This section provides an overview of some of the key elements discussed and addressed by Parties and non-Party stakeholders, including the quantitative amount, thematic scope, time frame of the goal, contributor base, and transparency arrangements. This list of elements is not intended to be exhaustive but rather to highlight the recurrent topics raised through NCQG-related discussions and to contribute to conversations about setting a goal by 2025.

What should the quantity of the NCQG be, and what role should the quality of finance play?

What is discussed?

Counting the provision versus mobilization of climate finance

When discussing the quantum of the NCQG, different elements addressed in this paper are also key to untangling the available options to establish a quantity. First, it is necessary to address two terms used in both the Convention and the Paris Agreement as well as in decisions related to climate finance: provision and mobilization. These terms date from the adoption of the Convention (Articles 4.3 and 4.4). Provision of finance refers to funding provided directly by developed country governments, whereas mobilization of finance refers to investments that are crowded in from other sources, instruments, and channels, including private finance or other innovative sources. With the adoption of the $100 billion goal, developed countries once again committed to provide and mobilize resources to meet the goal.

Parties are debating the potential role and scope of the provision versus mobilization of finance, as well as who should be responsible for each. Developed countries have, for example, suggested that Article 9 of the Paris Agreement, which states that developed countries should have leadership in mobilizing resources, should be read in conjunction with Article 2.1c, which states that Parties should make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (UNFCCC 2016). In this context, these Parties suggest that the NCQG should focus on mobilizing resources by all countries, as a global effort (a notion reflected in Article 9.3); they propose that resources come from various sources—public, private, domestic, international—and consider the solidarity, responsibility, and ability of actors to contribute according to the principles of CBDR-RC (European Union 2023a). Regarding provision, some developed countries have reaffirmed their commitment to provide financial resources to developing countries, especially the most vulnerable. Further, some countries have stated that the contributor base should be expanded (European Union 2023b), for example, based on the economic capacity of other countries to increase the quantity of climate finance provided, particularly high-income economies, excluding those that are highly vulnerable to climate change (Government of Canada 2023) (see “Contributor: Who should contribute to the NCQG?” for more in-depth discussion).

For their part, developing countries have expressed interest in ensuring that the NCQG focuses primarily on the provision of climate finance from developed to developing countries. Based on Article 9, developed countries would be obligated to provide financial flows and to lead the mobilization, and other Parties’ contributions would be based on solidarity and not be perceived as an obligation to increase the provision. Developing countries have mentioned that incorporating Article 2.1c into the goal potentially conditions aid from developed countries unjustly on the alignment of financial flows in their countries. Further, discussions about the incorporation of Article 2.1c need to consider its implementation in the context of sustainable development and efforts to eradicate poverty and in line with the principles of equity and CBDR-RC, in light of different national circumstances as expressed in Article 2.

These interpretations of Articles 2.1c and 9 lead to alternative scenarios for defining the quantum. The new goal could be structured as a quantitative goal with only the provision of finance by developed countries, one goal for the provision of finance by developed countries and one for mobilization by these same countries, one for developed country provision and mobilization together, and a goal for developed country provision and a goal for mobilization from all parties (that includes qualitative aspects such as policy and regulatory frameworks that mainstream climate as a variable to align climate finance through different policies, such as green procurement and climate-related bonds, among others).

Quantum and the needs and priorities of developing countries

The NCQG will have to be determined “taking into account the needs and priorities of developing countries” (UNFCCC 2016). In recent years, various research organizations and private firms have developed both bottom-up and top-down approaches, focusing on adaptation, mitigation, or loss and damage (L&D) and, in some cases, breaking down needs at a sectoral level and by geography. How these approaches may impact the new goal’s quantity remains uncertain.

Nationally determined contributions (NDCs) are one key source of information when determining global climate finance needs. As of August 31, 2023, 91 developing countries had provided estimates of financial need in their NDCs (with cutoff dates between 2025 and 2040) totaling $4.5 trillion. Of this total, $1.6 trillion is conditional on receipt of international support, and $0.6 trillion is unconditional. (The total amounts of conditional and unconditional finance requirements do not equal the total amount of $4.5 trillion because not all countries have disaggregated between their conditional and unconditional finance requirements in their NDCs.)

