Key Takeaways:
The New Collective Quantified Goal (NCQG) Sets Ambitious Targets for Climate Finance: COP29 finalized the NCQG, aiming to mobilize USD $300 billion annually by 2035 with a long-term benchmark of USD $1.3 trillion per year from a range of sources, including public, private, bilateral and multilateral channels, underscoring the need for transparency among all actors to close the global climate finance gap.
The Enhanced Transparency Framework (ETF) as a Beacon for Climate Action: At the end 2024, countries submitted reports regarding their financial flows through Biennial Transparency Reports (BTRs) under the ETF to identify funding gaps, optimize resource allocation and strengthen trust between donors, recipients and stakeholders.
Achieving Enhanced Transparency with the ICAT Climate Finance Transparency Guide: The ICAT Climate Finance Transparency Guide provides a step-by-step methodological approach, tailored to supporting Nationally Determined Contribution (NDC) implementation, optimizing resource management and aligning national frameworks with the ETF for transparent outcomes on the road from Baku to Belém (COP30) and beyond.
The end of COP29 deliberations
As the curtains close on COP29 in Baku, Azerbaijan, the international community reflects on the progress made in addressing global climate challenges. The New Collective Quantified Goal (NCQG) for climate finance took center stage over the course of the conference, aimed at ensuring predictable and adequate funding to support developing countries in achieving their NDCs.
Building on the framework established by the Paris Agreement, COP29 highlighted the importance of transparency, accountability and collaboration to close staggering financial gaps, while accelerating implementation and climate ambition. However, the NCQG fell drastically short of addressing the substantial USD $5 trillion annual funding gap required to meet global climate finance needs.
Given the limited funding available to developing countries, financial resources must be carefully monitored and reported to optimize climate adaptation and mitigation activities. With negotiations now concluded, the outcomes from Baku serve as a stark reminder of the work ahead in achieving a sustainable and climate-resilient future.
Taking a look at the NCQG
The outcome of the NCQG on climate finance defined at the conclusion of COP29, faced criticism for its lack of ambition and clarity. It’s set to mobilize USD $300 billion annually from developed countries to developing countries by 2035 for climate action, tripling the amount of finance from the previous USD $100 billion target. Under Article 9 of the Paris Agreement, developed countries are committed to providing financial resources to assist developing country Parties with respect to both mitigation and adaptation priorities. However, the NCQG implies that the mobilization and provision of climate finance from developed countries will stem from a variety of sources including public and private, bilateral and multilateral, among other alternative sources.
Subsequently, the NCQG calls upon all actors to work together to increase funding for developing countries from public and private sources, targeting a benchmark of at least USD $1.3 trillion per year by 2035. Now that the NCQG is finalized, ensuring transparency will be crucial to protect the integrity and effectiveness of climate finance mobilization as global ambitions continue to grow.
Delivering on the Enhanced Transparency Framework under the Paris Agreement
Central to narrowing this funding gap and meeting the NCQG by 2035 is the Enhanced Transparency Framework (ETF). The ETF, established under Article 13 of the Paris Agreement, plays a pivotal role by mandating Parties to regularly report on climate finance flows, technology transfer and capacity-building efforts for strengthening comparability and accountability.
As described under the ETF, countries are now required to communicate this information and data through their Biennial Transparency Reports (BTRs) to create a standardized reporting process under the United Nations Framework Convention on Climate Change (UNFCCC). Subsequent reports will be due every two years with the goal of ensuring consistency through a regularly established timeline for Parties.
Reporting is essential for developing countries, since they are the primary recipients of climate finance. By tracking these flows, stakeholders can identify funding gaps, measure progress and prioritize actions aligned with global climate objectives. At the domestic level, understanding climate finance flows can help improve and optimize public resource management, allowing governments to redirect funding towards sectors that have high greenhouse gas (GHG) abatement potential or other climate-sensitive sectors. Enhanced transparency also strengthens donor relationships, signaling clear needs for greater resource mobilization and additional financial support.
