New Collective Quantified Goal OECD Paper

Climate Change
Expert Group
Paper No.2024(2)
The New Collective Quantified

Goal on climate finance: Options
for reflecting the role of different
sources, actors, and qualitative
considerations
Chiara Falduto, Jolien Noels and Raphaël Jachnik (OECD)
May 2024
2  COM/ENV/EPOC/IEA/SLT(2024)2
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THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

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COM/ENV/EPOC/IEA/SLT(2024)2 3
Acknowledgements
The authors would like to thank OECD colleague Jimena Brenes Madrigal for her background research,
IEA colleague Cecilia Tam for her substantive contributions to a box in Chapter 2 in relation to financing
needs and sources for clean energy, as well as OECD colleagues Julia Benn, Tomas Hos, Marisa Berbegal
Ibanez, and Camilo Gamba for their substantive contributions to Chapter 4 in relation to Total Official
Support for Sustainable Development. Moreover, the authors would like to thank OECD colleagues
Valentina Bellesi, Jane Ellis, Sofie Errendal, Tomas Hos, Sirini Jeudy-Hugo, Katia Karousakis, Marcia
Rocha, Mohammed Saffar, Walid Oueslati, Cécile Sangaré, Deger Saygin, and Robert Youngman, IEA
colleagues Cecilia Tam and Luca Lo Re, as well as Charlene Watson (Overseas Development Institute)
for their comments and suggestions on earlier drafts of this paper. The authors would further like to thank
facilitators, presenters and attendees at the April 2024 CCXG Global Forum on the Environment and
Climate Change, whose views and feedback helped shape this final version.
The CCXG Secretariat would like to thank Australia (Department of Foreign Affairs and Trade), Belgium
(Federal Public Service Health, Food Chain Safety, Environment), Canada (Environment and Climate
Change Canada), the European Commission, Finland (Ministry of the Environment), Germany (Federal
Foreign Office), Italy (Ministry of the Environment and Energy Security), Japan (Ministry of the
Environment), Netherlands (Ministry of Economic Affairs and Climate Policy), New Zealand (Ministry for
the Environment), Norway (Ministry of Climate and Environment), Republic of Korea (Ministry of Foreign
Affairs), Sweden (Swedish Environmental Protection Agency and Swedish Energy Agency), Switzerland
(Federal Office for the Environment), the United Kingdom (Cabinet Office) and the United States
(Department of State) for their direct funding of the CCXG in 2022-2023, and Belgium, the OECD and IEA
for their in-kind support of the CCXG in 2022-2023.
Questions and comments should be sent to:

Chiara Falduto
OECD Environment Directorate
46 Quai Alphonse le Gallo
92100 Boulogne-Billancourt
France
Email: Chiara.Falduto@oecd.org
All OECD and IEA information papers for the Climate Change Expert Group on the UNFCCC can be
downloaded from: www.oecd.org/environment/cc/ccxg.htm.

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Abstract
At the UNFCCC COP21 in 2015, Parties decided that a New Collective Quantified Goal (NCQG) on climate
finance shall be set prior to 2025, from a floor of USD 100 billion per year, taking into account the needs
and priorities of developing countries. The ad-hoc work programme on the NCQG commenced at the
beginning of 2022 and will conclude in 2024. In this context, the present paper puts forward key findings
that can help inform the final months of international discussions relating to the NCQG. First, the paper
provides a stocktake of available evidence highlighting that climate action in developing countries requires
significant levels of financing that can be met from a wide, and complementary, range of existing and
potential new sources. Second, the paper considers how the NCQG could capture various individual
elements, grouped in three clusters: international public finance, private finance, and domestic efforts.
Without pre-empting the future structure of the NCQG, the discussion in this paper illustrates how to
potentially reflect both the importance of international public finance as well as the need to scale up private
finance, while also recognising the magnitude and effectiveness of such finance depends on domestic
contexts and actions by all Parties. Third, the paper explores issues relating to tracking and assessing
progress towards the future goal. These indicate that while certain elements can be tracked in monetary
terms, others would require a different type of quantified indicators or qualitative information. These
considerations also highlight that although data and information stemming from the Paris Agreement’s
Enhanced Transparency Framework will be central, further sources will be needed for such progress
assessments to be as comprehensive and policy relevant as possible.
JEL Classifications: F35, F63, F64, Q01, Q54, Q56

Keywords: UNFCCC, climate change, Paris Agreement, Climate finance, New collective quantified goal

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Résumé
Lors de la COP21 en 2015, les États parties à la CCNUCC ont décidé qu'un Nouvel Objectif Collectif
Quantifié (NOCQ) en matière de financement de la lutte contre les changements climatiques serait fixé
avant 2025, à partir d'un seuil de 100 milliards de dollars par an, en tenant compte des besoins et des
priorités des pays en développement. Le programme de travail ad hoc sur le NOCQ a commencé début
2022 et se terminera en 20214. Dans ce contexte, ce document présente des conclusions qui peuvent
contribuer à éclairer les derniers mois des discussions internationales relatives au NOCQ. Tout d'abord,
sur la base des estimations disponibles, le document souligne que l'action climatique dans les pays en
développement nécessite des niveaux importants de financement total qui peuvent être couverts par un
large éventail de sources existantes et potentielles jouant des rôles complémentaires. Deuxièmement, le
document envisage comment le NOCQ pourrait prendre en compte divers éléments individuels, regroupés
en trois catégories : les financements publics internationaux, les financements privés, et les efforts
nationaux. Sans préjuger de la structure future de l'objectif, cette approche illustre comment
potentiellement refléter la centralité des financements publics internationaux et la nécessité d’augmenter
à grande échelle les financements privés, tout en reconnaissant que l'ampleur et l'efficacité de ces
financements dépendent également des contextes nationaux et des actions menées par tous les États.
Troisièmement, le document explore les questions relatives à la manière de suivre et d'évaluer les progrès
accomplis dans la réalisation de l’objectif futur. Il en ressort que si les éléments essentiels peuvent être
suivis en termes monétaires, d'autres nécessiteraient différents types d'indicateurs quantifiés ou
d'informations qualitatives. Ces considérations soulignent également que, même si les données et les
informations issues du Cadre de Transparence Renforcé de l'Accord de Paris seront centrales, d'autres
sources seront nécessaires pour que l’évaluation des progrès soit aussi complète et pertinente à
l'élaboration des politiques publiques que possible.
Classification JEL: F35, F63, F64, Q01, Q54, Q56

Mots clés: CCNUCC, Changement climatique, Accord de Paris, Financement climatique, Nouvel objectif
collectif quantifié

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Table of contents
Acknowledgements 3
Abstract 4
Résumé 5
List of acronyms 8
Executive Summary 10
1. Introduction 16
2. Snapshot of finance needs and sources for climate action in developing countries 18
2.1. Investment and financing needs for climate action 18
2.2. Sources of finance for climate action 22
2.2.1. Typology, roles and limitations of different actors and instruments 22
2.2.2. Illustrative overview of existing sources of finance for climate action 25
3. Options for reflecting sources, actors, and qualitative elements in the NCQG 32
3.1. Preamble 33
3.2. Cluster 1: International support for climate action 34
3.2.1. Bilateral public finance 35
3.2.2. Multilateral public finance 37
3.2.3. Non-commercial finance from non-Party stakeholders 38
3.2.4. Support for capacity building and technology transfer by Parties providing support and,
potentially, non-Party stakeholders 39
3.2.5. Qualitative considerations that can help further strengthen the provision of public
finance 40
3.3. Cluster 2: Private finance mobilised and catalysed for climate action 47
3.3.1. Private climate finance mobilised by public finance interventions 48
3.3.2. Private finance catalysed by other public interventions 50
3.4. Cluster 3: Domestic efforts by all Parties 51
3.4.1. Incentives for public climate budgeting and spending 52
3.4.2. Incentives for strengthened enabling environments for climate-related investments 53
3.4.3. Incentives for the use of innovative instruments to raise further resources domestically 54
4. Potential indicators for different elements of the NCQG 56

4.1. Types of indicators to track progress towards different elements 56
4.2. Data sources for tracking progress towards the NCQG 60

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References 65
Tables
Table 1. Overview of possible options for reflecting different elements in the NCQG 13
Table 2.1. Overview of differences and commonalities in methodological approaches of selected providers of
climate investment and financing needs estimates 19
Table 3.1. Possible typology of public interventions having an effect on private finance 48
Table 4.1. Selection of possible indicators for different NCQG elements 58
Table 4.2. Overview of reporting requirements under the Paris Agreement ETF 60
Figures
Figure 2.1. Sample estimates and uncertainty ranges of annual climate finance needs in developing countries
by 2030 21
Figure 2.2. Overview of sustainable development finance actors and instruments 22
Figure 2.3. Overview of current main sources for global climate finance by actors and region 26
Figure 2.4. Illustrative examples of estimated financing sources for climate change mitigation and adaptation
in different geographies 29
Figure 2.5. Clean energy investments in developing countries (excluding China) by sector and region (LHS)
and sources of finance (RHS) in the NZE Scenario 30
Figure 3.1. Visualisation of the possible clusters and elements of the NCQG 33
Boxes
Box 2.1. Selected examples of domestic policy actions towards policy and enabling conditions more conducive
to private finance for climate action 27
Box 2.2. Zoom in on financing needs and sources for clean energy in developing countries 30
Box 3.1. Advantages and challenges of sub-goals 46

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List of acronyms
AFOLU Agriculture, Forestry and Other Land Use
BTR Biennial Transparency Report
CIVs Collective investment vehicles
CPI Climate Policy Institute
CRDC Climate Resilient Debt Clauses
DAC Development Assistance Committee
DFI Development Finance Institution
DSF Debt Sustainability Framework
ECG Export Credit Group
ESG Environmental, Social and Governance
ETF Enhanced Transparency Framework
EU European Union
GCF Green Climate Fund
GDP Gross Domestic Product
GEF Global Environment Facility
GHG Greenhouse Gases
GPP Green Public Procurement
GST Global Stocktake
GSSS Green, Social, Sustainability and Sustainability-linked
IFC International Financial Corporation
IMF International Monetary Fund
IRENA International Renewable Energy Agency
IPCC Intergovernmental Panel on Climate Change

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JETP Just Energy Transition Partnership
LDCs Least Developed Countries
LDCF Least Developed Countries Fund
MDB Multilateral Development Bank
NAP National Adaptation Plans
NCQG New Collective Quantified Goal
NDC Nationally Determined Contributions
NZE Net Zero Emissions
ODA Official Development Assistance
OOF Other Official Flows
SCF Standing Committee on Finance
SCCF Special Climate Change Fund
SIDS Small Island Developing States
SLBs Sustainability Linked Bonds
SNP System of National Accounts
SSC South-South co-operation
TED Technical Expert Dialogue
TPS Tradeable Performance Standards
TOSSD Total Official Support for Sustainable Development

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Executive Summary
At the 21st Conference of Parties (COP) of the United Nations Framework Convention on Climate Change
(UNFCCC) in 2015, Parties decided to set a New Collective Quantified Goal (NCQG) on climate finance,
from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries.
The NCQG is to be decided upon by the end of 2024. Discussions that began in 2022 are ongoing,
addressing critical aspects of the NCQG, including its potential quantum, scope, and structure.
The context in which the NCQG is being developed has changed considerably since the USD 100 billion
goal was set in 2009. On the one hand, climate-related initiatives in both the public and private finance
sectors have significantly expanded, alongside an overall increase in global climate efforts. On the other
hand, climate impacts and vulnerabilities to such impacts have increased across geographies, along with
economic pressures, such as growing debt burdens in many developing countries. This evolving context
makes the process of establishing a new goal that is both ambitious and achievable even more complex.
To ensure that the NCQG takes into account the needs and priorities of developing countries, it is important
to understand financing needs for climate action and existing sources of financing. Identifying financing
needs for climate action is not straightforward, and there remain many challenges and uncertainties with
current aggregate-level estimates due to a diversity in methodologies used and data limitations.
Notwithstanding these challenges, existing estimates and projections suggest that by 2030, average
annual climate finance needs in developing countries could range between USD 550 to 2 500 billion.
The strategic combination of different financial sources is imperative for scaling up climate finance in
developing countries and ensuring its efficient and effective utilisation. Public climate finance is pivotal for
activities with high social value but limited direct financial returns, such as adaptation and capacity building,
as well as to de-risk projects and mobilise private finance. Private finance from a wide range of actors
plays a crucial role, particularly for sectors and projects that can deliver revenue streams. Different financial
instruments (grants, debt, equity, guarantees and insurances) and blending mechanisms serve distinct
and complementary purposes. From a general perspective, grants can support capacity building and
project demonstration, loans can finance large infrastructure, equity can contribute to financing stability,
and guarantees and insurance can cover or reduce various types of risks.
Despite increasing financing needs to achieve the Paris Agreement's goals, tracked global investments
supporting climate action averaged only USD 1 265 billion during 2021-2022, out of which developing
countries represent less than 20%. Such estimates have significant data gaps, particularly in domestic
public finance, private investments in sectors such as agriculture, and for adaptation in general. Available
evidence indicates that overall volumes of investments going to least developed and low-income countries
remain modest in both absolute and relative terms, largely due to difficulties in accessing both public and
private finance, and to issues relating to the cost of capital. Notably, while the private sector represents a
large share of climate finance in high-income and some middle-income countries, it is less prevalent in
financing climate action in most developing countries, and particularly in least-developed countries. This
highlights the critical role of continued international support towards building local capacities and
supporting domestic policies that create conducive environments for private sector investments towards
low-greenhouse gas and climate resilient solutions.

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COM/ENV/EPOC/IEA/SLT(2024)2  11
Building on these considerations and context, this paper sets out potential options for how the roles of
different actors, finance sources, and policy incentives could be reflected in the NCQG. To do so, the paper
identifies possible elements for consideration organised in three thematic clusters as well as an
introductory cross-cutting “preamble”:
• The preamble sets the broad context, in which the NCQG operates. Potential elements can include
an acknowledgement of global financial needs for climate action and articulate the role of the
NCQG within this broad framework. The preamble could further underscore the necessity of
making all financial flows consistent with the Paris Agreement's goals, including by tackling
regulatory barriers and aligning public incentives and policies, to ensure the NCQG’s effectiveness.
• Cluster 1 - International support for climate action captures elements relating to the critical role
of international public and non-commercial finance in supporting climate-related activities that offer
limited financial returns, thereby contributing to increasing developing countries’ capacities to
access and absorb climate finance, as well as to scaling up private finance.
• Cluster 2 – Private climate finance captures elements relating to targets and incentives for
Parties providing support and multilateral institutions to mobilise private finance through their
provision of public climate finance, as well as elements relating to the broader scaling up of private
finance that can result from the combination of a wider range of international and domestic public
interventions.
• Cluster 3 – Domestic efforts by all Parties captures elements relating to domestic public
interventions that can directly finance climate action and mobilise private finance, or that help to
create policy, regulatory, and fiscal environments that incentivise investment for climate action.
Within each cluster, this paper sets out potential options for reflecting specific elements within a NCQG
decision text. These options are summarised in Table 1. As ongoing deliberations have not yet converged
on many of these elements, the paper aims to present a balanced view of the advantages and
disadvantages of options without prejudging the outcome of ongoing negotiations.
This paper also sets out potential headline indicators for monitoring progress of potential elements within
the three clusters. These include quantitative monetary indicators (public finance, mobilised private
finance), as well as non-monetary quantitative and qualitative metrics (e.g., domestic policies
implementation by all Parties). Tracking these diverse indicators presents data availability and
transparency challenges, particularly for private finance beyond that mobilised by international public
finance, as well as for the qualitative aspects of domestic efforts and policy impacts.
Finally, without pre-empting the future structure and scope of the goal, the paper briefly discusses what
data sources could be used to monitor progress towards the goal. As a core data source, the Paris
Agreement’s Enhanced Transparency Framework (ETF) provides relevant information for clusters 1 and
2. However, additional sources would be needed for a comprehensive overview across the proposed
clusters and elements. Such sources could include, for example, the OECD Development Assistance
Committee (DAC) database for further transparency on bilateral and multilateral climate finance (cluster 1)
as well as mobilised private climate finance (cluster 2); the Total Official Support for Sustainable
Development (TOSSD) for similar data from a wider set of providers and data on domestic expenditures
contributing to climate action (cluster 3); national statistics relating to expenditures and investments as well
as official documentations relating to domestic policies (cluster 3); a range of non-official and commercial
data sources for tracking climate-related private investments more broadly (cluster 2). This multi-source
approach acknowledges the complexity of fully capturing the scope of climate finance and the likely need
for a range of complementary indicators and metrics to assess progress towards the NCQG.