Studies use different approaches and cover different geographic or sectoral scopes. Several studies use a top-down approach, where estimations use methodologies that link global warming estimates to changes in economic growth and associated damages. Other studies use bottom-up approaches, using estimates directly produced by countries (for example, in their NDCs or national adaptation plans). Where information is not available for a country, studies have extrapolated potential costs. For either approach—top down or bottom up—studies are using different models and methodologies to assess global climate-related investment needs. Integrated assessment models (IAMs) are increasingly used by national governments and in international assessments (Nordhaus 2017). IAMs aim to calculate the impacts of alternative assumptions (e.g., climate policies) on variables such as investments, output, or emissions.

Mitigation finance assessments

As shown in Figure 1, estimates of required global annual spending on mitigation to achieve net zero by 2050 range from $3.5 trillion to $9.2 trillion per year and from $105 trillion to $275 trillion in total by 2050. In these reports, most investments focus on the transition to zero-emission energy sources. Some of these reports also show disaggregated sources of finance (private versus public).

On the higher end, a report by McKinsey & Company provided an estimate covering the energy and land-use sectors based on a relatively comprehensive approach to household and business spending on assets that use energy. For example, it includes the full cost of passenger cars and heat pumps, capital expenditures in agriculture and forestry, and continued spending on high-emitting physical assets such as fossil fuel–based vehicles and power assets. This report found that $9.2 trillion per year, or a total $275 trillion by 2050, would be required for the world to achieve a net zero transition by 2050 (McKinsey & Company 2022).

A report by Vivid Economics (2021), focusing primarily on the energy sector, found that global investments to achieve net zero by 2050 would amount to $4.5 trillion per year or a total of $125 trillion by 2050. Similarly, the Energy Transition Committee and the International Renewable Energy Agency (IRENA) have produced their own estimates of global energy sector investments required to achieve net zero by 2050. The Energy Transition Committee estimates that $3.5 trillion per year, or a total of $105 trillion by 2050, will be required (ETC 2023). IRENA, however, provides an estimate of $5.4 trillion per year and a total of $115 trillion (IRENA 2023). IRENA’s report shows a more dramatic role for the private sector, with $56 trillion in private funding needed by 2030 versus $1 trillion in public funding (IRENA 2023).

Figure 1 | Cumulative and annual mitigation finance

Notes: ETC = Energy Transition Committee; IRENA = International Renewable Energy Agency.

Source: Caldwell and Alayza 2023.

Adaptation finance assessments

In the case of adaptation, most reports base their estimates on a combination of national cost estimates and global top-down cost estimates, and they assume time frames related to expenditures required to achieve net zero by 2050. Some of these reports disaggregate their estimates between developed and developing countries. Reports have found that expenditures required for adaptation can range from $0.05 trillion to $1.1 trillion per year by 2050 globally and from $0.1 trillion to $0.9 trillion per year by 2050 for developing countries, as shown in Figure 2. These reports have relied on different methodologies, including the Adaptation Regional Integrated Model of Climate and the Economy (AD-RICE) (Baarsch et al. 2015), extrapolation (UNEP 2022), and bottom-up estimates (Chapagain et al 2020).

Figure 2 | Annual 2030 and 2050 adaptation finance

Notes: IPCC = Intergovernmental Panel on Climate Change; UNEP = United Nations Environment Programme.

Source: Caldwell and Alayza 2023.

Loss and Damage finance assessments

Related to L&D, costs range from $1.1 trillion to $2.7 trillion per year on average by 2050 under the net zero scenario, as shown in Figure 3. Markandya and González-Eguino (2019) found that global L&D ranged from $1.8 trillion to $2.7 trillion per year by 2050. This report is based on an IAM that applies different discount rates to find low and high damages at a global level. The report uses 2005$ values and focuses only on economic losses. Those costs not covered by adaptation measures are classified as L&D costs (Markandya and González-Eguino 2019).

A subsequent report produced by Heinrich Boll was based on major extreme climate and weather events and the model from Markandya and González-Eguino (2019), updating this from 2005$ values to 2023$ values and removing developed countries (Richards et al. 2023). The latter methodology is used in Figure 3 for comparison purposes. A separate report from Climate Analytics estimated L&D costs based on an IAM model, specifically an AD-RICE model, finding that costs ranged from $1.07 trillion to $1.85 trillion per year by 2050. This report estimated macroeconomic damages in 2012$, and the other two reports estimated residual damages (L&D minus adaptation costs) (Baarsch et al. 2015).

Figure 3 | Annual 2030 and 2050 L&D finance

Source: Caldwell and Alayza 2023.

Setting a numerical figure will not be sufficient; what’s the role of quality?

