Elements of the new goal
Based on these mandates, over the past two years governments have used the technical expert dialogues and annual climate negotiations to discuss what the goal should look like, with the co-chairs of the process compiling a longlist of potential options for elements of the new goal.
Over the next seven months, country negotiators will need to make progress in paring down options so that at COP29 ministers can focus on the key political decisions.
Here are some of the key questions to be resolved, drawing on insights from the $100 billion experience:
Quantity
The new goal must be above $100 billion per year and take into account the needs and priorities of developing countries. Needs estimates from both bottom-up assessments and top-down modelling find that total global climate investment needs run to multiple trillions of dollars per year. Some countries have suggested presenting the goal as a percentage of gross domestic product or gross national income, rather than in dollars, and others have raised the idea of measuring the goal in terms of achieved outcomes, such as emissions reductions and increased resilience to climate impacts. A key question is how to break down overall needs estimates: how much should be public finance and how much private, what portion should be met through international funding and what portion domestically? These questions are both technical and political, touching on debates around the most effective mix of market and planned economies, equity principles, and national circumstances. Approaches for how to connect overall climate finance needs assessments to particular sources of funding could help negotiations.
Structure
The $100 billion was a singular numerical goal that incorporated multiple components: mitigation and adaptation, public and mobilized private sources, bilateral and multilateral delivery channels, and a wide array of financial instruments. This made tracking progress and finding a suitable balance among each of these sub-components challenging. A number of countries have therefore suggested the new goal incorporate sub-targets, and potentially have a layered approach, with smaller targets nested within larger targets. Governments will need to decide what sub-targets and layers could be. They could include thematic targets such as for adaptation, mitigation, and loss and damage; sources of finance such as public, private finance mobilized, and innovative sources; and geographical scope, such as international flows, domestic resource mobilization, and global totals.
Quality
The $100 billion commitment didn’t say much about qualitative elements, such as the types of financial instruments that could be used or the ways countries should be able to access the funding. Many climate vulnerable countries are struggling with sovereign debt crises – many exacerbated by mounting climate impacts – and face significant hurdles in accessing affordable climate finance. A number of governments have therefore argued that the new goal should include qualitative elements, such as principles for funding, targets for improved access, and inclusion of marginalized groups. Some quality criteria could be partially expressed in quantified terms too, such as targets for grant-based finance or allocations for particularly vulnerable countries.
Contributors
The $100 billion commitment was for developed countries to mobilize finance for developing countries. The terms “developed countries” and “developing countries” have never been explicitly defined under the UN Framework Convention on Climate Change, but 39 countries have joined in reporting on how they are delivering the $100 billion goal. These countries have contributed about half of cumulative emissions in the atmosphere and hold a large share of global wealth, so have a significant responsibility for the climate crisis and capacity to provide support. The mandate for the new goal does not specify which countries will be responsible for delivering it; governments will need to define the contributor base. Developed countries have argued that since a number of other countries now have similar or higher levels of wealth and emissions (whether measured in aggregate or per capita terms), these countries should join them in contributing to the new goal. This could include different sets of countries contributing in different ways to different elements of the goal. Some governments have also argued that the goal should include funding from the private sector and innovative sources of finance, such as levies on shipping and aviation. A key question is who would be held accountable for contributions from these sources, given that the goal is being negotiated by sovereign states, and non-state entities would not be formal Parties to the commitment.
Relationship to the Paris Agreement’s long-term goal on finance
The $100 billion goal pre-dated the Paris Agreement, and focused solely on mobilization of finance by developed countries for developing countries. The 2015 Paris Agreement included, as one of its three long-term goals, Article 2.1c which aims at “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” This was significant, since it was the first time UN climate negotiations set a finance goal reflecting the full scale of effort needed to address climate change; incorporating public, private, domestic and international financial flows. Article 2.1c also looks beyond just scaling up climate-positive finance to the imperative to phase out financing for activities that are incompatible with climate goals, such as fossil fuels. The mandates for the new goal instruct negotiators that the aim of the goal is to contribute to accelerating the achievement of Article 2 of the Paris Agreement, including the 2.1c finance goal. A key question will therefore be how the new quantified goal connects to the long-term goal. This could be by having elements of the new goal that address broader alignment of finance flows, such as reforming fossil fuel subsidies, or connecting quantified targets for provision and mobilization of international climate finance to the broader global transition to net zero and resilient economies.
Time frames and revision
Developed countries had over a decade between agreeing to the $100 billion goal and needing to reach the target, and the commitment runs for six years, from 2020 to 2025. The new goal must be agreed “prior to 2025”, but the time frame it will cover has not been set. Governments have suggested various options, including five years (the same frequency as NDC submissions and Global Stocktakes under the Paris Agreement), 10 years, and 25 years (i.e. 2050, when the world needs to reach net zero emissions). Some countries have suggested a combination of a long-term target and interim targets. Related to time frames is the question of whether and how the goal would be revised over time. Given how long the current negotiations on the goal have taken (nine years between the mandate being established and the scheduled conclusion, and three years of actual negotiations) the frequency, criteria and process for revisions will be key questions to answer.
Tracking and reviewing progress
The quality and consistency of climate finance reporting has been one of the big challenges in assessing progress towards the $100 billion goal. A new system for how countries report on efforts under the Paris Agreement comes into effect this year. For the first time, all countries will report every two years using the same guidelines. This new process can hopefully lead to an improvement in the consistency and quality of climate finance reporting. Nonetheless, some countries have suggested the need for revisions to these rules in light of the new goal (the reporting guidelines are in any case up for review in 2028), and others suggested creating other reporting and tracking systems for the goal, with potentially more frequent reporting. New systems could also include tasking an independent entity that has the trust of all countries to assess progress towards the goal.
This is by no means a comprehensive list and is just an overview of key debates on each issue; we will be diving deeper into these questions and our recommendations in future pieces.
Next steps
It is critical that negotiators be willing to have frank and focused discussions on the key elements of the goal at the three technical meetings this year, and identify a pared down set of options that can be incorporated into the framework for a draft negotiating text. For more contentious areas where technical negotiators can get stuck, government leaders must provide political guidance. Ministers will be meeting in the third quarter of 2024 for a high-level ministerial dialogue, but before then there will be numerous other venues, including the Petersberg Climate Dialogue, G7, G20, and UN General Assembly where heads of state and ministers will have critical opportunities to find common ground.
Preparation is the key to success. While the new climate finance goal undoubtedly touches on topics that are particularly sensitive for governments in a year where over half the world’s population will be going to the polls, putting off discussion of the issues is unlikely to lead to a high-ambition outcome at COP29. Governments need to engage openly, explaining their needs and constraints, and seek common ground for a clear, ambitious, and deliverable goal that empowers all countries to do more to tackle the climate crisis.