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Based on the analysis in this paper, some guiding principles that could provide useful direction for ongoing
discussions include:
• First, clearly outline the roles and responsibilities of various public actors. The role of Parties
contributing to the NCQG could be reflected through differentiated levels of responsibilities for
developed countries, non-traditional provider Parties and other Parties based on their capacities.
It is also important to specifically recognise the important role of multilateral public finance
providers, including Multilateral Development Banks (MDBs) and climate funds. This delineation in
the roles and responsibilities of different public actors is crucial for operational effectiveness,
building trust, and ensuring a broad and inclusive approach to the NCQG.
• Second, address the critical importance of scaling up private finance to bridge the climate financing
gap, as well as the role of both public finance providers and public policy makers in this regard.
The Paris Agreement and its ETF recognise that private finance can be mobilised as a result from
a range of public interventions, including public finance and public policy interventions. In practice,
the mobilisation of private finance by public finance interventions can be tracked, attributed to
individual interventions, and reported at activity level. On the other hand, estimating the effect of
other public interventions, notably public policies, in scaling up private finance, typically implies
more aggregate-level indicators without attribution to individual interventions or actors. Hence,
without prejudicing the language used in the context of ongoing negotiations, the NCQG could
distinguish between private finance that is mobilised by public finance interventions on the one
hand and, on the other hand reflect the combined role of the full mix of international and domestic
public interventions in “catalysing” private finance more broadly.
• Third, go beyond mere monetary benchmarks. Relying solely on monetary targets would fall short
of incentivising the transformations needed to meet the NCQG's aims of contributing to the goals
set out in Article 2 of the Paris Agreement. There is a need for a holistic approach that not only
captures financial contributions, but also fosters enabling environments for sustained climate
action, reflects qualitative considerations such as the issue of effectiveness of finance, and
addresses key issues faced by developing countries such as access to finance and debt burden.
Notably, the NCQG process offers an opportunity to establish incentives for all Parties to undertake
domestic actions towards regulatory and fiscal frameworks that generate additional resources for
low greenhouse gas emissions and climate-resilient development.

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Table 1. Overview of possible options for reflecting different elements in the NCQG
Clusters Potential elements Issues Possible options
Using a two-tier approach that sets a commitment for developed countries to contribute to the NCQG and a slightly
less stringent expectation on a separate category of non-traditional provider Parties.
Reflecting the role of different Setting a commitment for a broader pool of provider Parties, including developed countries.
Bilateral public finance Parties contributing to the Setting a commitment for a set of provider Parties based on meeting specific criteria to contribute to the NCQG.
NCQG Encouraging voluntary contributions from “other Parties” as part of the NCQG’s global effort.
Setting an aspirational or quantitative target for voluntary contributions from “other Parties” as part of the NCQG’s
global effort.
Setting a specific target for public climate finance provided via multilateral channels.
Reflecting the role of MDBs and
Multilateral public finance Explicitly recalling and recognising the important role of MDBs and multilateral climate funds in the provision of support
multilateral climate funds
for developing countries.
Non-commercial finance Encouraging relevant actors (e.g., philanthropies) to provide financial support.
Reflecting the role of non-Party
contributions from non-Party
stakeholders Encouraging Parties to collaborate with non-Party stakeholders to enable their contribution towards the NCQG.
stakeholders
Support for capacity building Recognising the role of capacity building and technology transfer to support developing countries achieving the goals
Cluster 1 – and technology transfer by Providing incentives for of the Paris Agreement.
International Parties providing support and, capacity-building and
support for potentially, non-Party technology transfer support Incorporating guidance on capacity building and technology transfer in the context of specific challenges or barriers
climate action stakeholders faced by developed countries.
Encouraging Parties contributing to the NCQG to dynamically reflect both the sustained importance of mitigation and
Importance of different climate growing importance of adaptation and/or loss and damage in their provision of support in the context of the NCQG.
themes
Setting quantitative sub-goals for one or more thematic areas (e.g., mitigation, adaptation, loss and damage)
Requesting Parties contributing to the NCQG to provide clear documentation and guidance on the access modalities
of their bilateral climate finance.
Calling on international providers, including MDBs and multilateral climate funds, to facilitate enhanced and simplified
Qualitative considerations that Access to finance
access to financial resources.
can help further strengthen the
provision of public finance Establishing goals for financial resources to be allocated to groups of developing countries that face significant barriers
to access.
Explicitly acknowledging and recognising that many developing countries face debt sustainability challenges, and that
non-debt instruments are critical to supporting developing countries
Sustainability of debt burden Encouraging Parties and other relevant stakeholders to make progress on efforts related to debt sustainability in
parallel processes
Encouraging or requesting Parties providing support to explore or scale up the use of instruments that incentivise

Unclassified

climate action while improving debt sustainability (e.g., through Climate Resilient Debt Clauses (CRDC) or debt-for-
climate swaps)
Including quantitative goals on the provision of non-debt finance for non-commercially viable activities in specific
developing countries groupings, e.g., SIDS, LDCs, or developing countries with high debt sustainability risk
Recalling the ETF’s request for developing countries to report information on the impacts and estimated results of
climate finance received
Enhancing effectiveness of Encouraging Parties contributing to the NCQG to support developing countries in their efforts of tracking the impacts
support provided and effects of financial support received, for example through dedicated capacity-building activities.
Encouraging Parties contributing to the NCQG, MDBs, and multilateral climate funds to enhance their efforts in
reporting information on the results and impacts of their climate finance projects.
Encouraging Parties and other relevant stakeholders to take into account considerations related to vulnerable groups
Gender responsiveness and in their climate finance efforts.
inclusivity Encouraging Parties to strengthen monitoring, evaluation, and reporting mechanisms that systematically collect and
analyse social and gender-disaggregated data on climate finance allocation and outcomes.
Setting a quantified goal private Setting a quantified, absolute goal for Parties contributing to the NCQG to mobilise private climate finance, including
finance mobilisation through multilateral institutions.
Private climate finance Calling on Parties and international providers to enhance the effectiveness of their mobilisation strategies.
mobilised by public finance Setting incentives for more Calling on the MDBs to strengthen their mobilisation potential while avoiding unintended consequences on wider
Cluster 2 – interventions effective private finance development priorities
Private finance mobilisation by international
providers Setting the basis for strengthening co-ordination and collaboration between different actors.
mobilised and
catalysed for Recalling the importance of regular and granular reporting on the mobilisation of private climate finance
climate action* Recognising the importance of scaling up private finance to achieve the goals of the Paris Agreement, including
Setting incentives for the through policy support, capacity building, and other approaches.
Private finance catalysed by
increased catalysation of private Setting an aspirational goal for Parties contributing to the NCQG to strengthen capacity building and co-operation
other public interventions
resources efforts with developing countries on regulatory environments and policies conducive to scaling up private investments
for climate action.
Encouraging Parties receiving support to evaluate the financial implications of implementing their national climate
Integrating climate change plans e.g., Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs) as part of their budget
Incentives for public climate considerations into the planning
budgeting and spending planning, allocation, and
Cluster 3 – spending of public finances Encouraging Parties to adopt a long-term perspective in their budget planning processes to effectively integrate
Domestic efforts climate considerations into their national development agendas
by all Parties Addressing the role of public Encouraging the adoption of regulatory measures to boost private sector investments
Incentives for strengthened
policy frameworks to support Incentivising climate-related financial transparency and risk disclosure
enabling environments for
and enhance the mobilisation Promoting the use of fiscal instruments to incentivise climate investment and disincentivise high-GHG and non-resilient
climate-related investments
and catalysation of private activities

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finance Recognising the potential impact of certain domestic policies on the ability of other countries to attract climate finance.
Incentives for the use of Exploring the use of innovative
Encouraging the use of innovative financial instruments to raise resources domestically for climate action and
innovative instruments to raise instruments in raising further
sustainable development.
further resources domestically. resources
Note: * Under the Paris Agreement, public sector efforts are defined as “mobilising” private finance. Accordingly, private climate finance can be reported as mobilised by financial instruments (e.g., grants,
guarantees, insurance) or by policy interventions, capacity-building, technology development and transfer, technical assistance, and other means. Empirical evidence and practical experience in tracking
and assessing climate-related financial flows and their drivers highlight the importance of distinguishing between the specific role of public finance instruments in mobilising private finance, and the combined
catalytic effect of a broader range of public interventions (including capacity building, public policies).

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1. Introduction
At the 21st Conference of Parties (COP) of the United Nations Framework Convention on Climate Change
(UNFCCC) in 2015, Parties decided that the Conference of the Parties serving as the meeting of the Parties
to the Paris Agreement (CMA), “shall set a new collective quantified goal from a floor of USD 100 billion
per year, taking into account the needs and priorities of developing countries”, prior to 2025 (decision
1/CP.21, paragraph 53) (UNFCCC, 2016[1]). The New Collective Quantified Goal (NCQG) on climate
finance is set to be decided upon by the end of 2024, at CMA6. The process to establish the NCQG has
been underway since 2022 and has thus far involved, among other things, submissions from Party and
non-Party stakeholders, as well as a series of technical expert dialogues (TEDs) that focused on various
aspects of the NCQG such as its quantum, possible quantitative elements, timeframe, and sources of
finance. In 2024, the TEDs are being conducted back-to-back with three meetings under the ad hoc work
programme through which Parties will develop the substantive framework for a NCQG draft negotiating
text.
The NCQG deliberations, as decided by CMA1, are to be taken forward “in accordance with Article 9,
paragraph 3” of the Paris Agreement (decision 14/CMA.1), which states that, “as part of a global effort,
developed countries should continue to take the lead in mobilising climate finance from a wide variety of
sources, instruments and channels, noting the significant role of public funds, through a variety of actions,
including supporting country-driven strategies, and taking into account the needs and priorities of
developing country Parties” (UNFCCC, 2016[1]). Moreover, the NCQG deliberations are to consider the
goal’s aim to “strengthen the global response to the threat of climate change within the framework of
sustainable development and efforts to eradicate poverty, including by aligning finance flows with a
trajectory towards low greenhouse gas emissions and climate-resilient development”, as articulated in
Article 2 paragraph 1(c) of the Paris Agreement (decision 14/CMA.1) (UNFCCC, 2019[2]).
It is important that the NCQG is designed to reflect the evolving global economic and financial landscape,
recognising the significant changes that have occurred since 2009 when the USD 100 billion goal was
initially set. These include rapid advancements in green technologies, an expansion in the green finance
sector, the improved socio-economic status of many countries, and overall heightened global awareness
of climate change issues as reflected in stronger climate commitments from governments, corporations,
and civil society (CPI, 2023[3]; OECD, 2023[4]; Calvin et al., 2023[5]). However, it is equally important to
consider the growing adverse impacts of climate change, as well as of economic crises and instabilities
over the past decade, which have influenced the availability and direction of financial flows, and
exacerbated the vulnerability of some countries (OECD, 2020[6]; IMF, 2024[7]; Alayza, Laxton and
Neunuebel, 2023[8]). Capturing this broader evolving landscape is important to ensure the NCQG is fit-for-
purpose for strengthening the global response to the threat of climate change.
Discussions and deliberations on the NCQG are underway in the lead-up to CMA6. The decision adopted
at CMA5 requested the co-chairs of the ad hoc work programme (AHWP) on the NCQG to prepare, a
substantive framework for a draft negotiating text capturing progress made for consideration at COP29 no
later than four weeks prior to CMA6. As of May 2024, and as highlighted in many Parties’ submissions and
interventions made at the TEDs in 2023, many interrelated critical questions remain open, including on the
quantum of the NCQG and the different sources of finance to be captured by the NCQG (UNFCCC,
2024[9]).

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This paper explores the practical aspects of integrating different sources of finance, reflecting the role of
different actors and qualitative considerations in the NCQG. The options discussed in this paper are non-
exhaustive, and stem from TED discussions and Party submissions made in the NCQG deliberation
process. For each option, the paper sets out a specific example of how it could be incorporated in the
NCQG decision text, assessing both its advantages and disadvantages, and the practicality and feasibility
of implementing different options, without prejudging the outcome of the ongoing process.
The reminder of the document is structured as follows:
• Chapter 2 takes stock of available estimates and evidence on climate change-related investments
including financing needs of developing countries, and the role of different actors and instruments
in financing climate action in this context, including information on underlying methodological
approaches and data coverage.
• Chapter 3 sets out potential options for the NCQG to reflect different individual elements grouped
within three clusters of international public finance, private finance, and domestic efforts.
• Building on Chapters 2 and 3, Chapter 4 considers potential metrics, indicators and qualitative
elements that could help assess future progress towards different potential elements that may be
captured by the NCQG.

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2. Snapshot of finance needs and

sources for climate action in developing
countries
Having a good understanding of finance needs and of current sources of finance for climate is crucial to
inform discussions relating to the NCQG. Against this backdrop, this chapter takes stock of evidence on
climate-related finance needs (section 2.1) as well as on current financing sources and their roles (section
2.2), with a focus on developing countries.1 The analysis focuses on available quantified evidence relating
to climate change mitigation and adaptation. As such, it does not cover developing countries’ needs relating
to non-financial aspects (which are, however addressed in the clusters and elements proposed in Chapter
3. ), nor loss and damage (except where explicitly covered by available estimates presented in this
chapter).
2.1. Investment and financing needs for climate action
Reaching the Paris Agreement temperature goal (Article 2.1a) relies on sharp greenhouse gas (GHG)
reductions in many sectors. In the energy sector, for example, the International Energy Agency (IEA)
scenarios highlight the need to ramp up renewables, increase electrification and improve energy efficiency
while reducing the use of fossil fuels (including an end to unabated coal-fired power plants) and cutting
down methane emissions from remaining fossil fuel-based operations (IEA, 2023[10]). On the other hand,
increasing the ability to adapt to the adverse impacts of climate change and fostering climate resilience
(Article 2.1b), while challenging to assess (Jeudy-Hugo, Errendal and Kotani, 2022[11]), requires adaptation
and resilience considerations to be embedded in all economic and human activities.
Against this backdrop, a range of actors have developed estimates of global and regional investment and
financing needs for climate action. Investment needs, in an economic sense, relates to needed purchases
of (or capital expenditure for) physical or intangible assets (Kreibiehl et al., 2022[12]). Financing, on the
other hand, refers to the process of securing the money needed to cover an investment or project cost.
Needs for climate action can also be non-monetary, such as capacity needs, skill needs or societal needs.
These fall outside the scope of this chapter.
Estimates of investment and financing needs for climate action typically have different scopes, follow
different methodological approaches and assumptions, and rely on different data and estimation
techniques (Table 2.1). As there is no agreed methodology to estimate needs, organisations and
governments have developed their own methodologies. Highlighting differences and commonalities in
scope and approaches is needed to contextualise and summarise available aggregate-level estimates.
1
The paper acknowledges both that the scope of countries captured by such evidence may vary, and that “developed”
and “developing” countries are not as such defined under the Paris Agreement.