Parties have also discussed a need to consider other aspects of the finance being provided, such as whether it is in the form of grants or loans. These concepts are usually described as the “quality” of climate finance. Questions remain about the degree to which they will factor into the final quantum of the goal. Nevertheless, Parties are considering different components, including the concessionality, effectiveness, accessibility, and predictability of climate finance (Table 2) (see Cozzi et al. [2022] and Argueta et al. [2022] for a more detailed description of quality aspects).

Certain qualitative components, including accessibility and concessionality, touch upon whether the goal should incorporate language on the types of financial instruments involved. Developing country Parties, in particular, have expressed interest in increasing grant financing or other forms of finance that do not increase the debt burden of countries. They propose this in response to the high levels of debt held by many countries today: 53 percent of low-income countries—23 of which are among the 50 most climate-vulnerable nations globally—are now at increased risk of difficulties in repaying their debts (Alayza et al 2023). In addition to traditional forms of climate finance, Parties have had some early discussion on whether other forms of innovative financial instruments, particularly those instruments that have the potential to increase countries’ fiscal space, can be considered. For example, the Independent Association of Latin America and the Caribbean (Asociación Independiente de Latinoamérica y el Caribe; AILAC) and Argentina, Brazil, and Uruguay (ABU) mentioned in their respective submissions that the new goal should foster the use of innovative instruments such as debt swaps, payment for environmental services, and blended finance (ABU 2022; AILAC 2022).

Regarding access to climate finance, the Paris Agreement emphasizes that the “institutions serving the Agreement, including the operating entities of the Financial Mechanism of the Convention, shall aim to ensure efficient access to financial resources through simplified approval procedures and enhanced readiness support for developing country Parties” (UNFCCC 2016). However, developing countries have been struggling to effectively access climate flows (Argueta et al. 2021). Many developing countries have flagged the difficulties they have faced in accessing funding from the climate funds and similar sources in a timely manner. This includes difficulties with meeting, for example, data or cofinancing requirements. They call for more flexibility and quicker, more simplified processes. They also call for continued emphasis on channeling funding through local agencies. Developed countries, meanwhile, tend to recognize the need for ease of access but also emphasize the need for standards and procedures to ensure that funds are used appropriately.

What’s at stake?

Determining the quantum of the new goal is arguably the most crucial aspect of these negotiations. Parties need to decide on whether they are selecting one or multiple goals. This is a fundamental factor that influences all other parts of the negotiations. It touches upon the basic relationship between developed and developing countries as well as their roles in relation to implementation of the Paris Agreement.

“Taking into account” the needs and priorities of developing countries is also an important point of negotiation. First, Parties will need to determine how to assess these needs. Should Parties rely on Parties’ own assessments in their NDCs or on external assessments? Second, Parties will need to decide on how these estimates will impact the final quantum. What role do needs assessments play in determining a quantitative goal?

Parties have also discussed the need to consider the quality of the finance being provided. For example, developing countries highlight the need to balance thematic areas, ensure predictability, strengthen access, and increase concessionality of the funding provided. Developed countries, meanwhile, want to ensure that funds are used effectively. Questions remain about the degree to which they will factor into the final quantum of the goal.

Theme: What should the goal fund?

What is discussed?

What’s the role of L&D within the thematic scope?

The decisions and commitments leading to the $100 billion goal exclusively referred to support for climate action in developing countries, where funding to date has been allocated mainly to mitigation and (to a lesser degree) adaptation actions, likely due to the context of meaningful mitigation action and transparency of implementation in developing countries. Thus, progress on the goal has been measured under these two categories. However, developing countries have questioned whether the NCQG can include L&D as finance category.

Decisions adopted within the UNFCCC and reports have reinforced the role that L&D finance might play in the NCQG. At COP19 (2013) in Poland, climate negotiators established the Executive Committee of the Warsaw International Mechanism for Loss and Damage. Two years later, in Paris, an L&D article was embedded in the Paris Agreement calling for Parties to avert, minimize, and address L&D. The first L&D finance-related reports under the Convention were developed in 2019, when COP22 recommended the UNFCCC Secretariat prepare a paper identifying the sources of financial support for addressing L&D. At COP25, the Santiago Network on Loss and Damage was established. However, developing countries and civil society organizations insisted on the need for a fund to respond to L&D, and the sixth assessment report of the Intergovernmental Panel on Climate Change (IPCC) also clearly highlighted L&D due to climate impacts (IPCC 2021).

