The differences between countries widened at the Bonn climate change conference held earlier this month, which also hosted the second meeting of the ad hoc work programme on the NCQG.
Countries discussed iterations of the work programme’s input paper, which had been prepared by its co-chairs. The ‘no-status’ document is meant to serve as the basis of the draft negotiating text that countries will debate at 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan, where a decision on the NCQG is to be made.
The paper presents options reflecting the positions of different countries on various aspects of the goal. But the talks in Bonn ended without consensus.
Who should pay up for climate action?
The expansion of the contributor base for the new goal was deadlocked. Simply put, parties from the Global North, including the United States, the European Union and Australia, are calling for an increase in the contributor base to the new finance goal in order to “reflect new economic realities.”
Developing countries argue that this debate is irrelevant because the NCQG is intended to facilitate the transfer of climate finance from developed to developing countries. This is a fundamental schism that is likely to escalate.
The UNFCCC (or the Convention) and the Paris Agreement do not include a legal definition of ’developed’ and ’developing’ countries. The interpretation of the terms within these contexts has primarily been based on the grouping into ’Annex II’ and ’Non-Annex I’ Parties, set in 1992 at the time of the adoption of the Convention.
The former are the developed countries that must provide financial assistance to developing countries under the Convention. Several of these Annex II nations are currently arguing that this categorisation is outdated in the NCQG context.
This was strongly opposed by the Group of 77 and China bloc, who argued that the question of who ’else’ should provide finance was outside the mandate of the NCQG for several reasons. Firstly, because it is supposed to be a goal for the provision of finance from developed to developing countries, with historical responsibility for emissions by developed countries being the premise.
Secondly, they pointed to Articles 9.1 and 9.3 of the Paris Agreement to be read together, which speak to developed countries’ obligations to provide financial support. Further, the goal is a continuation of the $100 billion commitment by developed countries.
Developing countries stood steadfast in their argument that the climate finance negotiations were not meant to push more responsibility onto them, but rather to create a goal that honours the obligations of developed countries to provide long overdue means of implementing climate action.
Developed countries, on the other hand, focused more on Article 9.3 alone, which states they “take the lead” in mobilising climate finance, but doesn’t specify the obligatory aspect as such, observers told Delhi-based think tank Centre for Science and Environment.
Relatedly, most of the interventions by countries in the Global North attempted to push the understanding that the NCQG is a “broad goal”. For instance, Kevin Adams, lead finance negotiator for US said, “Our task is to design the financial architecture to discuss how we are going to invest in climate action under the Paris Agreement.”
This is in stark contrast to the positions of over 100 developing countries that say, as a continuation of the $100 billion commitment of developed country Parties, the NCQG’s mandate is simply to be a goal based on their needs and priorities, which ensures the provision of finance to them and an emphasis on international public finance.
Can we talk finance without numbers?
The second highly contentious issue was that of the “quantum”. Developing country groups, including Like-Minded Developing Countries (LMDC), Arab group and African Group of Negotiators, all suggested amounts in the range of $1.1-$1.3 trillion per year (subject to revision based on newer needs estimations) throughout the talks.
These numbers are largely in line with the earlier estimation of developing countries’ needs of about $5.8 trillion cumulatively until 2030 to implement their Nationally Determined Contributions, as put forth by the UNFCCC’s Standing Committee on Finance. An updated estimation of needs is due to be presented later this year.
Proponents of the ~$1 trillion per year target highlighted that several other elements of the goal are hard to debate without an amount put on the table by donor countries. They urged Global North countries to put forward an amount instead of focusing on expanding the list of who should provide it.
Mohamed Nasr, lead finance negotiator for the African Group, for instance, said, “We cannot discuss aspects such as transparency, timeframes without any idea of the amount to begin with.” Saudi Arabia too, towards the end, asked developed nations to “bring a number” to the table for deliberation.
But an amount in the trillions is unlikely to come forward from any developed country any time soon. CSE’s conversations with developed country negotiators, who do not wish to be named, revealed strong mandates from governments back home, with the “difficulty” of justifying huge amounts of taxpayer money on such spending, which possibly plays a part in their apprehension.
Furthermore, there is a belief that certain non-developed countries’ growing gross national income/gross domestic product, combined with their current high emissions, warrants their inclusion on such a list.
Developing countries and civil society groups suggested this approach disregards the reality of global historical emissions and climate justice.
Both developed and developing groups acknowledge that the NCQG will have to be set from a minimum of a $100 billion per year, but to developing countries, the ambition on the quantity needs to be much higher than this.
Imbalanced text, imbalanced outcome
Near the halfway point, the Co-chairs proposed that Parties begin to discuss substantive aspects of the goal where some semblance of agreement was emerging. They requested that countries provide inputs on transparency, principles and accessibility. Developing countries were disappointed with this approach altogether, suggesting that the focus first be on the quantum and its links with other elements.
More importantly, the version of the text at this juncture was widely criticised by developing countries across the board for being imbalanced and not reflecting their positions adequately, especially in comparison with that of their Global North counterparts.
In particular, the text was considered to have disproportionately focused on the option of a “multilayered, multidimensional” approach to the goal, which is distinctly a position held by developed countries. This approach suggests that the NCQG be structured with multiple layers, with the outermost layer being a “global investment layer,” emphasising the position of wanting the NCQG to be financed from a “wide variety of sources and new and innovative instruments”.
In comparison, developing countries’ proposals for a quantum with thematic sub-goals of mitigation, adaptation and loss and damage received less attention in the text. India, on behalf of LMDCs, stated in this regard, “The multidimensional, multi-layered approach [as presented] cannot be accepted in the current form. The section on quantum seems to be hidden, with all ideas mingled into one…– this approach to streamlining [the text] is not balanced.”
Nearly all developing countries echoed this sentiment and the talks ended with this version of the text.
Towards Baku on borrowed time
Several other issues in the NCQG still need to be ironed out. Most importantly, it is worth noting that detailed, constructive dialogue on the substantive elements of the goal has yet to begin. The Co-chairs will prepare a summary of the discussions, as well as guiding questions for stakeholders interested in submissions for the next round of technical discussions in the coming months.
Given that there is only one more negotiation-focused meeting left in Baku, it is crucial to emphasise that this is a critical decade for climate action. If the world is to get on track to meet its 1.5 degrees Celsius target — a real breakthrough in climate finance — the enabler of climate action is urgently needed.
The lead finance negotiator for China opined in one of the sessions, “The atmosphere in this room is as tense as the Paris Agreement negotiations.” The issue at hand is just as significant and hopefully, the tension will move Parties towards cooperation and meaningful action – fast.
Sehr Raheja