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Table 2.1. Overview of differences and commonalities in methodological approaches of selected

providers of climate investment and financing needs estimates
Type of
Reference Geography Sector Timeframe Approach Scenario
expenditure
Mitigation and adaptation
Energy generation, Transport,
Industry and mining, Waste
Analysis of
Developing management, Agriculture and
Clima submitted NDCs &
countries, fisheries, Forests and land use, 2020-2030 Unclear Unclear
Partners NAPs + wider
excl. China Infrastructure and built environment,
literature review
Health, Water, Oceans and coastal
zones, Disaster risk management
Analysis of
submitted NDCs &
CPI Global All 2022-2030 Unclear Unclear
NAPs + wider
literature review
Energy transformations, loss and Analysis of
Developing
damage, adaptation and resilience, submitted NDCs &
IHLEG 2030 countries, 2020-2030 Unclear Unclear
natural capital, methane from fossil NAPs + wider
excl. China
fuels and waste literature review
Energy, waste & sanitation, land use
Analysis of
and forestry, transport, agriculture,
submitted national
UNFCCC water, disaster prevention &
Global 2020-2030 Unclear documents* + Unclear
SCF preparedness, coastal zone
wider literature
management, ecosystem,
review
infrastructure, health
Mitigation only
Capital Investment, <1.5°C
Energy, Transport, Industry, Cost model + wider
ETC Global 2021-2050 Concessional/grant (50%)
Buildings literature review
payments IEA NZE by 2050
<1.5C
IEA Global Energy transformations 2026-2050 Capital Investment Cost model (50%)
IEA NZE by 2050
1.5°C
IRENA Global Energy transformations 2023-2050 Unclear Cost model (50%)
IRENA 1.5
Capital 1.4°C
Energy, Transport, Industry,
expenditure (50%)
McKinsey Global Buildings, Agriculture, Forestry and 2021- 2050 Cost model
physical assets NGFS NZE
Other Land Use (AFOLU)
investment 2050
Adaptation only
Agriculture, water, infrastructure and
Cost model + 2.7°C
settlement, forests and ecosystems,
Developing analysis of (50%)
UNEP climate-induced disaster, human 2021-2030 Unclear
countries submitted NDCs & RCP4.5 –
health, energy, coastal, tourism,
NAPs SSP2
other
Note 1: This table only includes aggregate analyses, some of which could include country-specific estimates as part of the aggregates. This is
a high-level comparison, acknowledging that the different dimensions presented here are not directly comparable across references.
* National documents include: Adaptation Communications (ACs), Biennial Update Reports (BURs), Long-Term Low-Emission Development
Strategies (LT-LEDs), National Adaptation Plans (NAPs), National Adaptation Programmes of Action (NAPAs), National Communications (NCs),
Nationally Determined Contributions (NDCs), Technology Action Plans (TAPs), Technology Needs Assessments (TNAs).
Source: Authors, based on (Climate Capital Partners, 2022[13]; CPI, 2023[14]; ETC, 2023[15]; IEA/IFC, 2023[16]; Songwe, Stern and Bhattacharya,
2022[17]; McKinsey & Company, 2022[18]; UNFCCC SCF, 2021[19]; UNEP, 2023[20]; IRENA, 2023[21]).
The methodologies highlighted in Table 2.1 cover estimates including developing countries, either as the
main scope of the analysis or as a subset estimate of their global analysis. Many more estimates exist,
providing either global estimates (e.g., (Bertram et al., 2021[22]; McCollum et al., 2018[23])), regional
estimates (for e.g., Africa (CPI, 2022[24])), or national estimates (UNFCCC SCF, 2021[19]). Such estimates

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cover different sectoral scopes, which are often classified in different ways making them difficult to
compare. Estimates of mitigation-related investment needs often focus on energy. For example, the IEA
and IRENA capture investments associated with energy system transformations, as a sizeable subset of
investment needs for mitigation (IEA/IFC, 2023[16]; IRENA, 2023[21]). Estimates of adaptation investment
needs are more limited in number, whether at a global, regional, or national level (UNEP, 2023[20]).
Estimates of aggregate investment needs are based on different methodological approaches and data
sources (Table 2.1). Some global needs assessments are calculated using bottom-up models of changes
in economic activities and their costs (referred to here as cost models). Others combine a wide literature
review of disaggregate sectoral estimations and national assessments (as published as part of NDCs or
NAPs for example). One challenge with such analysis is that national assessments follow highly different
approaches and scopes, thus strongly limiting the potential for meaningful aggregation. Aggregate
analyses of needs may also rely on different definitions (Zhang and Pan, 2016[25]; UNEP, 2023[20]). Some
needs estimates can cover non-financial needs, such as institutional capacity building (Kreibiehl et al.,
2022[12]; Osama et al., 2021[26]). There are also important gaps in national needs assessments, as not all
countries publish them, nor do those who do publish them cover both mitigation and adaptation across all
relevant sectors (UNFCCC SCF, 2021[19]).
Other differences in methodologies and assumptions can further drive heterogeneity in needs estimates
(Table 2.1). The choice of a given climate change mitigation scenario can impact the results of any climate-
related financial analysis (Noels et al., 2023[27]). A more ambitious scenario, in terms of near-term
emissions reductions and long-term temperature goal for example, would require higher mitigation finance
needs, but may reduce adaptation finance needs (IEA/IFC, 2023[16]). Different scenarios can follow very
different mitigation and adaptation strategies, and underlying assumptions, further driving uncertainty in a
needs analysis. Moreover, for adaptation-related needs assessments, there is no clear objective or
quantified goal, neither at global or national levels. Hence, different estimates may accept different risk
levels and residual damages (UNEP, 2023[20]). Further, differentiating between finance needs for climate
change adaptation and sustainable development can be challenging, given their highly interconnected
nature.
Despite methodological and data challenges in estimating finance needs for climate action, such estimates
can help motivate ambition and inform strategies to scale up finance for climate action significantly. One
study, bringing together different references, estimates global climate mitigation and adaptation finance
needs between 5.9 and 12 trillion USD annually by 2030 (CPI, 2023[3]).
Estimates of climate-related investments and financing needs in developing countries specifically may be
available as a subset of global investment estimates for climate action or sustainable development, or stem
from dedicated analyses. Due to differences in coverage, methodological approaches and assumptions,
and data challenges, such estimates vary widely and are highly uncertain. As shown in Figure 2.1,
estimates of investment needs for mitigation and adaption in developing countries by 2030 available from
individual studies vary widely depending on, as discussed above, the underlying methodological approach,
as well as the scope considered. Notably, different estimates will have different geographic scopes. In this
context, it is also important to note that the Paris Agreement does not define as such countries considered
as developed and developing.
Available estimates of mitigation-related investment needs for developing countries range from USD 550
to 2500 billion annually by 2030 (Figure 2.1). Investment needs across sectors and regions are large and
highly heterogenous.
• For instance, estimated needs for climate change mitigation-related investments in the energy
sector indicate USD 2.2 to 2.8 trillion per year by the early 2030s (IEA/IFC, 2023[16]). This total
includes around one-third low-emissions generation (mainly to renewables), another third for
improvements in efficiency in end-use sectors (notably for efficient cooling and electric mobility),

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just under one-quarter for electricity grids and storage and around 8% for low-emission fuels as
well as and carbon capture, utilisation, and storage.
• Looking at individual countries, research finds annual investment needs between USD 30 to 50
billion in electricity supply by 2030 to align with the Just Energy Transition Partnership’s (JETP)
targets (Fearnehough et al., 2024[28]). Ghana’s investment needs to implement mitigation-related
actions in its NDC are over USD 1 billion annually between 2020 and 2030 (UNDP, 2021[29];
UNFCCC, 2021[30]).
Figure 2.1. Sample estimates and uncertainty ranges of annual climate finance needs in developing
countries by 2030
Note: The data does not currently allow to ensure geographical consistency across estimates. The inclusion or exclusion of certain large
countries can have noticeable effects on the estimates. Notably, many estimates presented here exclude China.
Source: Authors, based on (Climate Capital Partners, 2022[13]; CPI, 2023[14]; ETC, 2023[15]; IEA/IFC, 2023[16]; Songwe, Stern and Bhattacharya,
2022[17]; McKinsey & Company, 2022[18]; UNFCCC SCF, 2021[19]; UNEP, 2023[20]).
Available estimates of adaptation-related investment needs for developing countries range from USD 200
to 400 billion annually by 2030 (Figure 2.1), with uncertainty ranges going from USD 101 to 1 000 billion
(UNEP, 2023[20]).
• Absolute and relative sectoral needs in adaptation finance differ across regions (UNEP, 2023[20]).
Developing countries in East Asia and the Pacific need more finance for infrastructure and
settlements. Developing countries in Latin America & the Caribbean, the Middle East and North
Africa have their highest needs in agriculture.
• As an example of country-level estimates, adaptation investment needs in India are over USD 5.5
billion annually (estimate for six largest states between 2021-2030) (CPI, 2024[31]).
Although loss and damage investment and financing needs are beyond the scope of this paper, these are
included in a limited number of the estimates presented in Figure 2.1. In particular, Songwe, Stern and
Bhattacharya (2022[17]) find that coping with loss and damage from climate-related disasters, could require
annual investments between USD 200 and 400 billion by 2030.
While aggregate-level estimates of financing needs for climate change mitigation and adaptation differ,
these needs appear significant in volumes. Importantly, the scale and type of such needs vary significantly
across geographies and sectors. As discussed in the next section, different sources, instruments, and
actors may be suitable to meet different adaptation- and mitigation-related needs across geographies and
sectors.

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2.2. Sources of finance for climate action
To provide context for elements and options discussed in Chapter 3. , this section starts with an overview
of the various types, roles, and limitations of different sources of finance (section 2.2.1). Section 2.2.2 then
presents a selection of available estimates of sources of finance for climate change mitigation and
adaptation at aggregate level and in different developing country contexts. This analysis acknowledges
the presence of significant data gaps and recognises that the reality of sources, actors, and intermediaries
involved in mobilising, providing, and directing finance for climate action is considerably more complex and
varied across different sectors and countries. Moreover, it highlights that issues concerning the quality and
impacts of such finance are more nuanced and cannot be fully captured by the aggregate-level evidence
presented in this section.
2.2.1. Typology, roles and limitations of different actors and instruments
The number and diversity of financial actors who are called upon by the international community to mobilise
resources for sustainable development, inclusive of climate action, have grown, as exemplified by the 2015
Addis Ababa Action Agenda (United Nations, 2015[32]). These actors include “taxpayers, private investors,
diaspora communities, international providers and philanthropic actors, among others, all of whom bring
their own rationales, roles, resources, instruments, incentives and intermediary objectives and whose
distinct contributions to sustainable development derive from their respective and diverse comparative
advantages” (OECD, 2018[33]). Figure 2.2 provides an overview of this range of actors and instruments,
highlighting a wide variety of possibilities to combine different resources, which is both an opportunity and
a complicating factor.
Figure 2.2. Overview of sustainable development finance actors and instruments
ACTORS INSTRUMENTS
External actors
Concessional financing
Bilateral Development agencies
official and LRGs Standard grants
providers Bilateral DFIs Performance-based grants
Grants Interest subsidies
Public Export credit agencies Capital subscriptions
sector IMF EU
Multilateral MDBs Concessional loans
Institutions UN agencies Non-concessional loans
Vertical funds Debt Asset-backed securities
Reimbursable grants
Public-private partnerships Bonds
Commercial Multinational companies

Contingent Guarantees /
Private investors Institutional investors liabilities Insurance
sector
Individual migrants Philanthropic foundations
Hybrid Subordinated bonds/loans
instruments Preferred equity
Domestic actors
Public Governments
sector National Development Banks Common equity
Equity CIVs
Philanthropic foundations Reinvested earnings
Private Private enterprises
Domestic financial institutions Non-concessional financing
sector Households
Note: Examples for the types of actors and instruments are not exhaustive.
Source: Adapted from (OECD, 2018[33]).

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Insights into the roles and limitations of different financing sources can further contextualise the challenges
and opportunities to enhance the amount and mix of financing sources and instruments for climate action
in different geographies, sectors, and themes. While further work is needed to better assess the
effectiveness and impacts of financing sources, different sources and instruments have clear strengths
and limitations.
Generally, public climate finance can fill financing gaps for climate-related activities that may not yet be
market competitive or have no to low expected financial returns. In doing so, public climate finance can
help mobilise and crowd in private financing sources for climate action by reducing risks.
• Domestic public finance is crucial for the provision of public goods and services, addressing
economic disparities, and contributing to macroeconomic stability (UN DESA FSDO, 2024[34]). In
the context of climate action, government revenues are most efficiently used for activities providing
such outcomes, which are often characterised by high social value but relatively limited or no direct
financial returns. Such activities include adaptation action, capacity-building programs, and climate
risk mitigation and response. For example, much adaptation occurs in routine development
investments by governments that are typically public goods and would be undersupplied if left to
the market (Allan et al., 2019[35]). However, domestic public finance capacities are insufficient in
many developing countries to transition to net-zero emissions and adapt to climate change impacts,
especially with large, expected constraints on government revenues (OECD, 2022[36]). Among
other things, there are substantial differences in countries’ abilities and capacities to increase tax
revenues (OECD, 2018[33]).
• International public finance, from bilateral and multilateral sources, has a crucial role to directly
finance climate action, build capacity, and mobilise private finance through mechanisms that de-
risk projects (further discussed below in relation to financial instruments). It can address activities
in not-yet-mature sectors, notably in countries such as Least Developed Countries (LDCs), where
private sector engagement is frequently restricted due to high-risk profiles and underdeveloped
markets. In such contexts, public and highly concessional finance become indispensable (OECD,
2022[37]). Among other things, concessional finance leverages the limited pools of public finance to
attract much larger private finance, through a range of financing and de-risking instruments such
as loans with interest rates below the conventional market rates, grants, guarantees, subordinated
debt, and, to some extent, equity investments (G20 SFWG, 2023[38]).
• Seeing the scale of transformations and resources needed, there is a consensus that most climate
finance will need to be in the form of private finance, from both domestic and international actors,
including commercial banks, institutional investors (e.g., sovereign wealth funds, pension funds,
insurance companies), private investors, and private and multinational corporations. Domestic
private investment is an important source of capital formation (OECD, 2018[33]). In this context, the
existence and relative depth of local capital markets is important for development outcomes and
for drawing in international private finance. Private finance can also bring non-financial benefits,
such as transmitting new technologies, providing access to international markets, and creating
business linkages (OECD, 2018[33]). In more mature sectors, including clean energy, the rapidly
improving commercial picture means the scope and potential for private investment has grown
(OECD, 2023[39]). However, there are significant hurdles in raising private finance in developing
countries, for example, for adaption and in LDCs. Philanthropic capital, although limited in scale,
can partly fill gaps in areas with higher risks, low or no expected returns, ands can pioneer
innovative financing solutions (OECD, 2018[33]).
Climate finance by different public and private actors can be delivered through different financing
instruments. Broadly speaking these are grants, debt, and equity, with different uses and limitations
(Schoenmaker and Volz, 2022[40]; EIB, 2023[41]; CPI, 2023[14]; Mustapha, 2022[42]). A mix of new innovative
financing instruments and other de-risking mechanisms can also be used. Moreover, blended finance
mixes concessional and non-concessional financing instruments from public and private actors, to unlock