These actions paved the way for L&D finance to be formally included as part of the UN climate change negotiations at COP27. This led to the opportunity to officially address “funding arrangements for responding to loss and damage associated with the adverse effects of climate change, including a focus on addressing loss and damage” (UNFCCC 2022a). As an outcome of these discussions at COP27, Parties decided to establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change and to establish a fund to respond to L&D whose mandate includes a focus on addressing L&D (UNFCCC 2022a).

The operationalization of the funding arrangements and the newly created L&D fund will be informed by recommendations provided by a transitional committee. The committee will recommend the institutional arrangements, modalities, structure, governance, and terms of reference for the fund. It also will define the elements of the new funding arrangements, identifying and expanding sources of funding and ensuring coordination and complementarity with existing funding arrangements.

As stated by the IPCC, scientific evidence already confirms that countries, mainly the most vulnerable developing countries, are experiencing the economic and noneconomic impacts of L&D. Economic impacts include both sudden-onset events (e.g., floods, storms, and cyclones) and slower-onset processes (e.g., droughts, sea level rise, desertification, and glacial retreat) as well as noneconomic impacts that include loss of heritage and biodiversity. Some reports have estimated finance needs for L&D by 2050 to be up to $1,745 billion and $2,684 billion per year (Richards et al. 2023). For example, Pakistan’s L&D costs alone, caused by the recent flooding disasters in 2022, were estimated at $40 billion. These costs do not consider noneconomic L&D.

Developing countries and country groups, including ABU, the African Group of Negotiators on Climate Change (AGN), AILAC, the Alliance of Small Island States (AOSIS), and the Least Developed Countries (LDC) Group have expressed the view that L&D should be included in the NCQG (ABU 2022; AGN 2022; AILAC 2023; AOSIS 2022; LDC Group 2023). They point to, among other provisions, Article 3 of the Paris Agreement, which states that “the efforts of all Parties will represent a progression over time while recognizing the need to support developing country Parties for the effective implementation of this Agreement” (UNFCCC 2016). Further, they point out that the Paris Agreement includes L&D in Article 8, in which parties recognize the importance of averting, minimizing, and addressing L&D associated with the adverse effects of climate change.

Dividing the pie between adaptation, mitigation, and L&D

Parties are also discussing whether to have specific subtargets for the different types of finance: adaptation, mitigation, and (potentially) L&D. Under the Paris Agreement, Parties agreed to ensure a “balance” between adaptation and mitigation finance. However, the definition of balance was not made clear, and adaptation finance has typically lagged behind financing for mitigation, even before the adoption of the Paris Agreement.

In considering the role of mitigation, adaptation, and L&D finance, negotiators are looking at whether to create specific targets for each type of finance. This requires agreement on how to determine the correct division between these themes and how to facilitate successful monitoring of these finance targets. For example, this may involve considering how to compare different types of finance, such as grants versus debt financing (Watson 2023).

What’s at stake?

COP27 changed the climate finance landscape with a decision on L&D finance. Developing countries’ climate finance needs have included some measurement of L&D, but the negotiation outcome at COP 27 in Egypt has paved the way for due recognition. Because the NCQG has a mandate to consider developing countries’ needs, now the main question revolves around how the new goal should treat L&D finance and its role in the balance equation.

In addition, there is a question of whether—and, if so, how—to set specific targets or goals for each of the types of finance. Some parties have made clear their view that the addition of L&D to the balance of adaptation and mitigation should neither lower nor limit the amount of finance provided for mitigation or adaptation initiatives. If an L&D subtarget is to be included, negotiators will need to incorporate considerations around the size of the target and how to measure such finance. Parties will also need to consider the relationship of the new goal with the establishment and operationalization of the new funding arrangements, including the L&D fund, mainly if funds directed to the L&D fund can be counted toward the NCQG.

Time frame: What time frame should the goal cover?

What is discussed?

Parties need to determine a time frame for the NCQG and potential intermediate milestones or review cycles upon which the goal may be updated over time. As was evidenced during the fifth TED (UNFCCC 2023), Parties generally identify the time frame options around long-term perspectives, looking at 2050 as a specific target; medium-term time frames, covering 10-year review cycles; and short-term, or 5-year, implementation periods.

