision of the goal. Switzerland also said it does not see reference to the Convention or any COP decision beyond decision 1/CP.21. It also said it does not see loss and damage as being part of the scope of NCQG due to the liability concern associated with it. NCQG is ultimately support for implementation of Article 2.1 (c) and the scope is adaptation and mitigation, it said. It also called for a 10-year goal and said it sees quantum associated with contributor base, timeframe and recipient base. It said its preferred option would be a chapeau paragraph which refers to the timeframe with the contributor base attached to it. It should also say to whom the support is going, and it suggested sub quanta for specific groups. It also said it sees an additional paragraph that speaks to the push and pull factor of policies in the chapeau.

Australia said the NCQG must be fit for purpose and should be a single decision, with the context embedded throughout the text. It advocated for a multi-layered approach with a global investment target underpinned by elements to get there. It suggested various criteria for the contributor base: those with capacity to pay in line with current economic realities; a static or dynamic list, or a criteria-based approach such as GNI and GDP. This does not mean all Parties such as Small Island Developing States (SIDS) and LDCs will contribute. “We expect all major economies to contribute to this global effort, including allocation for specific sub groups,” said Australia. It also called for policy guidance elements and referred to additional elements such as de-risked investments; cost of capital; access; sovereign debt; sustainable finance taxonomies and climate risk disclosures; measures to support scaling up of domestic flows; MDBs and IFIs.

It agreed that the cost of capital and debt burden would be important elements of the decision and must be addressed to make it easier to reach the investment ambition. “If the investment ambition is not clearly defined, we won’t get to 1.5°C. If we talk of a single layered goal like USD 100 billion, it is not fit for purpose,” said Australia. Referring to the goal as a global collective effort, it said it would be important to discuss how to engage the private sector meaningfully.  It also said recollection of the mandates should be in the preamble and should include Article 2.1 (c) and Article 9.3 of the PA. The context should explain to the world the current realities of the world, how the goal is to be interpreted and implemented, and reflect all the three long-term goals and reference relevant outcomes of the GST.

It said it wants to see recognition of ambition to scale up finance from all sources as well as recognition of the current global economic landscape and how the goal fits there. It said it sees the context evolving in other elements of the decision text. It also said the ETF is the backbone and there is a need to either update the reporting formats or encourage reporting on a voluntary basis. Australia also said it does not see the need to separate qualitative elements in the text. It called for finance being gender responsive with a potential quantification of some qualitative aspects of the goal. It suggested inclusion of a paragraph on impact and effectiveness as well as instruments and thematic areas. It also said it would like to see reflection of co-benefits and referred to nature and climate resilient development in this regard. It said it would like an element on access with a potential quantification or a target for access for those that face significant capacity constraints. It said it would like to see a focus on capacity building and technology transfer in the section. 

Canada said the NCQG’s context needs to reflect current realities which is different from where the world was in 2015. It said countries’ capabilities had evolved and while Canada was not opposed to CBDR, it should be in the context of evolving capabilities, it said. It agreed with the US on removing reference to the Convention, since the NCQG is under the PA.

It also said public finance will not meet the needs of developing countries and spoke about an overarching global investment goal, capturing all flows—international, domestic, public and private. It said it sees language on carbon markets, as well as call to action specifically on the private sector, consistent with low GHG emissions and climate resilient development and recognize philanthropies.

Global investment targets must generate ambition for all, it said and encouraged Parties to continue to provide information under Article 9.5. It also said that revision is different from a review, which is a “check-in”. It said revision would tantamount to establishing a cycle of a new goal, “which is something we cannot agree to”. Responding to calls by developing countries to have burden sharing arrangements, Canada said before burden sharing there is a need to establish who is in the contributor base and who is in the recipient base, and it suggested having a “no option” for burden sharing in the text.

Norway, New Zealand and the United Kingdom spoke along similar lines.