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larger amounts of private finance and improve the risk-return profile of climate projects in developing
countries (NGFS, 2023[43]).
• Grants are generally provided through dedicated climate funds, or bilateral or multilateral providers
(G20 SFWG, 2023[38]). As they do not place any financial burden on the recipients, they typically
support capacity building, feasibility studies, demonstration projects, technical assistance, and
activities with low or no direct financial returns but high social returns (OECD, 2022[37]). Grants are
more often used to support countries with less favourable economic and socio-political conditions
and limited absorptive capacity of debt financing.
• There are different types of debt financing (e.g., loans, bonds, credit lines, unconventional debt
instruments) that serve different roles and have different limitations in financing climate action in
developing countries. As debt needs to be repaid, typically with accrued interest, it can create
positive incentives for borrowers to exercise fiscal discipline but can also place a fiscal burden on
the borrower (OECD, 2018[33]). Low-cost project debt or concessional debt 2 by public actors can
reduce risks associated with financing projects for climate action in developing countries making
them more attractive to private actors. Public climate finance loans can be extended to
governments, or used to fund mature or close-to-mature technologies as well as large infrastructure
projects with a future revenue stream, which are predominant for mitigation finance as well as in
middle-income countries (OECD, 2022[37]). Green, Social, Sustainability and Sustainability-linked
(GSSS) Bonds can provide valuable additional resources to financing climate action (OECD,
2023[44]). In countries with significant but manageable debt levels and high climate vulnerability,
debt-for-climate swaps3 are for example used to increase liquidity and finance domestic climate
projects (CPI, 2023[14]).
• Equity financing provides greater stabilisation to recipients of finance compared to debt financing
because risks are shared between investors and recipients (OECD, 2018[33]). Direct investments
in companies can also bring capacity building opportunities. Direct investments in projects through
equity can be used to finance the more expensive portion of the capital stack, whilst providing a
strong signal to investors on international support for projects, thereby helping to attract more
private finance (OECD, 2023[39]). Equity funds created by multilateral development banks (MDBs),
and bilateral institutions also signal the due diligence done by these actors on projects, thereby
reducing information asymmetries for private investors and creating an enabling environment for
the latter (G20 SFWG, 2023[38]). However, it also comes with higher risks for MDBs and bilateral
institutions, which can hamper their ability to provide stable and predictable funding to developing
countries (OECD, 2018[33]).
• While guarantees and insurances do not result in a financial flow unless called upon, they are
critical to de-risk projects in general and to mobilise financial resources in particular. Guarantees
can mobilise private finance through managing a range of risks and uncertainties, including to
address the challenge of high-risk perception of climate-related investments in developing
countries, tackle high local currency borrowing rates, mitigate foreign exchange risk, strengthen
local debt capital markets, provide political risk cover, providing political risk cover, and leverage
the role of local financial institutions (CPI, 2024[45]). Climate-related export credits 4 provided by
developed countries’ official export credit agencies can support and facilitate international trade
2
Low-cost project debt or concessional debt is debt financing at below market rates. Debt finance can be concessional
based on price (including interest rates and/or fees), tenor, subordination, repayment profile, and/or security.
3
Debt-for-climate swaps are financial arrangements where a country's debt is reduced in exchange for spending or
policy commitments by the debtor country, at fiscal cost no higher than the debt reduction (Chamon et al., 2022[138]).
4
An export credit is an insurance, guarantee or financing arrangement which allows a foreign buyer/borrower of
exported goods and/or services to defer payment over a period of time (OECD, 2008[144]).

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transactions related to low-carbon activities such as renewable energy generation (OECD,

2022[46]).
In conclusion, different sources of finance play different roles in financing climate change mitigation and
adaptation. Being able to rely on and mobilise a mix of different sources and instruments will be crucial in
both scaling up climate finance and in ensuring efficient and effective allocation of resources.
2.2.2. Illustrative overview of existing sources of finance for climate action
When considering available estimates of climate finance, it is important to have in mind that coverage is
partial, as also highlighted by the UNFCCC’s Biennial Assessment and Overview of Climate Finance Flows
(UNFCCC, 2022[47]). While climate finance is relatively well tracked for international public sources and
specific sub-sectors (notably clean energy, see Box 2.2), significant data gaps remain for domestic public
finance and private sources, as well as for sectors that involve smaller-scale activities (e.g., agriculture)
rather than large infrastructure. Such gaps are typically even more acute for climate change adaptation
than for climate change mitigation, owing to greater challenges in identifying and tracking adaptation- and
resilience-relevant activities in investment and financing, e.g. see (CPI, 2022[48]).
Keeping data limitations in mind, most recent estimates indicate that global finance flows supporting
climate action reached USD 1 265 billion on average in 2021-2022 (CPI, 2023[3]). Although not directly
comparable in terms of scope, current finance flows for climate action typically represent only a small, one-
digit percentage of all real-economy investments (proxied by gross fixed capital formation5) (Kreibiehl et al.,
2022[12]), which highlights strong potential for redirecting investments towards climate action.
Within the USD 1 265 billion of tracked global climate mitigation and adaptation finance in 2021-2022,
developing countries (excluding China) represented USD 179 billion on average, with USD 30 billion in
least developed countries (CPI, 2023[14]). Finance volumes going to least developed and low-income
countries remain modest in absolute and relative terms, in great part due to difficulties in accessing finance,
and to issues relating to the cost of capital (IEA, 2024[49]). Other estimates for clean energy investments
(electrification, grid infrastructure and efficiency) in developing countries (including China) were estimated
at USD 770 billion in 2022, with China accounting for two-thirds and the top three countries (China, India
and Brazil) for over three-quarters (IEA/IFC, 2023[16]). In the context of tracking progress towards the USD
100 billion goal, less than 10% of total climate finance provided and mobilised by developed countries was
for low-income countries (OECD, 2023[50]).
Available estimates of global climate finance indicate that public and private actors contribute almost
equally to global climate finance flows (USD 640 and 625 billion respectively in 2021-2022). Development
finance institutions (multilateral, bilateral and national) contributed the largest share of public climate
finance (57%), while commercial financial institutions provided the largest share of private climate finance
(38%), followed by corporations (31%) and households (29%). Institutional investors currently play a
negligible role (CPI, 2023[3]). Looking at philanthropic organisations, of the estimated total USD 750 billion
they provided globally in 2020, only an estimated USD 6-10 billion (only 2%) was specifically designated
for efforts aimed at addressing climate change (Desanlis et al., 2022[51]). In 2022, forty of the largest
foundations active in developing countries provided USD 2.4 billion of climate-related finance, representing
19% of the foundations' total development-related commitments (USD 12.6 billion) (OECD, 2024[52]).
Finally, in the specific context of the USD 100 billion goal, international public finance from developed
countries has been the main contributing source. In 2021, bilateral and multilateral public finance
(attributable to developed countries) together represented 82% of the USD 89.6 billion provided and
5
Gross fixed capital formation includes both investments in new assets, as well as “major improvements, additions or
extensions to fixed assets, both machinery and structures, which improve their performance, increase their capacity
or prolong their expected working lives” (UN, 2008[145]).

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mobilised by developed countries (OECD, 2023[50]). The remaining 14% being made up by mobilised
private finance and export credits.
Notwithstanding data limitations, in particular for domestic government expenditure and private sector
investment need to be kept in mind, available aggregate estimates indicate that the share of public and
private sources in total climate finance varies significantly across geographies (Figure 2.3). At the two
extremes, while private actors account for nearly all climate finance flows in the US and Canada, they only
represent 14% of climate finance flows on the African continent. Most of this private finance was channelled
domestically (CPI, 2023[3]). Despite hiding significant differences between individual countries and sectors,
these estimates highlight that mobilising and shifting private finance for climate action requires both an
enabling environment conducive to investment in general (OECD, 2015[53]), as well as specific enabling
conditions for low-carbon and climate-resilient investment in developing countries. The latter involves
designing and implementing ambitious and stable climate policies, including but not limited to pricing GHG
emissions. It also implies ensuring coherent and consistent signals across different policy areas, which
traditionally do not take climate-related objectives into account, such as investment policy and promotion,
competition, financial regulation, disclosure requirements, fiscal policy, innovation, and trade (OECD,
2015[54]).
In practice, private finance typically flows as a result of a combination of climate-related public finance and
policy interventions, in the context of broader policy environments and enabling conditions (Haščič et al.,
2015[55]). While many developing countries remain faced with significant capacity challenges in putting in
place policy and enabling environments conducive to private finance for climate action, there are also clear
examples of successful and effective actions in this area (see examples in Box 2.1).
Figure 2.3. Overview of current main sources for global climate finance by actors and region
Public Private
%
100
90
80
70
60
50
40
30
20
10
0
Africa South Asia East Asia & Central Asia & Middle East Latin America & Western Europe US &
Pacific Eastern Europe Caribbean Canada
Note: Average shares for 2019-2020. Data gaps are most pronounced for domestic government expenditure, investments from private sector,
and South-South flows.
Source: (CPI, 2022[24]).

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Box 2.1. Selected examples of domestic policy actions towards policy and enabling conditions
more conducive to private finance for climate action
Examples of policy actions to improve domestic enabling conditions for climate investments:
• As part of a series of reforms between 2014 and 2016, Egypt introduced incentives aimed at
encouraging investment in and the operation of renewable power projects. These incentives were
designed to facilitate the sale of electricity generated from these projects through long-term power
purchase agreements. One notable incentive introduced was the "feed-in subsidy," which aimed to
stabilise electricity prices by providing financial support to renewable energy producers. This
subsidy ensured that producers received a guaranteed price for the electricity they generated,
thereby promoting the expansion of renewable energy generation in Egypt (IMF, 2023[56]).
• Mexico’s Energy Transition Law, approved in 2015, establishes a legal framework for the efficient
use of energy and gradual increase of clean energy in electricity production. Notably, it includes
various policy instruments to achieve emission standards. For instance, it mandates the acquisition
of Clean Energy Certificates, which, together with the Intelligent Electrical Networks Programme,
are aimed at modernizing the National Network of Transmission and General Distribution Networks.
Additionally, the law establishes an Excellence in Energy Efficiency program, which is a voluntary
certification and recognition process for products, equipment, and buildings demonstrating
sustainable and efficient energy usage (Averchenkova, 2019[57]).
• China is developing what is set to be the world's largest CO2 emissions trading system. Unlike cap
and trade or a carbon tax, China's system relies on a tradable performance standard (TPS). This
TPS works by tying compliance to how much CO 2 a company emits compared to how much it
produces. Essentially, companies are given emissions allowances based on a set emissions-output
ratio. This unique feature of the TPS influences firms' production decisions and their emissions
abatement efforts, impacting the system's cost-effectiveness and distributional impacts.
Examples of financial sector policies and actions of relevance to mobilising finance for climate action:
• Several stock exchanges in developing countries have mandated that companies disclose
information on environmental, social, and governance (ESG) issues as a condition for listing.
Examples include the Philippines Stock Exchange, the Hanoi Stock Exchange, and the Nigerian
Stock Exchange (IFC, 2022[58]).
• When developing environmental impact reporting guidelines, regulators often make linkages to
internationally accepted reporting frameworks like the GRI, SASB, TCFD, or Integrated Reporting.
For instance, the Philippines Securities and Exchange Commission’s Sustainability Reporting
Guidelines for Publicly Listed Companies, provides a brief comparison of the various reporting
frameworks they refer to, so reporting entities can identify the most appropriate one to disclose their
material issues. (IFC, 2022[58]).
• The Sustainable Finance Policy for Banks and Financial Institutions by the Bangladesh Bank
stands out as a notable example of ambitious regulation (Humayun Kabir, n.d.[59]). It defines
sustainable finance, distinguishes between sustainable finance and green taxonomy, establishes
targets, ratings, rewards, and delineates inclusion/exclusion lists for sustainable products (IFC,
2022[58]).
• The King IV Corporate Governance Code of South Africa has laid important groundwork for the
making ESG considerations an explicit responsibility for boards of directors, resulting in a growing
set of guidance documents. Most notably, the King IV Guidance Paper on the Responsibilities of
Governing Bodies in Responding to Climate Change outlines a set of actionable principles for
boards in addressing climate change (Institute of Directors South Africa, 2021[60])

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In terms of financial instruments, current climate finance is mainly provided through debt instruments (61%)
(CPI, 2023[3]). Grants only represent in 5% of climate finance flows globally, and equity 34%. In the context
of climate finance provided by developed countries’ public bilateral and multilateral actors, loans
represented over two-thirds, grants represent around a quarter, while equity investments are marginal
(OECD, 2023[50]). In 2020, multilateral development banks committed less than 2% of their climate finance
in the form of equity, which may partially explain that they only attract 1.2 times the amount of private equity
relative to commitments of their own resources (IMF, 2022[61]). Further, guarantees have proven to be
effective mechanisms to mobilise private finance in developing countries in the context of the USD 100
billion climate finance goal. For example, guarantees provided by public finance providers mobilised about
a fifth of total private finance for climate action (OECD, 2022[37]).
As much of climate finance, especially in developing countries, has been financed through debt (often at
market rates), there are growing concerns about countries’ sovereign debt burden. 6 Developing countries
are facing increasing debt levels that may become unsustainable (Chamon et al., 2023[62]), restricting
investments in development and climate resilience. Many developing countries face difficulties in allocating
available resources to climate initiatives when a significant portion of their budget is earmarked for debt
servicing (Chabert, Cerisola and Hakura, 2022[63]). Especially in low-income countries debt has
accumulated rapidly over the past decade. In 2022, net debt inflows into developing countries turned
negative as debt repayments reached new highs and new debt commitments plummeted (World Bank,
2023[64]). About 60% of LDCs and other low-income countries are assessed as being at high risk of debt
distress – a twofold increase from 2015 levels. This situation is exacerbated by insufficient financial inflows,
limited access to concessional resources, and a shift towards more expensive private creditors. The
resulting reduced fiscal space undermines climate-resilient development efforts (Robertson et al., 2023[65]).
Behind such aggregate figures, the main financing sources and instruments vary depending on the
geographical and thematic scope considered, as illustrated in Figure 2.4. While the share represented by
public finance is significant in all cases, the degree of reliance on domestic or international public sources
as well as the ability to attract private finance differ depending on the geography considered as well as, on
average, between mitigation- and adaptation-related sectors and activities. These differences are logically
also reflected in the corresponding financial instrument split, with equity financing typically representing a
smaller share than debt financing.
• Currently, climate change adaptation in African countries is almost exclusively financed through
public sources (Figure 2.4 Panel A), as is the case for climate finance in Africa in general. Within
that, multilateral development financial institutions take the largest share.
• Financing for climate action in Latin America is split almost equally by public and private actors
(Figure 2.2). Taking the example of climate finance for land use in Brazil, over 63% comes from
private actors, with international players financing a small share (CPI, 2023[66]).
• In the context of the USD 100 billion goal, the share of climate finance mobilised for developing
countries in the Americas is almost twice as large as the share in developing countries in Africa
(Figure 2.4 Panel B).
• Climate action in Ethiopia is currently mainly financed through grants (Figure 2.4 Panel C),
reaching much higher levels than the aggregate global trend. Shares of climate financing through
grants are also high in some other African countries, such as Ghana (CPI, 2023[67]), while they are
much lower in others, such as Nigeria (CPI, 2022[68]) and Kenya (CPI, 2021[69]).
• Most financing for clean energy in Indonesia is provided through debt (CPI, 2023[70]), consistent
with overall trends discussed above.
• In the context of the USD 100 billion goal, developing countries in Asia and the Americas receive
public climate finance mostly through loans, while the share of grants is higher in African and
Oceanian developing countries Figure 2.4 Panel D).
6
Sovereign debt burden refers to the substantial accumulation of external debt by a government, resulting from loans
and financial obligations incurred to fund the national public budget and meet developmental needs.