Shorter time frames have been proposed to account for changing administrations, election cycles, political challenges, and the potential to coincide with NDC and Global Stocktake (GST) update and submission processes. Proposers of shorter time frames have also argued that these would allow a higher level of predictability for developing countries and that an ambitious short-term goal could consequently incentivize ambitious and front-loaded short-term climate action. Those in favor of longer-term time frames have suggested setting a goal for 2050, aligning efforts to most 2050 net zero targets, and signaling commitments to introduce structural changes to the financial systems (UNFCCC 2023).

An adjustable goal?

Developing countries have suggested that the goal be updated based on future needs and scientific findings. The evolving nature of inflation rates, budget cycles, and other external factors may impact the availability and need for resources. Parties, including developed and developing countries, have expressed their interest in being able to adjust the goal to reflect the evolving nature of the global economic landscape. The review process could be developed every two and/or five years to align with the time frame of other UNFCCC processes and reports, such as NDCs, the GST, or biennial transparency reports (BTR). Review milestones could incorporate updated information from national investment plans, new national policies, government terms, and national budget cycles to inform the country’s needs and the quality of climate finance and assess how resources are being used.

Some parties have suggested that a review process could benefit from having an independent expert committee to assess progress and produce a synthesis of annual or biennial reports to inform progress on the goal. In addition, a review process could be further leveraged to assess if climate finance is indeed producing the desired outcomes, a notion supported by developed countries (see Watson 2023). This way, countries—both contributors and recipients—can evaluate the impact of climate finance on specific national goals or priorities.

Some Parties have also raised the question of whether the goal will be maintained on annual terms, as with the $100 billion goal, or if a cumulative goal should also be established. This would allow some of the challenges associated with the $100 billion goal (mainly, not reaching the goal in certain years) to be addressed up front by clearly defining responsibilities for what happens when an annual goal is not met. In this context, some developing country Parties have suggested that an annual goal is more conducive to the transparency framework than a goal with a longer reporting period because the shorter time frame may make it easier to monitor and assess data.

Lastly, Parties are discussing whether to have a centralized system in place to track needs and contributions toward the new goal. It is suggested that a tracking system could support monitoring data from contributors and recipients and be informed by reviews and reports within (e.g., BTRs) and outside (OECD climate finance reports and Oxfam climate finance shadow reports) the UNFCCC.

What’s at stake?

In general, the main challenges to consider concerning the time frame and temporal scope are related to the political will of countries to deliver their promises within the adopted time frame, the availability of updated data to assess compliance with the new goal, the dynamic nature of developing country needs, and the need for accountability mechanisms to track the goal (see “Transparency arrangements: What type of transparency arrangements should accompany the goal?”).

The time frame discussion will have a direct relationship with the negotiated quantum. It has been suggested that a longer time frame could undermine short-term ambitions by allowing the provision of finance to instead increase over time. If they go the route of implementing intermediate review milestones, negotiators will need to consider adequate mechanisms for addressing the uncertainty that such an approach might introduce if it reopens negotiations at each milestone.

Contributor: Who should contribute to the NCQG?

What is discussed?

Interpretations differ about who should provide and mobilize financial flows to meet the NCQG. Some Parties are asking whether the NCQG contributor base should be expanded to include countries beyond those developed countries initially responsible to fulfill the $100 billion goal. The fifth TED acknowledged that subsequent discussions are needed to further understand “how to reflect the provision of ‘collective’ in the implementation, where some argue it could reflect agreeing on burden-sharing arrangements among provider countries, while others referred to broadening the contributor base of provider countries” (UNFCCC 2023).

How was the original list of developed countries determined?

The Convention identifies three main groups of countries according to their commitments. Annex I includes countries that were members of the OECD in 1992, plus countries with economies in transition, including the Russian Federation, the Baltic states, and several Central and Eastern European states. Annex II includes all countries from Annex I, excluding economies in transition. Non–Annex I countries are mainly developing countries that constitute recipients of financial flows.

Article 4.3. of the Convention states that “developed country Parties shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures that are covered by paragraph 1” (UNFCCC 2009). Further, Article 4.4. states that “developed country Parties and other developed Parties included in Annex II shall also assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects” (UNFCCC 2009). Article 4.7 mentions that “the extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective implementation by developed country Parties of their commitments under the Convention related to financial resources and transfer of technology and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of the developing country Parties” (UNFCCC 2009). In this sense, the concept of “developed countries” was deemed as being synonymous with Annex II countries. This is the same definition that other institutions, such as ODI, have generally used, as opposed to the OECD, which includes other EU Member States not included in Annex II (Bos and Thwaites 2021).