The ETF underpins the operationalization of Article 2.1c of the Paris Agreement, which calls for aligning public and private financial flows towards low-carbon and climate resilient development.
The ICAT Climate Finance Transparency Guide as a Tool for Action
In light of the global funding gap and need for strengthened transparency, the Initiative for Climate Action Transparency (ICAT) developed the first-ever Climate Finance Transparency Guide, with technical support from CCAP, to aid countries in estimating, tracking and reporting financial flows for implementing their NDCs. The Guide seeks to integrate climate finance data into national transparency frameworks, while concurrently aligning reporting with the broader ETF, such as the BTR submissions and other overarching Paris Agreement obligations.
The Guide is specifically designed to provide step-by-step methodological guidance to government officials and climate change experts in developing countries. It features five key phases:
Scoping, planning and institutional arrangements to establish foundational processes and structures.
Defining and classifying climate finance to ensure clarity and consistency in financial tracking.
Tracking ex-ante climate finance needs assessment for forecasting and planning financial requirements.
Monitoring climate finance and managing flows effectively.
Evaluating efforts to move from transparency to actionable climate outcomes.
The five key phases of the ICAT Climate Finance Transparency Guide are part of a process cycle that will continuously evolve as nations begin to undergo implementation and become acquainted with its associated activities, given the varying levels of readiness amongst countries.
Considering the special needs and unique circumstances of Small Island Developing States (SIDS) and Least Developed Countries (LDCs), the Guide also offers a flexible and adaptable approach that enables their active participation in the ETF reporting process. As the volume of climate finance continues to increase over the next decade from diverse sources, greater transparency measures will increasingly be required by countries to achieve the USD $1.3 trillion goal by 2035.
Staying on course from Baku to Belém
Despite the setbacks and challenges surrounding the NCQG, the international community must continue to build on the momentum from COP29, staying focused on increasing climate finance while strengthening transparency and accountability.
Positive momentum has been maintained as the COP29 Presidency, in collaboration with the UNFCCC, launched the Baku Global Climate Transparency Platform (BTP), which strengthens mutual trust among Parties and promotes universal participation in the ETF. With a relatively large number of different disclosure processes, the BTP serves as a beacon for cooperation in the multilateral space. It seeks to convene national experts and climate finance practitioners to facilitate the collection and harmonization of data at the international level through a uniform process.
Additionally, the COP29 Presidency will be working closely with the COP30 Presidency, to develop the “Baku to Belém Roadmap to 1.3T.” The Roadmap calls for all actors to work together to increase climate finance from public and private sources and provides strategic direction for meeting the USD $1.3 trillion target. Along the road to COP30, greater transparency will be key for unlocking different sources of climate finance.
To this end, the ICAT Climate Finance Transparency Guide remains an essential tool for realizing this climate finance goal through supporting and accelerating Parties’ BTR submissions, improving and optimizing domestic public resource management and strengthening transparency amongst local stakeholders and international donors for the potential mobilization of additional climate finance sources.
Our work in transparency
As co-developers of the Guide, CCAP continues to support developing countries in implementing robust national climate finance transparency frameworks. CCAP specializes in developing national climate finance policies, providing technical capacity-building and knowledge sharing activities and mobilizing additional climate finance sources towards areas of need.
Acknowledging the gravity of the NCQG outcomes, CCAP understands the key role of transparency in identifying funding gaps, optimizing public resource management, building trust among different stakeholders and meeting disclosure obligations to the UNFCCC for additional financial support.
To learn more about CCAP’s work in climate finance transparency, click here:
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CCAP’s mission is to support every step of climate action, from ambition to implementation. A recognized world leader in climate policy and action, CCAP creates innovative, replicable climate solutions, strengthens capacities, and promotes best practices across the local, national, and international levels to accelerate the transition to a net-zero, climate resilient future. CCAP was founded in 1985 and is based in Washington, DC.
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