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Figure 2.4. Illustrative examples of estimated financing sources for climate change mitigation and
adaptation in different geographies
Panel A: Financing sources for adaptation in Africa by Panel B: Climate finance provided and mobilised by
public and private actors developed countries across developing country regions
100
3 Institutional investors Private Public Private
%
4 Export Credit Agencies %
90 0 20 40 60 80 100
11
Bilateral DFI
80
Oceania 96 4
70
19 Governments
60
Africa 87 13
50
Public
40
Asia 86 14
30 63 Multilateral DFI
20
Europe 85 15
10
0
Adaptation finance in Africa
Americas 76 24
Panel C: Financing sources for climate action in Ethiopia by Panel D: Instrument split of public climate finance provided by
instrument developed countries across developing country regions
Balance sheet financing Loans Grants Equity and unspecified
Project-level market rate debt %
Low-cost project debt 0 20 40 60 80 100
% Grant
100
6 3 3
Asia 85 13 2
90
17 25
80
Americas 81 16 3
70
25
60
50 Europe 83 16 1
97
40
72
30 Africa 58 39 2
52
20
10 Oceania 25 69 6
0
Mitigation Adaptation Cross-cutting
Note: Data for all panels are an average for the years 2020-2021. Data gaps are most pronounced for domestic government expenditure,
investments from private sector, and South-South flows. Tracking methodologies and reporting may differ in what is considered climate finance.
In Panels A and C, climate finance is broadly defined as finance aimed at reducing emissions, and enhancing sinks of greenhouse gases, and
at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts.
This figure tracks primary capital flows directed toward low-carbon and climate-resilient development interventions with direct or indirect GHG
mitigation and adaptation benefits. Further details on methodological and data considerations for Panels B and D are in (OECD, 2022[37]).
Source: Adapted from (CPI, 2023[14]; OECD, 2022[46]; OECD, 2022[37]; CPI, 2022[71]).
Putting together the investment needs and roles of different financing instruments and actors as done in
this chapter allowed to highlight the need to scale up financing from a range of different sources in order
to respond to the significant yet varied climate-related investment needs in developing countries.
Effectively addressing the climate finance gap necessitates a strategic matching of climate finance needs

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with the comparative advantages and combined roles of different actors and sources of finance. Such
matching requires clear information on needs and priorities of developing countries, as well as an
understanding of the varying motivations driving different sources of finance, such as propensity to risk or
prioritisation of development objectives. In addition to increasing the volumes of climate finance, it is key
to ensure efficiency and impact in utilising climate finance resources. Capacity building will be essential for
accurately costing needs and navigating diverse finance sources.
Box 2.2. Zoom in on financing needs and sources for clean energy in developing countries
Global clean energy investment has risen by 40% since 2020, reaching USD 1 800 billion in 2023, but
almost all the recent growth has been in developed countries and in China. Developing countries
(excluding China) account for just 15% of the total, as capital flows to clean energy projects in many
developing countries remaining stubbornly low. Significant technology costs reductions mask some of
the growth in capacity and some EMDE such as India, Brazil and parts of Southeast Asia, which have
reported strong growth rates particularly for utility scale solar PV and wind. Overall, however, annual
investment in clean energy in developing countries need to rise more than six-fold from USD 270 billion
today, to USD 1 600 billion by the early 2030s to meet a 1.5-degree pathway (IEA’s NZE scenario) (IEA,
2024[49]).
Investments in low-emissions sources of electricity generation together with investments in grids and
storage account for half of total clean energy investment needs. Another third is required for investments
in electrification and efficiency, with the remainder going to low-emissions fuels, including deployment
of carbon capture, utilisation, and storage (CCUS). A small fraction of the total investment spend – less
than USD 50 billion per year – would be sufficient to meet universal access for electricity and clean
cooking.
Figure 2.5. Clean energy investments in developing countries (excluding China) by sector and
region (LHS) and sources of finance (RHS) in the NZE Scenario
Source: (IEA/IFC, 2023[16]; IEA, 2024[49]).
Currently, around half of the investments in clean energy projects in developing countries come from
public sources, including development finance institutions (DFIs). In contrast, the share of public
financing in developed countries is much lower at about 20%. Funding from all sources needs to grow
sharply, but many developing countries have limited fiscal space to expand public financing. Meeting
sustainable development goals and climate pledges in developing countries will require a much greater
effort to scale-up financing from private sources. Public and DFI funding needs to work more effectively
to mobilise private capital from both international and domestic sources.

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The IEA’s cost of capital observatory data shows that the cost of capital for clean energy projects such
as solar PV is currently at least twice as high in developing countries then in developed countries,
reflecting higher real and perceived risks in developing countries (IEA, 2024[49]). This elevated cost of
capital pushes up financing costs and makes it much more difficult to generate attractive risk-adjusted
returns necessary to attract private capital.
Investment on the scale needed to meet the NZE scenario will require all sources of finance. Mobilising
private finance at scale will require at least a tripling in international concessional funds to help improve
the risk return profile of clean energy projects across the electricity, end-use and low emission fuel
sectors. These funds are particularly critical to help mobilise private capital in countries and sectors that
do not have adequate access to affordable commercial finance.
In addition to clean energy investments, meeting NZE by 2050 goals will require a 75% reduction in
methane emissions from oil and gas operations, one of the cheapest options to reduce GHG emissions
anywhere in the economy. Just over USD 75 billion in cumulative spending (USD 12 billion annually) is
required to 2030 to achieve these reductions in emissions (IEA, 2023[72]). Of the total spending, the IEA
estimates that about USD 15-20 billion needs particular attention to ensure that adequate sources of
finance are available for developing countries.
Source: (IEA, 2023[72]) (IEA, 2024[49]), contributed by Cecilia Tam (IEA).

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3. Options for reflecting sources, actors,

and qualitative elements in the NCQG
The analysis in Chapter 2. highlighted the need to scale up financing from a range of complementary
public, private, international, and domestic sources to respond to the significant yet varied climate-related
investment needs in developing countries. The role of the NCQG in this context could be twofold: to support
developing countries in their pursuit of efforts to address their needs, and to more generally stimulate
efforts to scale up investments in climate action to support the goals of the Paris Agreement. To enhance
its impact and to reflect the complexity of the global climate financial architecture, the NCQG could also
capture further elements, such as capacity-building, technology transfer, and policy frameworks, which can
enhance countries’ ability to access, attract, and use climate finance more effectively.
Building on evidence relating to financing climate action (Chapter 2. ), this chapter explores how different
actors, sources of finance, and policy incentives could be included in the NCQG in a way that incentivises
an effective and efficient scaling up of finance for climate action in developing countries. To do so, this
chapter identifies different elements that are organised in three non-mutually exclusive and interlinked
clusters (Figure 3.1). This approach is not intended to propose a structure for the goal 7, but rather to help
facilitate ongoing discussions about how to reflect different possible elements of the NCQG. The proposed
clusters are organised as follow:
• Cluster 1 (section 3.2) captures international public support and forms of non-commercial finance
from other non-Party stakeholders that provide support for activities with high social benefit and
limited financial returns, contribute to increase developing countries’ capacities to access and
absorb climate finance, as well as help scale up private finance.
• Cluster 2 (section 3.3) captures the role of public finance providers as well as other public
interventions in contributing to scaling up private climate finance for climate action. While
acknowledging that the Paris Agreement text recognises that private finance can be mobilised by
a broad range of public interventions, this cluster puts forward a distinction between private finance
mobilised by private finance interventions, and private finance resulting from the combination of a
wider range of public interventions, including public policies and capacity-building, which is referred
to as “catalysation”.
• Cluster 3 (section 3.4) captures domestic efforts from all countries that can either directly finance
climate action and mobilise private finance in developing countries, or help create policy,
regulatory, and fiscal environments creating conditions that are conducive to investment for climate
action.
This paper also considers the possibility of including a preamble to set the broader context of integrating
a variety of financial actors and sources within the global financial architecture, emphasising the need for
harmonised efforts internationally to accelerate the achievement of the goals set in Article 2.1 of the Paris
7
As part of ongoing deliberations on the NCQG, Parties have proposed different options for structuring the goal. These
include structuring the goal around climate themes, financial actors, and/or sources of finance.

Unclassified
Agreement. This preamble could further underscore the interconnectedness of the NCQG in the global
financial system, highlighting the importance of enabling environments to fully realise the potential of
climate finance and more broadly make finance consistent with climate mitigation and resilience goals.
This chapter starts with a short reflection on the content of the preamble, before three subsequent sections
detail the three clusters respectively. Some issues are relevant across clusters for the final NCQG text to
work effectively, such as defining which financial instruments apply to each cluster and identifying the key
Parties and actors involved. These issues are discussed separately within each cluster for ease of
presentation and understanding.
Figure 3.1. Visualisation of the possible clusters and elements of the NCQG
Note: Building blocks are not to scale; darker shades in clusters 1 and 2 identify blocks that can potentially have more stringent requirements.
Source: Authors.
3.1. Preamble
Incorporating a preamble or introductory paragraphs within the NCQG could help define the context in
which the goal operates. In their submissions, some Parties have highlighted the need for the NCQG to
reflect such a broader context. However, other Parties have raised concerns that broadening the NCQG's

Unclassified
scope might shift focus away from supporting developing countries (UNFCCC, 2024[9]). Notwithstanding
this diversity of views, a preamble, or introductory paragraphs in the NCQG decision could help clarify the
goal’s role within the broader financial landscape and highlight its interdependence with global financial
trends and dynamics. Doing so would help ensure that the NCQG is not a standalone initiative but a key
part of a co-ordinated global financial response to climate change. Some elements for considerations in
the preamble could for instance include:8
• Acknowledging the extensive global finance and investment needs for climate action
outlined in Chapter 2, and clearly articulating the goal's objectives within this broader
context. The NCQG preamble could include a top-tier, holistic quantified goal for global investment
ambition that reflects the magnitude of global and/or developing countries’ financial needs in
achieving the goals of the Paris Agreement (see section 2.1) (Watson, 2023[73]). In this context, the
preamble could spell out more precisely the role of the NCQG with respect to this broader and
global investment ambition, e.g., whether it is to address only a share of these financial needs, or
whether the NCQG is intended to act as a catalyst to stimulate the global investment ambition
required to achieve the goals of the Paris Agreement. This element could also include an
acknowledgement of the dynamic nature of global and/or developing countries’ needs and evolving
economic capacities.
• Recognising that achieving the Paris Agreement's goals will ultimately require the
alignment of all financial flows from a diverse range of actors and stakeholders beyond the
Agreement's signatories. These include commercial banks, institutional investors (e.g.,
sovereign wealth funds, pension funds, insurance companies), private investors, and multinational
corporations (see section 2.2). Such a recognition could help highlight that continued efforts by all
Parties will likely be required beyond the NCQG as well, to engage with relevant stakeholders
domestically and internationally towards promoting their gradual transition towards alignment.
• Explicitly recognising that numerous challenges, if not addressed, will continue to hinder
the scaling up and effective use of climate finance, such as regulatory barriers as well as
misaligned public incentives and policies. Addressing some of these challenges may fall
beyond the scope of the NCQG. Therefore, the preamble could highlight the importance of
identifying and overcoming these obstacles for strengthening the effectiveness of the NCQG. This
could involve recommending policy reforms, promoting financial innovation, and supporting
capacity-building efforts in all countries to remove impediments and enhance the ability of
accessing and utilising climate finance effectively, including by reducing the cost of capital in
developing countries (see section 2.2.2). The NCQG preamble could recognise that it is
fundamental to undertake such initiatives in parallel to achieving the objectives of the NCQG and
cite initiatives already underway that are geared towards this aim. Without tackling such
challenges, global financial needs for climate will continue to rise.
3.2. Cluster 1: International support for climate action
This cluster recognises the critical role of international public finance and other forms of non-commercial
finance from non-Party stakeholders both to provide support in countries and areas of climate action where
market solutions and private investments are less likely to happen, as well as to mobilise and help catalyse
private finance (see section 3.3). Importantly, amongst all the sources of finance, public finance is the one
8
The following are a non-exhaustive list of examples of elements that could be considered for the preamble. Party
submissions and discussions at the TED have highlighted, as further elements, issues relating to e.g., linkages
between country NDCs and NAPs, as well as the international financial architecture reform agenda (UNFCCC, 2024[9]).

Unclassified
that can be controlled, directed, and, to some extent predicted. In this context, this cluster identifies four
possible elements:
• Bilateral public finance (section 3.2.1)
• Multilateral public finance (section 3.2.2)
• Non-commercial finance contributions from non-Party stakeholders (section 3.2.3)
• Support for capacity building and technology transfer (section 3.2.4).
Section 3.2.5 identifies qualitative considerations (e.g., how to address the issue of access to finance) that
can be integrated in the NCQG in the form of specific sub-goals or provisions that can help further
strengthen the effectiveness of this cluster.
3.2.1. Bilateral public finance
Bilateral public finance provides essential support to developing countries for contributing to their efforts
towards meeting the goals of the Paris Agreement. This element could be reflected in the NCQG through
the establishment of a quantified goal for bilateral public finance contributions, separate from the other
possible elements explored in this paper.9
A key issue is determining which Parties would contribute to bilateral public finance. For example, the
current USD 100 billion goal refers to mobilisation by “developed country Parties”. Yet, in the context of the
Paris Agreement, “developed” and “developing” countries are not defined categories. Notwithstanding this,
Annex II Parties are generally considered those responsible for delivering the USD 100 billion goal;
although in its reports, the OECD also includes Non-Annex II EU members in its list of contributors (OECD,
2023[50]). However, since the establishment of the Annex II list in 1992, significant political, social, and
economic changes have occurred globally (see e.g., (Alayza, 2023[74])). Many Non-Annex II Parties are
now providing support to developing countries, both bilaterally and via their contributions to multilateral
institutions (see Section 3.2.2 below), (Colenbrander, Pettinotti and Cao, 2022[75]). Given these changes,
some Parties argue that the NCQG offers an opportunity for expanding the list of countries responsible for
supporting developing countries beyond Annex II Parties. Conversely, other Parties hold that NCQG
deliberations do not have the mandate to discuss contributors to the goal. Several studies by civil society
organisations have examined proposed options for how to expand the base of contributors, considering
criteria such as historical emissions or economic capacity (Colenbrander et al., 2023[76]; Beynon, 2023[77];
Evans, 2021[78]).
While there is broad consensus among Parties on the distinctive role that developed countries are
expected to play within the context of the NCQG, there are variations in perspectives regarding the specific
nature of this role and how it could be articulated within the goal.10 Notwithstanding these divergent views,
the incorporation of an explicit commitment for developed countries would, at a minimum, offer
reassurance to developing countries regarding the availability of financial support towards their climate
efforts. Simultaneously, such a commitment does not preclude the inclusion of other elements and actors
within the NCQG framework, potentially with varying levels of stringency.
9
A second option would be that of setting a goal for public finance contributions, including both bilateral and
multilateral. This is further explored in section 3.2.2.
10
Some Parties see the NCQG as being primarily for developed countries to contribute to, as they view the NCQG as
a continuation of the USD 100 billion goal. In contrast, other Parties, while reaffirming developed countries' role in
providing financial resources to assist developing countries, particularly the most vulnerable, emphasise the idea of
the NCQG being part of a "global effort." They highlight the necessity for a transformative approach to mobilise climate
finance, involving a greater variety of actors and reflecting the evolving nature of economic capacities for countries
which are now contributing support to developing countries. (UNFCCC, 2024[9])

