Why is it in the news?

• In 2009, developed countries pledged to contribute $100 billion annually towards climate action.
• However, they have not fulfilled this commitment. With the urgency of the climate crisis, negotiations are underway to establish a new global climate finance budget ahead of COP29 in Baku in November.

 More about the news

• The term to be frequently discussed in climate dialogues and at COP29 is NCQG – New Collective Quantitative Goal. NCQG refers to the new amount that developed countries are expected to mobilize annually from 2025 onwards to finance climate action in developing countries. This figure must surpass the $100 billion originally pledged by developed nations from 2020, which they failed to deliver.
• The necessity for substantial financial resources for effective climate action has been evident for some time, particularly in developing countries. Current assessments indicate that the annual financial requirements for climate action extend into trillions of dollars, far beyond the $100 billion promised.
• A report from the UN Climate Change in 2021 suggests that developing nations would necessitate around $6 trillion annually until 2030 to execute their climate action plans.
• Looking ahead, it remains uncertain how much the developed countries will commit to the new annual climate finance target.
• Even though the potential amounts being discussed are not public, it may be overly optimistic to expect that developed countries could commit to a figure anywhere near the evaluated requirements.
• India has urged developed countries to ensure that the NCQG reaches at least $1 trillion per year, primarily in the form of grants and concessional finance.

Conclusion

• While the new amount set for climate finance is anticipated to be higher than the current $100 billion commitment, the delivery and allocation of these funds will be crucial.
• Developing countries are intent on establishing a transparent and inclusive process to monitor and measure the agreed-upon amount.
• Furthermore, the distribution of the funds across different climate action needs such as mitigation, adaptation, and loss and damage will also be a matter of significance.