New Collective Quantified Goal (NCQG) (GS Paper 3, Economy)
Context and Importance
- At the ongoing COP29 summit in Azerbaijan, countries are in the final stages of negotiating the New Collective Quantified Goal (NCQG) on climate finance.
- This goal is set to replace the previously established $100 billion per year target from COP15 (2009) and is designed to scale up financial support for climate action in developing countries.
- The NCQG will be a cornerstone in global efforts to address climate change, ensuring that developing nations have the resources they need to mitigate the effects of climate change and adapt to its consequences.
Background of Climate Finance Commitments
- In 2009, developed countries at COP15 pledged to provide $100 billion annually in climate finance to help developing countries tackle climate change.
- However, the target was largely political and not based on a negotiated formula.
- By COP21 (2015), the Paris Agreement set the expectation that a new, more ambitious collective goal would be established by 2024 to replace the $100 billion target.
- Developing nations have long argued that $100 billion is insufficient to meet their climate finance needs.
- According to estimates, the actual need could range between $1 trillion and $2.4 trillion per year until 2030.
- The NCQG negotiations aim to bridge this funding gap and ensure that finance is both adequate and equitable for those countries most vulnerable to climate change.
What is the NCQG?
- The New Collective Quantified Goal (NCQG) is a target aimed at mobilizing significant annual financial resources for climate action in developing countries.
- The goal reflects a broader and more ambitious financial commitment, building on the $100 billion goal.
- While the exact figure is still under negotiation, the NCQG could eventually range from $100 billion to over $2 trillion per year, depending on the final agreement.
- This finance would support both mitigation (reducing greenhouse gas emissions) and adaptation (helping countries cope with the impacts of climate change).
Why is NCQG Necessary?
- The initial $100 billion figure was deemed insufficient from the outset.
- Climate finance needs for developing countries have grown dramatically due to increasing risks from climate impacts, such as extreme weather events, rising sea levels, and food and water insecurity.
- According to the UN, the financial requirements for developing countries' climate actions may range from $1 trillion to $2.4 trillion annually by 2030, encompassing both adaptation and mitigation efforts.
- Developing nations also seek finance that is not only adequate but also predictable, grant-based (rather than loans), and long-term to enable sustained climate action over the coming decades.
Understanding Climate Finance
Climate finance refers to the funds required for climate action, including projects aimed at mitigation and adaptation:
- Mitigation involves reducing greenhouse gas emissions to slow the pace of climate change (e.g., renewable energy projects, energy efficiency improvements).
- Adaptation includes actions taken to anticipate and minimize the adverse effects of climate change (e.g., building climate-resilient infrastructure, implementing disaster risk management programs).
Climate finance can come in the form of grants, concessional loans, and investments, with a growing emphasis on financing mechanisms like carbon pricing (through carbon taxes or cap-and-trade systems), which also incentivize emission reductions while generating funds.
The Role of Developed Countries
- The historical responsibility for climate change largely lies with the industrialized nations, whose emissions over the past 150 years have significantly contributed to global warming.
- According to the UNFCCC, developed countries have a legal and moral obligation to provide financial support to developing nations to address the effects of climate change.
- Unfortunately, these countries have yet to meet their financial commitments.
- As negotiations at COP29 progress, developing nations continue to urge the global community to meet its obligations, particularly given the urgency of addressing the climate crisis.
Global and Indian Climate Finance Initiatives
Several global and national initiatives have been set up to channel climate finance to developing nations:
- Global Environment Facility (GEF): Founded in 1991, the GEF provides grants to projects that address climate change, biodiversity, and land degradation, partnering with governments and the private sector.
- Adaptation Fund: Established in 2001, this fund provides financial support for adaptation projects in vulnerable developing countries, particularly those impacted by climate change.
- Green Climate Fund (GCF): Launched in 2010 under the UNFCCC, the GCF is the main mechanism through which climate finance is channeled to developing countries for mitigation and adaptation projects.
In India, climate finance is also being driven through domestic initiatives:
- National Action Plan on Climate Change (NAPCC): Launched in 2008, the NAPCC outlines eight national missions focusing on sustainable development in areas such as solar energy, energy efficiency, and sustainable agriculture.
- National Adaptation Fund for Climate Change (NAFCC): Set up in 2015, the NAFCC provides funding for projects aimed at adapting to climate impacts across India's most vulnerable regions.
- Clean Energy Fund (CEF): The government levies a cess on coal production and imports to fund the promotion of clean energy technologies, including renewable energy projects.
- Renewable Energy Investments: India has rapidly expanded its renewable energy capacity, particularly solar, supported by government incentives and investments from private sectors.
Moving Forward: The Need for a Robust NCQG
The outcome of the NCQG negotiations at COP29 will be crucial for the global climate agenda. It will determine the scale of financial resources available to developing countries and shape the future of global climate action. For the NCQG to be effective, it must be:
- Ambitious: Adequately reflecting the financial needs for both mitigation and adaptation in developing nations.
- Predictable: Ensuring a consistent and reliable flow of funds for climate projects over the long term.
- Equitable: Addressing the disproportionate vulnerability of poorer nations while holding developed countries accountable for their historical emissions.
In conclusion, the NCQG negotiations represent a pivotal moment in the fight against climate change. By securing sufficient climate finance, the global community can ensure that all nations have the resources they need to transition to a sustainable, low-carbon future and adapt to the changing climate.