Unclassified
Considering the possible different roles that different Parties may play with regards to a commitment related
to the provision of international bilateral public finance in the context of the NCQG, there are different, non-
mutually exclusive approaches that could be undertaken:
• Using a two-tier approach that sets a commitment for developed countries to contribute to
the NCQG and a slightly less stringent expectation on a separate category of non-traditional
provider Parties. In reflecting this approach, the NCQG text could, for example, read: “Developed
countries [commit to] provide [USD XXX billion] to developing countries. Non-traditional providers,
acknowledged as a distinct category within the NCQG, [commit to / seek to / are encouraged to]
gradually increase their financial contributions to developing country Parties in recognition of and
considering their evolving economic capacity and developmental progress [with the aim of
providing USD XX billion by YYYY]”.
• Setting a commitment for a broader pool of provider Parties, including developed countries.
In reflecting this approach, the NCQG text could, for example, read: “Developed countries, major
economies and others in a position to do so [commit to] provide [USD XXX billion] for climate action
in developing countries.”
• Setting a commitment for a set provider Parties based on meeting specific criteria to
contribute to the NCQG. The set of criteria could be varied, including current or historical levels
of emissions, and/or economic capacities, noting that insufficiently precise criteria could introduce
uncertainty regarding the committing contributors. In reflecting this approach, the NCQG text could,
for example, read: “[High emitters based on past, current and future emissions and from countries
with higher economic capacities], including develop country Parties, [commit to] provide [USD XXX
billion] for climate action in developing countries.”
The above exemplified approaches are non-exhaustive. In practice, each approach could be further refined
to include other elements and characteristics, e.g., sub-goals or further qualifiers. A fourth approach would
involve establishing a clear, shared understanding of "developed country Parties" that encompasses more
countries than those presently acknowledged as contributors to the USD 100 billion goal. However, this
approach is not explored further in this paper as the creation of a list of “developed country Parties”, similar
to the Annex I and Annex II classifications established in 1992, would not be consistent with the Paris
Agreement's flexible approach allowing Parties to self-identify based on their circumstances. Moreover,
the term "developed country" holds various implications within the Paris Agreement, entailing more
stringent reporting requirements and other obligations. Some countries may be financially positioned to
provide support but not be prepared or have the capacity to fulfil the broader set of "developed country"
obligations.
In addition to setting a specific commitment for a set of providers as outlined above, it is important for the
NCQG to reflect the increasing role that all Parties, can play in supporting developing countries as part of
a “global effort”. The NCQG could thus acknowledge and facilitate the contributions of various Parties that
are in a position of providing support beyond those that would have a more stringent commitment, as
highlighted above. The NCQG could capture the role of all other Parties in this context with language that
is less stringent than a commitment. Possible approaches in this context include:
• Encouraging voluntary contributions from “other Parties” as part of the NCQG’s global
effort. Such a provision would serve to promote a more inclusive and comprehensive approach in
scaling up climate finance towards addressing the challenges posed by climate change. For
example, the NCQG decision text could read: “In accordance with Article 9.2 of the Paris
Agreement, other Parties are encouraged to contribute to the NCQG’s global effort by providing
support to developing countries”.
• Setting an aspirational or quantitative goal for voluntary contributions from “other Parties”
as part of the NCQG’s global effort. Doing so would provide a stronger incentive and guidance
for the participation of other Parties. For example, the NCQG decision text could read: “Other

Unclassified
Parties are encouraged to contribute to the NCQG’s global effort by supporting developing
countries, with the aim of [inspiring actions that collectively advance the NCQGs climate finance
objectives to foster a broad-based commitment to support / achieving the symbolic milestone of
USD X billion by YYYY]”.
To note that, because under the Paris Agreement’s Enhanced Transparency Framework (ETF) only
developed country Parties are required to report on financial support provided, tracking contributions from
non-developed country Party providers may prove difficult (see Chapter 4. ). Moreover, the absence of
defined list of developed countries and other possible provider Parties may leave some ambiguity
regarding the expected NCQG contributors. In all cases, and to increase clarity and accountability in terms
of expectation placed on relevant contributor Parties, the NCQG could potentially include language that
invites contributing Parties to formulate specific pledges towards the NCQG. This could create a virtuous
cycle dynamic that acknowledges, and thus potentially incentivises, the efforts of ambitious providers.
3.2.2. Multilateral public finance
Multilateral channels – including multilateral development banks and multilateral climate funds – play a key
role in supporting climate action globally, including in the context of the existing USD 100b goal. Through
their submissions, several Parties have recognised the role of MDBs and climate funds in the NCQG
(UNFCCC, 2024[9]).
The NCQG presents an opportunity to explicitly address multilateral institutions and acknowledge their
critical role. This step is crucial because it ensures a more comprehensive and effective framework for
climate finance, as well as increased accountability and clearer responsibilities. At the same time,
multilateral institutions are not Parties to the Paris Agreement. Therefore, Parties to the Paris Agreement,
as shareholders and/or board members would need to play a role in working with these institutions to
facilitate their efforts to respond to any relevant NCQG provisions. In contrast to MDBs, a slightly different
consideration regards multilateral climate funds such as the Global Environment Facility (GEF) and the
Green Climate Fund (GCF). At COP21, Parties agreed that these entities shall serve the Paris Agreement.
As such, the NCQG could potentially offer more detailed guidance on their role and contribution towards
the goal.
It is noteworthy that some multilateral institutions, most notably MDBs, not only rely on inflows from
shareholders, but also raise additional funds from capital markets, thereby augmenting the volume of their
financial outflows. The NCQG would ideally clarify whether inflows or outflows, or both perspectives, are
to be captured within the goal.11 Outflows offer a more comprehensive approach, as they capture the actual
levels of finance provided to developing countries (i.e., a recipient perspective). In its reports on assessing
progress towards the USD 100 billion goal, the OECD does not use information on inflows to multilateral
institutions reported by developed countries in their Biennial Reports. Rather, it relies on climate finance
outflows reported by MDBs to the OECD DAC to capture the multilateral climate finance component
(OECD, 2022[37]). Importantly, if a separate goal for multilateral finance is established in the context of the
NCQG, it is important to ensure that inflows to multilateral institutions reported by Parties under the
UNFCCC ETF are not double counted with outflows from multilateral channels (see Chapter 4).
Another crucial issue regarding multilateral public climate finance relates to the discussions developed in
earlier sections on the contributor base of the NCQG, acknowledging that Parties beyond NCQG
11
Inflows refer to the funds that are received by multilateral institutions from various sources, such as contributions
from member countries. Typically, these resources are not earmarked; instead, they are pooled together to then be
allocated to different projects and programmes. Because they are un-earmarked, Parties cannot always provide
detailed information at the project level. In fact, the Party will have information on the lump sum (e.g., a grant) given to
a multilateral institution, but will not have visibility on how that money will be spent. Outflows refer to the distribution of
these pooled funds to various projects and initiatives in developing countries.

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contributors may be shareholders of some MDBs. For example, in its analyses of progress towards the
USD 100 billion goal, the OECD has developed a dedicated methodology that only accounts for that share
of outflows from each multilateral institutions that is attributable to developed countries (OECD, 2023[50]).
On that basis, the remaining shares of multilateral outflows, which relate to developing countries’
shareholding and contributions to such institutions, are not being counted towards the USD 100 billion
goal. Indeed, developing countries are shareholders of MDBs. Although less frequent, some countries
beyond UNFCCC Annex II countries are also contributors to multilateral climate funds.
There are different non-mutually exclusive approaches that could be considered to reflect the role of the
MDBs and climate funds in the context of the NCQG, including but not limited to:
• Setting a specific goal for public climate finance provided via multilateral channels. This
goal could take several forms, including an absolute goal or a goal expressed as a share of total
public finance. Setting a distinct goal for multilateral climate finance could enhance transparency
and accountability relating to the role of multilateral providers in the provision of public support. At
the same time, this approach could incentivise fragmented funding approaches, requiring careful
coordination and avoiding competition between bilateral and multilateral efforts. For example, the
NCQG decision text could read: “[Parties contributing to the NCQG] [commit to / seek to] achieving
USD XXX billion in multilateral climate finance [outflows/inflows]”.
• Explicitly recalling and recognising the important role of MDBs and multilateral climate
funds in the provision of support for developing countries. The NCQG could specify that
public finance from Parties providing support can be provided through both bilateral and multilateral
channels. Ideally, the decision text, potentially in a section related to transparency, would provide
more precise guidance on how to account support provided via multilateral channels. In reflecting
this approach, the NCQG text could, for example, read: “Parties recall the fundamental role played
by Multilateral Development Banks and multilateral climate funds, notably the operating entities of
the financial mechanism, and recognise that a share of financial support will be provided via
multilateral channels”. Related to tracking progress, the text could further specify that “[The body
responsible for tracking progress towards the NCQG] shall clearly identify the share of financial
support provided via multilateral institutions that is attributed to [Parties contributing to the NCQG]
according to methodologies to be developed by [YYYY].”
3.2.3. Non-commercial finance from non-Party stakeholders
Some private sector actors can provide financing in the form of grants and concessional loans and thus
complement public climate finance (see section 2.2.1). These contributions can help bridge financing gaps
and enhance the overall efficacy of climate finance. Notably, the existing and potential role of philanthropies
has gathered substantial attention (see section 2.2.2 and e.g., (Bhattacharya et al., 2023[79])). Because
non-Party stakeholders have no reporting obligations under the UNFCCC, effective monitoring of their
contributions towards the NCQG in a systematic and comprehensive way may, however, prove difficult.
Moreover, many non-Party stakeholders, such as non-governmental organisations (NGOs) active in
developing countries, operate as intermediary funders (i.e., receive funding from primary sources and then
allocates it to end recipients), making tracking challenging and increasing risks of double counting (see
Chapter 4. ).
Options to reflect the role of non-Party stakeholders in providing non-commercial finance contributions
include, for example:
• Encouraging relevant actors (e.g., philanthropies) to provide financial support. This call
could provide some incentives for relevant actors to contribute to the goals of the NCQG as part of
a global effort. The NCQG decision text could capture the role of non-Party stakeholders by stating:
“Non-Party stakeholders with the capacity to provide non-commercial financing in developing

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countries are encouraged to contribute to do so with the aim of assisting the implementation of
domestic climate action towards the achievements of Article 2 of the Paris Agreement”.
• Encouraging Parties to collaborate with non-Party stakeholders to enable their contribution
towards the NCQG. There are several ways, through which Parties can enable non-commercial
contributions from the private sector, for instance by creating sector-specific funds that align with
the priorities of non-Party stakeholders, encouraging non-Party stakeholders to invest in
technology and innovation funds, or more broadly promoting non-commercial impact investing
among private investors and philanthropies. The NCQG decision could capture this approach by
stating: “All Parties are encouraged to facilitate meaningful contributions from non-Party
stakeholders, including the private sector, civil society, and financial institutions, towards the
NCQG. [This could involve, creating mechanisms for match funding, supporting sector-specific
initiatives, and promoting the development and use of innovative financial instruments].” It is,
however, important to note that, in quantitative terms, at least some of the private finance effectively
provided through such mechanisms could be reflected in various elements of the” Private climate
finance” cluster discussed in section 3.3.
3.2.4. Support for capacity building and technology transfer by Parties providing
support and, potentially, non-Party stakeholders
Capacity building and technology transfer are key elements for enabling climate action in developing
countries but are typically not reflected in available estimates of investment and financing needs (see
section 2.1). However, capacity building and technology transfer are often embedded in the provision of
financial support. For example, according to the OECD Development Assistance Committee (DAC),
between 2018 and 2019, climate-related capacity development activities represented on average at least
USD 10.7 billion of Official Development Assistance (ODA), i.e., 44% of total climate-related commitments
by DAC members (Casado Asensio, Blaquier and Sedemund, 2022[80]). There is a broad range of
evidence12 that illustrates how these elements are crucial helping developing countries leapfrog to cleaner,
more sustainable technologies and practices, while also building their indigenous capabilities in climate
science, policy formulation, and technological innovation. Capacity building for governments is particularly
relevant also for supporting developing countries in creating the necessary enabling environments that
allow for the broader and more effective catalysation of private finance (e.g., by assisting in crafting
supportive renewable energy policies, or guiding entrepreneurs on accessing green financing).
• In this context, the NCQG could offer an opportunity to directly address both capacity building and
technology transfer support, potentially even addressing the role of non-Party stakeholders in this
context, to help better integrate them in a more systematic way in climate action. Different
approaches can be undertaken to reflect the role of these different types of support in the NCQG,
including:
• Recognising the role of capacity building and technology transfer to support developing
countries achieving the goals of the Paris Agreement. This approach could provide clear
incentives for scaling up and explicitly tracking this type of support. It could for instance be reflected
in the NCQG text as follows: “Parties recognise that the provision of capacity building and
technology transfer is a key enabler for the achievement of effective achievement of the goals of
the Paris Agreement”.
• Incorporating guidance on capacity building and technology transfer in the context of
specific challenges or barriers faced by developed countries. Following this approach, specific
recommendations on key target areas for these types of support could be used to complement
12
See, for example: (Casado Asensio, Blaquier and Sedemund, 2022 [80]), (UNEP, 2023[139]), (Alpízar et al., 2019[140]),
(Godfrey et al., 2002[141]), (Khan, Mfitumukiza and Huq, 2019[142]), (Lemos et al., 2013[143]).

