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Operating entities of the financial mechanisms offer a way to address transparency of access and delivery of climate finance from NCQG funds

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Operating entities of the financial mechanisms offer a way to address transparency of access and delivery of climate finance from NCQG funds

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In terms of transparency of finance, the GCF and AF offers another way of ensuring transparency in delivery.

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How will the NCQG tie into the Article 9.5 biennial communications and the reporting requirements on finance under the ETF?

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Delivery of finance to slow, project based finance may not be optimal

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Delivery of finance to slow, project based finance may not be optimal

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Time it takes to access finance - several studies show that there have been challenges in getting flows in the ground in a timely manner.

Project based funds (GCF/GEF) is not the only solution. A diversity and faster set of mechanisms  should be considered.

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Capacity building and enabling environments

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Capacity building and enabling environments

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Finance itself needs to be provided in ways that are responsive to needs, but also the commitment should include support to increase capacity to utilise finance/strengthen enabling environment.

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Consider the IPCC work on adaptation limits, which sets up a basis for how much finance is needed for loss and damage.

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Incentives to attract the pricvate sector into more adaptation finance

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Incentives to attract the pricvate sector into more adaptation finance

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Can the quantification of potential avoided losses incentivize the private sector to finance climate at lower cost.

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Prioritising the most vulnerable in the NCQG

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Prioritising the most vulnerable in the NCQG

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How will the goal specifically improve outcomes for LDCs and SIDS that are vulnerable to climate change but struggle to access financing - this was raised in the Q&A.

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Disaster Risk and Loss and Damage must be included in the NCQG

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Disaster Risk and Loss and Damage must be included in the NCQG

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Disaster risk finance finance (incl. loss and damage) by and from the private sector may be challenging, except for build back better or insurance.

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There is a view the private sector is a key source of climate finance, which is problematic as the private sector's primary focus is not philanthropic but rather focused on returns on investment finance as opposed to supporting serious developing countries needs particularly for adaption.

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Based on needs, science and transparent and time bound

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Based on needs, science and transparent and time bound

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NCQG shall be needs and science based, be transparent, contain shared accounting rules (double book entries), include proper tracking,
NCQG shall be time bound, as situation on the ground may change over time

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Measurement of effectiveness, impact, alignment and reporting

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Measurement of effectiveness, impact, alignment and reporting

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On quantum - include a measure of effectiveness in determining the NCQG

Focus on ensuring best possible outcomes through climate finance

Align investment policies to support partnerships

Need a mechanism for tracking/reporting outcomes

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NDR and NDCs shall inform on the needs of developing countries

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NDR and NDCs shall inform on the needs of developing countries

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How to address the needs of developing countries? - a basis for this could include the NDR and NDCs

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What insights can be drawn from the goal of jointly mobilizing USD 100 billion per year since its inception from the perspective of Parties and stakeholders that can inform the work on the NCQG?

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What insights can be drawn from the goal of jointly mobilizing USD 100 billion per year since its inception from the perspective of Parties and stakeholders that can inform the work on the NCQG?

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1.       We underscore that the finance goal to mobilize USD 100 billion a year was set unilaterally without an inclusive process or input from developing country Parties and is further hindered in that it relies heavily on non-public, non-concessional finance mechanisms. The mobilization goal of US$ 100 billion per year committed by developed countries is a much smaller amount in size in contrast to the actual needs assessed for developing countries.

2.       With the passage of time the requirement for the developing countries has increased and currently estimates for taking climate actions are laying out a case for trillions in new and additional financing. The adequacy of fund remains an issue and scaling up of fund from the developed country Parties is an important requirement for climate resilient future.

3.       To address the ongoing discourse on climate finance, more attention should be given to principles guiding mobilization of fund from developed countries for climate transition. The Historical responsibility and ‘respective capacities’ should determine the extent of contribution by the developed countries. The sharing of contribution, therefore, could be based on their contribution to the damage and on their respective capabilities. Besides, transparency & accountability, additionality, adequacy & predictability should characterize the flow of finance.

4.      We should draw insights from the Biennial Assessment Report and the experience of inadequacy of finance mobilization. We should also draw insights from the work under the LTF under the Convention.

5.       There should be an assessment of what the proportion of the 100bn has been with reference to grants vs refundable financial flows, and how those refundable flows are generating revenue for providers, in the case of non-concessional finance. There should also be an assessment of how the 100bn have impacted the funding of the operating entities of the financial mechanism of the UNFCCC. There should also be data on how these flows have managed to calculate adaptation and mitigation impacts, or made reference to specific climate actions and how they have aligned to NDCs. Several insights can be made because at the end of the day, the discussion should not be only on the amount of finance quantified but, on its quality, and impact.

Response from Abhishek Acharya, India

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How to ensure or prevent what happened in the the delivery of CF pre-2020 does not happen again - e.g. something similar to NDC committments.

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Lessons can be drawn / learned from the pre-2020 goal delivery plan.

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As a concept this needs to be explained, in particular on its meaning and implications for developing countries' budgetary and possible indebtness implications (including on the use of different financial instruments beyond grants, the co-financing ratios....).
Kamal DJEMOUAI (Adviser to AGN GCF board member)

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What topics should be further explored in 2022?

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What topics should be further explored in 2022?

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1.        The USD 100 billion per year proposed by developed countries to fill the finance gaps does not fulfill the finance gap for addressing issues of mitigation and adaptation in developing countries. The scale of finance should increase significantly considering:

—     emissions reductions as per the global goal of Article 2 of the UNFCCC;

—     building the adaptive capacity of developing countries in order to reach the global goal on adaptation (GGA) in the context of sustainable development and poverty eradication; and

—     address issues of loss and damage particularly in vulnerable countries.

2.       Climate finance and technology transfer continue being crucial to climate action by developing countries. COP 26, under the Glasgow Climate Pact, has urged developed country Parties to fully deliver on the US$ 100 billion goal urgently and through to 2025. Proactive initiative for quicker fulfillment of the commitment by the developed countries are the key in fulfilling the committed climate actions by developing countries within the defined time line.

Response from Abhishek Acharya, India

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What are the major drivers & barriers in the mobilization of private climate finance?

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What are the major drivers & barriers in the mobilization of private climate finance?

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1.        International climate finance remains a critical issue for stepping up climate resilient investments in developing, LDCs and SIDS. Adding to this, global outbreak of COVID 19 has posed severe challenge to these nations to finance for climate actions from domestic budgetary resources.

2.       Several multilateral organisations are now stressing on acceleration of private finance for climate actions in developing countries and LDCs & SIDS as well. The role of public sources of funding would remain critical to mobilizing and leveraging private capital. The extent to which private capital can be mobilized would itself depend on the amount of public sources available to act as a catalyst in attracting and leveraging private capital. Private sector funding would demand a well-defined risk reward profile for its investments. Hence, a significant amount of de-risking of the investment would have to be undertaken through appropriate types of public funding which needs to be discussed.

3.       The capacity for mobilizing private finance is not uniform. Neither can it be considered as the prime mover for finance. It can be at most a leveraging tool, while international public finance needs to be the major force in climate finance from developed to developing countries.

4.      Private finance is mainly focused or interested in making revenue. Therefore, these refundable resources are aimed primarily at mitigation, are not concessional in nature and do not address needs of developing countries. There should be stronger call for the private sector to provide support for adaptation in a non-refundable manner, as a way to enforce their social and environmental responsibility.
5.  May be it is of importance now to create "enabling environment" in the 'Developed Countries' to guarantee and incentivize climate finance flows through low cost finance and access to them.
Response from Abhishek Acharya India