What does the Paris Agreement say in terms of who should be contributing to the new goal? The decision adopted at COP21 states that “in accordance with Article 9, paragraph 3, developed countries intend to continue their existing collective mobilization goal through 2025 in the context of meaningful mitigation actions and transparency on implementation; prior to 2025 the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement shall set a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries” (UNFCCC 2016). (For further understanding of Article 9.3, please see Figure 4.)

Many developing countries emphasize that there should not be a change in the contributor base. For example, the Like-Minded Developing Countries Group submission states, “The New Collective Quantified Goal on Climate Finance does not have the mandate to discuss contributors to the goal as it has never been cited in a previous decision. The discussion on contributors is therefore not substantiated in the NCQG process and the options discussed therein will not be useful to the CMA as it does not have a mandate to respond to such options. The exploration of contributors will not yield any productive outcome and the options produced cannot be decided upon within the NCQG agenda item this upcoming CMA in any case” (LMDC 2023). The submission from the Arab Group similarly states that “the matter of contributors to the NCQG has already been agreed by Parties within Article 9 upon the adoption of the agreement. . . . The [NCQG] does not have the mandate to discuss contributors to the goal as it has never been cited in a previous decision” (AG 2023). Other countries have stated that the NCQG is a continuation of the $100 billion goal and, therefore, developed countries remain responsible for following the same responsibilities as that goal (AGN 2023). Further, the new goal is a “means to implement the goal of the Paris Agreement in the context of Article 9, which underlines that developed countries should provide financial resources to support developing countries (Article 9.1) and should continue to take the lead in mobilizing climate finance taking into account the needs and priorities of developing countries (Article 9.3); to provide a balance between adaptation and mitigation considering developing countries’ strategies, as well as their priorities and needs (Article 9.4)” (AILAC 2023).

Figure 4 | NCQG-related articles under the Paris Agreement to assess the contributor base

Source: Information based on UNFCCC (2016).

Fundamentally, this position centers on the continuation of finance obligations within Articles 4.3 and 4.4 and on the CBDR-RC principle, where developed countries are considered responsible for the highest levels of historical emissions and their levels of wealth sufficient to provide support to other countries.

However, some developed country Parties argue that the list of countries required to contribute financially to the NCQG should be expanded beyond Annex II (those responsible for the $100 billion goal). For example, some propose including high-emitting countries and those with high economic capacities, including some countries that, under the Paris Agreement, define themselves as developing country Parties (Government of Norway 2023) whereas others suggest focusing on all high-income economies, excluding highly vulnerable countries like Small Island Developing States (Government of Canada 2023). This position commonly points to the evolving international economic landscape, including the larger financial capacity reached by some emerging economies since the adoption of the UNFCCC in 1992 and their levels of GHG emissions in recent decades, either cumulative or per capita. For example, looking at carbon dioxide (CO₂) cumulative emissions between 1990 and 2019, 10 non–Annex II countries are currently among the top 20 high emitters. Of these 10 countries, 2 (South Korea and Saudi Arabia) are considered “high-income” economies according to the World Bank classification, which is based on the per capita gross national income (GNI) (see Figure 5 and Appendix A). Similarly, looking at average per capita emissions from 1990 to 2019, 8 of the top 10 non–Annex II highest per capita emitters are classified as “high-income” economies (see Figure 6 and Appendix B).

Figure 5 | Cumulative CO₂ emissions per country

Notes: See Appendix B for the country code list. CO₂ = carbon dioxide; GNI = gross national income; kt = kiloton.

Source: WRI authors; economy classification and per capita CO₂ data extracted from World Bank (n.d.a) and CO₂ emissions from World Bank (n.d.b).

Figure 6 | Per capita CO₂ emissions per country

Notes: See Appendix B for the country code list. CO₂ = carbon dioxide; GNI = gross national income; kt = kiloton.

Source: WRI authors; economy classification and per capita CO₂ data extracted from World Bank (n.d.a) and CO₂ emissions from World Bank (n.d.b).

Submissions by developed country Parties are increasingly highlighting the relationship between Article 9 and Article 2.1c in the context of establishing the new goal and broadening the contributor base. Article 2.1c, aiming to strengthen the global response to the threat of climate change, lays out the finance-
related long-term goal of the Paris Agreement, which calls for “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (UNFCCC 2016). How this long-term goal will be operationalized is still under discussion.