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other elements of the NCQG. For example, should Parties decide to address the issue of “access
to finance” (see the following section 3.2.5), the relevant provision could include an explicit call,
e.g. “[Parties contributing to the NCQG] [are encouraged to / seek to / …] undertake efforts to
provide capacity building support to developing countries in meeting the requirements to access
international public support”. Other examples of targeted capacity building guidance that would
follow this approach are presented in clusters 2 and 3.
3.2.5. Qualitative considerations that can help further strengthen the provision of
public finance
Broad consensus exists across Parties regarding the need to consider the quality and effectiveness of
climate finance as part of the NCQG (Fricano and Kumarsingh, 2022[81]; Fricano and Kumarsingh, 2022[82]).
Moreover, in their submissions, several Parties pointed to existing difficulties in accessing and attracting
climate finance (UNFCCC, 2024[9]). These challenges stem from limited capacity, constrained fiscal
capacity, elevated capital costs, and substantial debt levels, as also recognised in decision 4/CMA.5
(UNFCCC, 2023[83]). Consequently, several Parties emphasised the necessity for financial resources
within the NCQG to be, inter alia, predictable, and affordable, without worsening the existing debt burdens
in developing countries.
The NCQG could reflect these concerns and offer guiding principles, qualifiers, or sub-targets on the
provision of financial support (see Box 3.1). While some of these elements are particularly critical to this
first cluster relating to public financial support, many of these elements are also directly relevant to clusters
2 (private finance) and 3 (domestic efforts) and are hence further discussed and exemplified in sections
3.3 and 3.4 respectively. To note that this section presents only some examples of the many qualitative
considerations that could be incorporated in the NCQG.
Reflecting the importance of different climate themes
Historically, as illustrated in section 2.2, climate finance had focused mainly on mitigation activities, both
globally and in developing countries. In the context of the USD 100 billion goal, mitigation accounts for
66% of total climate finance provided and mobilised between 2016 and 2021 (OECD, 2023[50]). This relative
focus on mitigation may be attributed to a variety of factors, including, but not limited to, the need to finance
mitigation action upfront to try and minimise climate change, more clear-cut return on investments, easier
measurability of impact, lower cost of adaptation measures relative to mitigation ones and higher appeal
to the private sector (OECD, 2022[37]; CPI, 2023[3]). Nonetheless, the need for greater balance between
different thematic areas is increasingly recognised, particularly to align finance with developing countries'
needs and to address the evidence that adaptation is currently underfunded. Several countries, in their
submissions, put forward the need for the NCQG to set guidance on the allocation of climate finance across
different climate themes (most notably, adaptation, mitigation, and loss and damage). Nevertheless, some
Parties express reservations about setting quantitative targets for balance due to the larger scale, and
different use of instruments, of mitigation projects in comparison to adaptation projects (UNFCCC, 2024[9]).
Many developing countries are experiencing significant economic and non-economic losses due to climate
change impacts. Consequently, some Parties have called, in their submissions, for the recognition of loss
and damage in the NCQG and/or for its inclusion in the goal. The potential incorporation of loss and
damage within the NCQG raises important considerations regarding its relationship (including overlaps)
with adaptation efforts, and its connection with ongoing processes such as the newly established Fund for
responding to loss and damage. This issue is not further explored in this paper but would merit further
analysis.

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The relative importance of different climate themes could be addressed in the NCQG by, for example: 13
• Encouraging Parties contributing to the NCQG to dynamically reflect both the sustained
importance of mitigation and growing importance of adaptation and/or loss and damage in
their provision of support in the context of the NCQG. This approach could help in ensuring
that the allocation of climate finance is more directly aligned with the specific, expressed needs
and priorities of developing countries, facilitating a more effective distribution of resources. As
different developing countries will have different thematic priorities, this approach would not allow
for detailed guidance on what share of climate finance is to be allocated for what climate theme. A
possible formulation for inclusion in the NCQG decision text might read: "Parties recognise the
importance of prioritising climate finance in a manner that directly responds to the needs and
priorities of developing countries, ensuring that support for [adaptation / mitigation / loss and
damage] is allocated to reflect these priorities."
• Setting quantitative sub-goals for one or more thematic areas (e.g., mitigation, adaptation,
loss and damage) (see Box 3.1). This approach can help provide more specific guidance and
incentives to providers and help counteract the market-driven trends in the allocation of climate
finance. At the same time, the adoption of sub-goals could both prevent responding to evolving
needs across climate themes and promote a siloed approach to climate action as efforts to
distinctly separate areas such as mitigation and adaptation from other developmental priorities
could work against the need for integrated planning and execution. Moreover, such an approach
does not consider that some climate projects are, by default, cross-cutting. Pairing theme-based
sub-targets with other categories like country groupings or financial instruments could help a
multifaceted approach. As an example, an adaptation-specific sub-target could particularly
emphasise Small Island Developing States (SIDS) or prioritise grant-based funding. Alternatively,
introducing minimum floors for each thematic area might counterbalance strict allocations,
acknowledging that projects may be categorised under multiple thematic areas and ensuring
foundational support for each theme while retaining allocation flexibility. Such nuanced strategies
can cater to the diverse needs and capacities of countries, various climate actions, and the
multifaceted nature of climate change challenges. Should Parties decide on the use of sub-targets,
the NCQG decision text could indicate: “Of the USD XXX billion to be [provided / mobilised], at
least [USD XX billion / X%] [should] be for [adaptation]”.
Reflecting the issue of access to finance
Numerous studies have highlighted developing countries’ significant challenges in accessing international
public climate finance.14 These challenges are linked to, inter alia, fragmentation of the climate finance
architecture, accreditation barriers, challenges in complying with a wide range of diverse eligibility criteria
and application requirements, and limited reach to local organisation (OECD, 2023[84]; Fouad et al.,
2021[85]; Government of Japan, 2022[86]). Discussions throughout the TED2 have highlighted the
importance of reflecting this issue in the context of the NCQG (Fricano and Kumarsingh, 2022[87]). This
element could be addressed by, for example:
13
A possible third approach is that of recalling the importance of achieving a balance between adaptation and
mitigation and encouraging providers to strike such a balance. However, this approach is not explored further as would
leave space for Parties’ interpretation of the meaning of “balance”, thus not necessarily taking into consideration and
being in line with developing countries’ needs and priorities”. Additionally, this approach promotes a static perspective
on the evolving needs related to climate change.
14
Access to capital markets is another, separate, yet key barrier for developing countries. This issue pertains to Cluster
2 on “Private climate finance”.

Unclassified
• Requesting Parties contributing to the NCQG to provide clear documentation and guidance
on the access modalities of their bilateral climate finance. Access to bilateral climate finance
often hinges on bilateral relations between countries. While several climate funds and MDBs have
taken significant steps to improving access to public funds, less progress has been demonstrated
in the context of bilateral finance (OECD, 2023[84]). This provision could be further enhanced by
requesting providers to report, e.g., as part of the Global Stocktake (GST) process, on the steps
undertaken to improve access to finance. In addressing this point, the NCQG decision could
include: “[Parties contributing to the NCQG] [are encouraged to] develop clear documentation and
guidance on how to access bilateral public finance, and take steps in facilitating access, particularly
to those developing countries with limited capacities”.
• Calling on international providers including MDBs and multilateral climate funds, to
facilitate enhanced and simplified access to financial resources. This requires these
institutions to streamline application processes, reduce bureaucratic hurdles, and provide more
direct pathways for developing countries, especially those most vulnerable to climate impacts, to
tap into available funds. Efforts could include the development of user-friendly platforms for
application, transparent criteria for funding eligibility, and proactive support for applicants in
preparing their submissions. Similar to the approach above, providers could be requested or invited
to provide relevant and timely inputs on steps taken to improve access to finance in the context of
the GST. To address this issue, the NCQG decision could state: “International financial institutions,
including MDBs and climate funds, [are urged to / are called to] implement measures aimed at
streamlining access procedures, enhancing transparency in funding criteria, and offering dedicated
support to developing countries in their efforts to secure climate finance”.
• Establishing goals for financial resources to be allocated to groups of developing countries
that face significant barriers to access, such as LDCs and SIDS. As discussed earlier, sub-
goals can provide very clear incentives for providers on how to allocate public funds. At the same
time, they bear the risk of adding a layer of complexity to the NCQG, and further limiting flexibility
of an already rigid system of allocation of resources (see also Box 3.1). Following this approach,
the NCQG text could include language similar to: “[Parties contributing to the NCQG] [should aim
to / seek to] allocate a minimum floor of USD XX billion/ XX% to LDCs and SIDS, noting the unique
challenges that these countries face in accessing public climate finance.”
Taking into consideration the sustainability of debt burdens
As highlighted in section 2.2, debt finance (both public and private) plays a central role in financing climate
action. At the same time, many developing countries face a significant sovereign debt burden. A number
of developing countries have also expressed their concerns regarding debt sustainability in their
submissions (UNFCCC, 2024[9])Due to the magnitude of this issue and its links to many factors inherent
to the wider global financial architecture, the NCQG on its own will not be able to address the issue of debt
burden in developing countries. However, the NCQG could set some incentives that can somehow
recognise its relevance for developing countries. In the context of public finance specifically, this element
could be addressed in the NCQG by, for example:
• Explicitly acknowledging and recognising that many developing countries face increasing
debt sustainability challenges, and that non-debt instruments are critical to supporting
developing countries. The NCQG could build on the foundation laid by decision 4/CMA.5 by not
only noting the importance of non-debt instruments, but also by calling for their active promotion
and utilisation, possibly providing further guidance on the specific circumstances where such
instruments are most useful (UNFCCC, 2023[83]). For example, the NCQG decision could be
enhanced to state: “Parties recognise the critical need for non-debt financial instruments in
alleviating the financial burdens on developing countries, [urging] [Parties contributing to the

Unclassified
NCQG] to prioritise these mechanisms in their support strategies [for developing countries at high
debt distress], thereby facilitating sustainable development and climate action pathways.”
• Encouraging Parties and other relevant stakeholders to make progress on addressing debt
sustainability in parallel processes. Due to the high complexity of the debt sustainability issue,
co-ordinated efforts across a wide variety of actors will be required to make meaningful progress.
This falls beyond the scope of the NCQG. At the same time, the NCQG could recognise these
parallel processes and call on Parties to take steps towards these efforts. These include the
Summit for a New Financial Pact, the Paris Club, the G20 Common Framework for Debt
Treatments, or the IMF-World Bank Debt Sustainability Framework (DSF) for Low-Income
Countries. For example, the NCQG could include a provision similar to: “Parties and other relevant
non-Party stakeholders are urged to make progress to tackle debt constraints in developing
countries, collaborating through international processes including [mention of specific initiatives]”.
• Encouraging or requesting Parties providing support to explore or scale up the use of
instruments that incentivise climate action while addressing debt sustainability (e.g.,
through Climate Resilient Debt Clauses or debt-for-climate swaps). Specific instruments that
could be mentioned include debt-for-climate swaps, which provide debt relief in exchange for
investments in climate-resilient infrastructure or natural resource conservation projects, or Climate
Resilient Debt Clauses, designed to make countries' debt obligations more flexible in the face of
natural disasters or severe climate events (OECD, 2023[84]; Mustapha, 2022[88]). Other useful
instruments that do not add on debt burden include guarantees. Similarly, this approach could also
involve encouraging local currency landing (Bhattacharya et al., 2023[79]). For example, the NCQG
could include a provision similar to: “[Parties contributing to the NCQG] [are requested / are
encouraged to / …] consider the use of instruments that address debt sustainability, including debt-
for-climate swaps and Climate Resilient Debt Clauses in developing countries under high public
debt distress”.
• Including quantitative goals on the provision of non-debt finance for non-commercially
viable activities in specific developing countries groupings, e.g., SIDS, LDCs, or developing
countries with high debt sustainability risk. While setting such goals could directly address the
financial needs of these vulnerable groups and ensure targeted support, it also introduces
challenges in terms of defining eligibility criteria and monitoring compliance tracking (see also
Box 3.1). This approach would require careful consideration of the balance between specificity in
support and the administrative complexity it entails. Moreover, it would require robust tracking
mechanisms to ensure transparency and accountability. The NCQG text might then include:
[Parties contributing to the NCQG] [should / are encouraged to] provide a minimum of USD XX
billion/XX% in grants to [SIDS and LDCs / developing countries at high debt distress]”.
Enhancing the effectiveness of support provided
Understanding the efforts of developing countries to create this context, is key to ultimately maximising the
effectiveness of such finance. For example, the existing USD 100 billion goal was set “in the context of
meaningful mitigation actions and transparency of implementation” (decision 14/CMA.1) (UNFCCC,
2019[2]). As part of the ETF guidelines on the reporting of information on financial support received,
developing countries will be requested to include in their Biennial Transparency Reports (BTRs)
information on the status of the activity supported by financing received (e.g., “ongoing”, “completed”, etc.)
as well as on its impacts and estimated results. Overall, strengthened reporting of information on the use,
impacts and results of climate finance interventions is important not only for accountability, but also help
identify developing countries' priorities and outstanding challenges, which in turn can make international
support more targeted and responsive to developing countries’ needs and priorities. The NCQG could
address this issue by, for example:

Unclassified
• Recalling the ETF’s request for developing countries to report information on the impacts
and estimated results of climate finance received. This could be further strengthened by
capturing the impacts of climate finance as part of the tracking and transparency arrangements of
the NCQG, noting however that, due to limited financial resources and capacities, some developing
country Parties may find it challenging to gather and report such information. For example, the
decision text could state: “The NCQG is established in the context of meaningful mitigation actions
and transparency on implementation. As such, Parties receiving support are encouraged to report
on its impacts and estimated results of the activities supported by public finance, in accordance
with the Enhanced Transparency Framework of the Paris Agreement”.
• Encouraging Parties contributing to the NCQG to support developing countries in their
efforts of tracking the impacts and effects of financial support received, for example
through dedicated capacity-building activities. The NCQG could include a specific call for its
contributors to prioritise targeted capacity-building activities, which are essential for ensuring that
developing countries can effectively monitor and evaluate the effectiveness of received climate
finance. The NCQG could incorporate language to this effect: “[Parties contributing to the NCQG]
[are encouraged to] offer dedicated capacity-building initiatives to developing countries, focusing
on enhancing their ability to track, assess, and report on the impacts of received climate finance.”
• Encouraging Parties contributing to the NCQG, MDBs, and multilateral climate funds to
enhance their efforts in reporting information on the results and impacts of their climate
finance projects. Currently, only a limited number of provider Parties and multilateral institutions
regularly report and publish information on the results and impacts of the climate activities they
support. These Parties and actors currently have no reporting obligations on this under the Paris
Agreement. The NCQG could recall the importance of strengthening efforts towards this aim and
encourage Parties and multilateral institutions providing support to provide relevant and timely
inputs on the results of their climate finance activities to the GST process. The NCQG could
incorporate language to this effect: “[Parties contributing to the NCQG / MDBs and climate funds]
[in co-operation with developing country Parties] [are encouraged to / are requested to] enhance
their efforts in regularly reporting and publishing information on the results and impacts of their
climate finance projects”.
Gender responsiveness and inclusivity

To ensure the effectiveness and inclusivity of the goal, some Parties have highlighted the importance of
acknowledging the disproportionate effect of climate change on vulnerable groups like women and
indigenous people. Indigenous communities often inhabit ecologically sensitive areas like mountains,
coastlines, and forests, and consequently face displacement rates seven times higher than the global
population average (Lila Ram and Shahzar, 2024[89]). Their vulnerability is compounded by their reliance
on traditional practices, hindering their adaptability to changing conditions, and their often-marginalised
status with poverty rates two to three times higher than the global average (Lila Ram and Shahzar,
2024[89]). Similarly, climate change impacts men and women differently, largely due to gender-based
disparities in power, roles and responsibilities within households and communities (Open Data Watch,
2023[90]). Women are often overrepresented among the poor, possess fewer productive assets, rely more
on natural resources for livelihoods, and have limited decision-making authority over policies affecting them
(Duerto-Valero and Kaul, n.d.[91]). Considerations on gender responsiveness and inclusivity of indigenous
people could be addressed in the NCQG following different approaches, for example:
• Encouraging Parties and other relevant stakeholders to take into account considerations
related to vulnerable groups in their climate finance efforts. The NCQG could help bring
attention to the impacts of climate change on vulnerable groups and provide incentives to
contributors by, for example, incorporating language to the effect of “Parties acknowledge the
disproportionate effect of climate change on certain groups of the global population, including
women and indigenous people. [Parties contributing to the NCQG] [are encouraged to] increase
their efforts in providing support to these groups”.
• Encouraging Parties to strengthen monitoring, evaluation, and reporting mechanisms that
systematically collect and analyse social and gender-disaggregated data on climate finance

Unclassified
allocation and outcomes. Seeking to collect and make this data available can help policymakers
to accurately assess the differential impacts of climate interventions on women and diverse social
groups and indigenous communities, ensuring that resources are allocated effectively to address
their specific needs and priorities. The Common Tabular Formats (CTFs) developed under the ETF
do not currently include any fields related to the reporting of such information. However, Parties
could nonetheless be encouraged to report on this as part of the “additional information” field. For
example, the NCQG decision text could read: “[Parties contributing to the NCQG] [are encouraged
to] enhance their efforts in reporting whether and how their climate finance contributions contribute
to addressing vulnerable groups, including women and indigenous people”.