Some developed countries have pushed for interpreting Article 2.1c as putting responsibility on all Parties to pay for climate action. A submission from Japan suggests discussing “broadening the contributor base through the implementation of Article 2.1c” (Government of Japan 2023). Also, countries such as Norway and New Zealand raise the contributor issue in the context of Article 9 and Article 2.1c (Government of Norway 2023; Government of New Zealand 2023), and the Environmental Integrity Group states that “as part of a global effort, the contributor base should be as broad as possible” (EIG 2022). Developing countries have raised the concern that linking the NCQG discussions to Article 2.1c may distract developed countries from their responsibility to provide and mobilize climate finance. They worry that it will shift responsibility to developing countries’ domestic policies and finance flow shifts or add further conditionalities to the climate finance provided. This was one of the main reasons why the request by some developed countries to include an agenda item to further discuss scope and implementation of Article 2.1c failed at COP27. Instead, the CMA decided to launch the Sharm el-Sheikh Dialogue on Article 2.1c and its complementarity with Article 9, the outcomes of which will be reported to the CMA at COP28.

What’s at stake?

Prior to COP29 (2024), the final text of the NCQG needs to be adopted and any concerns related to the contributor base need to be addressed. As explained above, some Parties feel this warrants an expansion of the list of countries responsible for contributing finance. Others feel there is no legal basis for discussing and implementing such an expansion. They have raised the principles of equity and CBDR-RC, as well as finance responsibilities within the Convention and its relationship with Article 9 of the Paris Agreement, to explain that the responsibility should remain in developed countries.

Discussions around expanding or modifying the contributor base will need to be holistic and include factors beyond economic capacities, including, but not limited to, emissions levels, climate vulnerability, and development indicators (see Appendices A and B for a comparison of emissions, GNI, and the Human Development Index, based on life expectancy and education indexes in addition to GNI).

Transparency arrangements: What type of transparency arrangements should accompany the goal?

What is discussed?

How does reporting work today?

Until this point, there have been different reports within the UNFCCC to help track and monitor climate finance flows mobilized by developed countries. Existing UNFCCC reports include BRs and the biennial assessment and overview of climate finance flows (BA). BRs are submitted by each developed country every two years and include, among other things, reporting on climate finance provided through bilateral and multilateral channels, using a common tabular format (CTF). The BA is issued by the SCF and provides a global overview of climate finance flows and measurement, reporting, and verification support provided to developing countries as well as a compilation of finance data from developed countries’ BRs.

In the case of accountability toward the $100 billion goal, at COP26 the SCF was tasked with developing a report on the progress toward achieving the goal. The resulting report assessed progress on the $100 billion goal based on official reports produced by the UNFCCC (BRs and BA) and the assessments and tracking performed by international organizations and civil society groups such as the OECD and Oxfam (see Figure 7).

Today, some of the existing UNFCCC transparency arrangements are being streamlined under the Paris Agreement to produce annual, biennial, and quadrennial reports to help assess progress under the NCQG.

Figure 7 | Range of estimations per channel from sources of information in the latest available year, as presented in the SCF report

Notes: Pins represent specific values from each source of information per channel. The extent of the bars represents the maximum value of estimates on the latest available year across sources of information. Analyses make assumptions on sources and instruments that are not aligned with the language of the US$100 billion goal. Note that sources of information reflect data points for the latest available year that differ across sources of information and are therefore noncomparable. The underlying data points, sources, and annotations are outlined in Annex D of the source (SCF 2022). Values for bilateral finance from the BA are derived from preliminary data of biennial reports of Annex II Parties for 2020 and are subject to change after the December 31, 2022, submission deadlines. BA = biennial assessment and overview of climate finance flows; BUR = biennial update report; MDB = multilateral development bank; MOF = Ministry of Finance; OECD = Organisation for Economic Co-operation and Development.

Source: SCF 2022.

There are three accountability mechanisms under the Paris Agreement at the individual and aggregate levels (UNFCCC 2022b). Accountability at the individual level is based on the enhanced transparency framework (ETF). Through the ETF, countries report their climate action efforts, including tracking of their NDC and information about the support provided and received by individual relevant Parties toward climate action. Reporting under the ETF is complemented by a review process conducted by third parties to assess and monitor the progress to achieve the Paris Agreement goals (see Table 3).

The information gathered under the ETF will inform the GST. The ETF includes BTRs (starting in 2024, after BRs are replaced) and biennial technical expert reviews. The ETF will promote accountability at the country level by encouraging countries to report on their climate action efforts, including on support provided and received by Parties toward climate action. Reporting under the ETF is complemented by a review process conducted by technical experts, which will determine if BTRs are in accordance with modalities, procedures, and guidelines. The information assessed by the technical expert review includes support provided to developing countries (see Table 3).

Every five years the GST assesses, at an aggregate level, the collective progress toward achieving the Paris Agreement purpose and long-term goals. The GST covers the thematic areas of mitigation, adaptation, and means of implementation and support, and it considers information reported and reviewed under the ETF.

Table 3 | Transparency arrangements under the Convention and the Paris Agreement 

Notes: UNFCCC = United Nations Framework Convention on Climate Change.

Source: Dagnet et al. 2019.

Parties have proposed a transparency framework for the NCQG that allows for monitoring and tracking of progress and builds upon existing mechanisms and systems. Several countries have supported the idea of using existing transparency frameworks under the Paris Agreement (see Table 3). For example, Argentina, Brazil, and Uruguay have stated that the “NCQG needs to be based on a solid and transparent reporting system, based on the ETF, that allows for annual assessments of its fulfillment and for recommendations on periodic adjustments to guarantee it will be fully accomplished in its agreed timeframe” (ABU 2022). The United States also supports building the NCQG transparency framework upon existing mechanisms to avoid duplication (U.S. Government 2022). AOSIS mentioned that the transparency and accountability arrangements should be in accordance with the ETF’s modalities, procedures, and guidelines (AOSIS 2022). Several countries and groups of countries, including ABU, AILAC, and AOSIS, have stated that progress on delivering the new goal should be assessed as part of each GST (ABU 2022; AILAC 2022; AOSIS 2022).

In addition, it might be more efficient to task a centralized body, such as the SCF, with producing regular progress reports on the NCQG, facilitating information to the public, and ensuring all NCQG elements are adequately reflected through the ETF.

Although Parties generally agree that accountability and transparency processes should be built upon existing systems, they disagree about the importance of a unified definition of climate finance as well as what that unified definition might look like. As described in the SCF’s report on progress toward achieving the $100 billion goal, countries can still determine their own methodologies to track, measure, report, and define climate finance, which presents challenges to aggregating climate finance data provided under the NCQG (SCF 2022).

AOSIS and the LDC Group have raised the importance of a common method for tracking climate finance provided under the NCQG (AOSIS 2022; LDC Group 2022). AGN has also highlighted the importance of having clear definitions of what is considered “new and additional” finance compared to development finance and what it means to effectively “provide and mobilize” climate finance. Clarity on definitions and tracking methods may promote consistent, comparable information and help avoid double counting (AGN 2022). To date, developed countries have discretion to classify flows as new and additional in their BRs. This discretion allows them to report climate finance already mobilized as development flows within official development assistance as additional and new. For example, the International Expert Group on Climate Finance has stated that there is an overlap between climate and development finance, which has increased because climate investments tend to serve both purposes (Bhattacharya et al. 2020).

According to the fourth BR, Parties emphasized that reporting on private flows is voluntary and no internationally agreed standard exists for tracking private climate finance (except for OECD efforts). A standard guideline or methodology on how countries could track this source is still needed. Between the third and fourth BR, the number of Parties not providing information on private sector finance (neither qualitative nor quantitative) fell from 16 out of 42 to 10 out of 41.

What’s at stake?

The NCQG is not mentioned under the Paris Agreement, and there is no standing mandate to make use of existing processes and procedures. Drawing lessons from the $100 billion goal experience, Parties appear to agree that the NCQG should be established in conjunction with an official transparency mechanism under the Paris Agreement to efficiently monitor progress toward the goal, proactively identify challenges for mobilizing and providing finance, and identify measures for addressing them.

Developed countries still have general discretion to report resources as either committed, disbursed, or climate specific and to report mobilized support as new and additional. In addition, the modalities, procedures, and guidelines for reporting do not provide specific instructions on how financial instruments should be taken into consideration, nor do they specifically spell out a mandate for reporting on the NCQG. Thus, a long list of assumptions, definitions, and methodologies depend on the discretion of each country, which could prevent aggregate, comparable data.

Transparency arrangements for the new goal need to ensure that data are comparable, accurate, and consistent and accurately reflect what has been provided and mobilized, especially if the ETF is selected as the main transparency arrangement for the NCQG and the GST as the report to assess progress every five years toward the goal (see Figure 8).

Figure 8 | Information reported in CTFs within the ETF

Note: CTF = common tabular format.

Source: Oliver 2023.