Unclassified
Box 3.1. Advantages and challenges of sub-goals

The use of sub-goals—quantified, nested targets within the broader scope of the NCQG—has been a
key discussion point in the TEDs (Fricano and Kumarsingh, 2022[81]); (Fricano and Kumarsingh,
2022[82]); (Gilbert and Fakir, 2023[92]). In general, sub-goals can help counteract specific patterns in
climate finance distribution that might arise from the inherent incentives and disincentives set by
aggregate and collective targets. Moreover, sub-goals can allow for more granular evaluation, and can
help better reflect developing countries’ needs on aggregate, consistent with the NCQG's wider vision,
and ensure these priorities are reflected within overall climate finance distribution. At the same time,
sub-goals will be most effectively applied to a sub-set of climate finance – specifically to public climate
finance, given that private finance mobilisaiton is outside of the direct control of Parties and other public
finance providers. Moreover, sub-goals can potentially reduce the flexibility of finance provision by pre-
defining priority areas and, if not sufficiently granular, may come at a cost to meeting priorities of
individual countries. Sub-targets can also heighten access barriers by increasing the complexity of the
climate finance architecture and risk fostering a siloed approach.
The complexity of implementing sub-goals becomes more evident when considering multiple levels.
Having more than one level of sub-goals may lead to either synergistic or conflictual interactions across
different levels, adding a further layer of complexity to their implementation and management.
Sub-goals can be formulated in various ways:
• Absolute sub-goals set a fixed amount that does not change regardless of other variables
(e.g., "provide USD X billion for the energy sector”). This type of sub-goal can offer a clear target
that are easy to understand and measure. However, their fixed nature means they may not adapt
well to changing circumstances in overall financing, as well as changes in technology costs.
• Proportional sub-goals based on allocating shares of a total (e.g., "of the total climate finance
provided, X% should be provided to low-income countries, X% to upper-middle-income countries,
etc.,"). This type of sub-goals offers a way to distribute resources across different categories,
ensuring each receives a predetermined share of the total. This approach may fail to account for
changing needs or opportunities in different categories over time.
• Minimum floors establish a minimum level to be reached or maintained (e.g., "ensure that at
least [USD X billion / X%] of climate finance is provided to the LDCs”). This type of sub-goal is useful
to ensure critical areas receive at least a minimum number of resources and offer flexibility to
exceed the minimum. However, floors could potentially lead to complacency, where the minimum
becomes the default or maximum effort, rather than a starting point. Opposite to minimum floors are
ceiling caps, which set an upper limit. These sub-targets prevent over-allocation of resources to
certain areas but might hinder necessary investments and limit flexibility to respond to changes.
• Incremental sub-goals set relative to other variables (e.g., “increase the proportion of climate
finance targeting adaptation by 30% compared to 2020 levels by 2030"). These types of sub-goals
are flexible and automatically adjust to changes in the overall context. On the downside, if the
baseline is low, a relative increase may still result in inadequate absolute amounts for critical areas.
Importantly, the main approach discussed so far in relation to sub-goals, has been that of enshrining
sub-goals within the NCQG as a top-down approach. A possible second option relates that to
encouraging a bottom-up approach, whereby the NCQG would encourage Parties or other relevant
stakeholders to set their own sub-goal they intend to pursue in the context of the NCQG.
Source: Authors, based on an unpublished technical note developed to inform discussions at the September 2023 CCXG Global Forum.

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3.3. Cluster 2: Private finance mobilised and catalysed for climate action
Chapter 2. highlighted the increasing role of the private sector in supporting developing countries’ climate
action. Indeed, decision 11/CMA.5 underscores the “need for enhanced provision and mobilisation of
climate finance from a wide variety of sources (UNFCCC, 2023[93]). Discussions at TED1, as well as a
number of Party submissions, acknowledged the importance of the private sector in scaling up resources
for developing countries (UNFCCC, 2024[9]) (Fricano and Kumarsingh, 2022[81]).
The public sector can help scaling up private finance through a range of public finance and policy
interventions that contribute to mitigating risks and creating favourable conditions (Haščič et al., 2015[55]).
Under the Paris Agreement, the efforts of the public sector in this context are defined as “mobilising” private
finance. Notably, under Article 9.7 of the Paris Agreement’s developed country Parties shall provide
information on support for developing country Parties provided and mobilised through public interventions
(Paris Agreement, 2015[94]). Accordingly, under the Paris Agreement’s ETF, private climate finance can be
reported as being mobilised by a set of financial instruments (such as grants, guarantees, insurance, etc.),
or by “policy interventions”, “capacity-building”, “technology development and transfer”, “technical
assistance”, and “other” (Decision 5/CMA.3, CTF Table III.3).
Empirical evidence and practical experience in measuring and assessing the effect of public interventions
on private finance, however, point out to the importance of distinguishing between on the one hand the
specific role of public finance instruments in mobilising private finance, and, on the other hand the
combined effect that a wider range of public interventions, including public policies, have in catalysing
private finance. Table 3.1 below suggests soft distinctions between the concepts of mobilisation and
catalysation, recognising that both are components of finance mobilised under the Paris Agreement. Based
on these considerations, this cluster identifies two possible elements for consideration in the context of the
NCQG:
• Private climate finance mobilised by public finance interventions (section 3.3.2)
• Private climate finance catalysed by other types of interventions (section 3.3.2).
The first element - mobilising private finance through public finance interventions - features a direct and
transparent relationship between the public finance mechanisms employed and subsequent mobilisation
of private finance. This clear linkage allows for relatively straightforward tracking, including to separate out
and avoid double counting between the role played by different individual public finance interventions. In
this context, OECD statistical standards allow activity-level measurement and reporting of the mobilisation
effect of mechanisms used by bilateral and multilateral official development finance providers (OECD,
2023[95]). The second element involves the catalytic impact of a wider range of public interventions,
including capacity building and public policies, within the context of broader enabling conditions. Here,
evaluating the individual role of each intervention in relation to observed private finance involves a complex
assessment of indirect effects and influences, which are typically not possible to separate out from one
another nor to quantify.
The roles of different intervention types are interconnected, particularly because public policies and
broader conducive conditions can significantly influence the extent to which public finance interventions
can generate mobilisation (Haščič et al., 2015[55]). Private investments and funding for projects and
activities focused on low emissions and climate resilience in fact usually arise from a combination of various
public interventions and broader conducive circumstances. Indeed, as introduced in section 2.2.2, the
creation of enabling environments for investments are a key cornerstone for private sector involvement,
and it is crucial to support developing countries in the establishment of such environments. Incentives that
could be captured by the NCQG with a view of creating these environments is discussed as part of cluster
3 (section 3.4).

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Table 3.1. Possible typology of public interventions having an effect on private finance
Element Type of intervention Examples
Grants, loans, direct equity
Public climate co-finance to individual projects
Private finance mobilised by public finance investments, guarantees
interventions Public climate finance intermediated through Credit lines, fund-level
upstream instruments investments
Capacity building for climate project demonstration or Capacity building grants,
Grey zone between the two building blocks
policy development loans, technical assistance
Public financial support (financial incentive) as a
Subsidy schemes, tax breaks
Private finance catalysed by public policy result of climate policies or programs
interventions Mandatory targets, labelling
Climate policies not providing financial support
schemes
Investment- and trade-related
Non-climate policies
policies
Broader policy and enabling conditions (not captured
in cluster 2, see cluster 3 and chapeau) Political stability, legal
Enabling conditions environment, investment
conditions, technology cost
Note: According to the OECD statistical standards for measuring private finance mobilised by official development finance interventions, the role
played by technical assistance currently lies in between the mobilisation and catalysation categories, as methodological developments and pilot
data collection exercises highlighted that activity-level measurement and reporting of private finance mobilised through technical assistance is
only possible where a causal link can be clearly established, and double counting avoided.
Source: Adapted and expanded from (McNicoll et al., 2017[96]), (Haščič et al., 2015[55]) and (OECD, 2023[95]).
3.3.1. Private climate finance mobilised by public finance interventions
As per the reporting directives and standards that underpin OECD DAC statistics and OECD tracking of
progress toward the USD 100 billion goal, the mobilisation of private finance through official development
finance interventions involves the use of specific leveraging mechanisms to attract additional financial
resources from the private sector for development purposes (OECD, 2023[95]). In this context, for this type
of mobilisation, there must be a clear cause-and-effect relationship between private funds allocated to a
particular project and the leveraging mechanism employed by bilateral and multilateral official development
finance providers.
There are a few key considerations to be made in the context of determining how to best reflect the
mobilisation of public finance interventions in the context of the NCQG. These are briefly discussed in the
following sub-sections. In all cases, these considerations can apply to the different categories of public
climate finance providers discussed at length in section 3.2, whereby the same approaches identified in
section 3.2.1 could, in fact, be applied to any target on private climate finance mobilised.
Setting a quantified goal for private finance mobilisation
The mobilisation of private finance, even if linked to public finance interventions, is highly dependent on
external factors such as enabling environments and regulatory frameworks. It is therefore difficult for a
public provider to precisely predict how much private finance a specific intervention will mobilise (OECD,
2021[97]). For this reason, there may be a rationale for setting a goal on mobilisation that is separate from
a goal on provision (i.e., Cluster 1). A goal on mobilisation would ideally allow for some flexibility in terms
of precise quantum and capture the need to significantly scale up efforts for mobilisation. To reflect this
issue, the following approach could be adopted:
• Setting a quantified, absolute goal for NCQG contributors to mobilise private climate
finance, including through multilateral institutions. This approach could provide a clear,
measurable goal, offering transparency and a straightforward metric for progress, while
acknowledging the challenges and uncertainties in predicting the impact of specific interventions.

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To reflect this approach, the NCQG could include language similar to: “Parties [should], both as
bilateral providers and through multilateral channels, seek to mobilise USD X billion to support
climate action in developing countries.” This goal would necessarily need to be tied to the target
set for public climate finance (see 3.2.1 and 3.2.2), as the mobilisation of private finance results
from mechanisms used by public finance providers.
Some providers sometimes set and report on private finance mobilisation targets as a percentage of public
climate finance provided. This approach is not considered here as aggregate level leverage ratios between
private finance mobilised and public finance come with significant transparency limitations as well as risks,
including in terms of setting incentives to maximise such ratio (Jachnik and Raynaud, 2015[98]).
Setting incentives for more effective private finance mobilisation by international providers
Assessments of progress towards the USD 100 billion goal indicate that the mobilisation of private finance
from public finance interventions has fallen short of both expectations and potential (OECD, 2023[50]). This
was due to many reasons, including insufficient use and tailoring of risk mitigation instruments by
international providers, limitations in project pipeline, high risk perceptions, as well as the complexity of
regulatory frameworks across different jurisdictions (OECD, 2023[39]). In this context, the NCQG could help
set incentives for more strategic approaches by international providers towards scale up the mobilisation
of private finance, noting some of the interdependencies with domestic efforts detailed in Cluster 3 (section
3.4 below).
• Calling on Parties and international providers to enhance the effectiveness of their
mobilisation strategies. There is evidence that many critical investments in decarbonisation,
particularly but not limited to clean energy, are already or close to being commercially viable in
some developing countries. Private finance mobilisation would ideally become the default
approach for public finance directed towards climate investments in sectors where the commercial
dynamics have evolved to improve the prospects of private sector participation, for example where
new technologies have become more mature and risks and returns better understood (OECD,
2023[39]). For example: “[Parties contributing to the NCQG and multilateral institutions] [are urged
to / seek to] re-orient their public finance to the aim of mobilising private finance in mature sectors
and markets, including clean energy.”
• Calling on the MDBs to strengthen their mobilisation potential while avoiding unintended
consequences on wider development priorities. Recent debates on the evolution of MDBs have
centered around the need for these institutions to enhance their use of resources and balance
sheets to maximise development impact and mobilise private capital more effectively, particularly
for climate finance (OECD, 2023[39]; G20 Independent Expert Group, 2023[99]; G20 Independent
Expert Group, 2023[100]). This includes calls from G20 and G7 leaders for MDBs to adopt innovative
risk-sharing instruments, set ambitious mobilisation targets, and reform their approaches to
leverage private finance, amidst recognition that despite their potential, MDBs’ current private
finance mobilisation remains relatively low compared to the available global private capital (G7,
2023[101]). The NCQG offers an opportunity to further recognise and stress this important point,
including a provision that explicitly calls on the MDBs and their shareholders to revise their
approaches to mobilisation. For example: “MDBs and their shareholders [are called / are urged] to
evaluate and adjust their operational strategies for mobilising private finance, aiming to optimize
the use of innovative financing mechanisms, such as risk-sharing instruments, and to set ambitious
targets for the mobilisation of private capital, particularly in the realm of climate finance.”
• Setting the basis for strengthening co-ordination and collaboration between different
actors. Initiatives such as country platforms, including Just Energy Transition Partnerships
(JETPs) or the Climate Club Global Matchmaking Platform, are emerging as promising avenues
for strengthening the co-operation between public and private sector and enhance the mobilisation

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of private finance (Climate Club, 2023[102]). The NCQG decision could recognise ongoing efforts in
this area and further incentivise Parties to increase their efforts in this space. For example, the
NCQG text could “Recall the importance of strengthening co-ordination and collaboration between
bilateral and multilateral climate finance providers, domestic actors, and the private sector,
including through the establishment of country platforms”.
• Recalling the importance of regular and granular reporting on the mobilisation of private
climate finance. Substantial gaps in data hinder the evaluation of the track record and prospects
for mobilising private finance through international public climate finance. These gaps pose
considerable challenges for policymakers aiming to discern effective strategies across different
sectors and regions. Under the ETF, developed country Parties will be able to report information
on private climate finance mobilised. The NCQG could further highlight the pivotal importance of
this exercise and include a relevant provision. For example, the NCQG could include language like:
“Recognising the fundamental importance of availability of information on private finance mobilised,
[Parties contributing to the NCQG] should continue enhancing their quality of their tracking and
reporting of climate finance mobilised in accordance with the provisions of Article 13 of the Paris
Agreement”.
3.3.2. Private finance catalysed by other public interventions
As already introduced above and in section 2.2.2, private investments and financing for low-emissions and
climate-resilient projects and activities are typically the result of the combined effects of a range of public
finance and policy interventions as well as of broader enabling conditions (Haščič et al., 2015[55]). A range
of programmatic and upstream level-interventions and divers also play a role to help catalyse private
investments and financing, including capacity building and general policy support by international
providers; financial incentives resulting from domestic climate-related policies (e.g., tax breaks, subsidies);
other domestic policies defining norms or standards; broader policy and enabling conditions.
Estimating the effects of individual capacity building and policy interventions on private finance remains
very challenging (McNicoll et al., 2017[96]). This is due to data constraints, methodological issues (defining
accounting boundaries, addressing time lags) as well as high risks of double counting when aggregating
estimates. Moreover, because catalysation of private investments is the result of the combined effects of
wide range of public interventions and enabling conditions, it is impractical to include provisions in the
NCQG that target specific groups of Parties on this matter. Unlike the case of public finance provision,
where responsibilities and contributions can be more directly assigned and measured, the diffuse and
multifaceted nature of catalysation makes setting specific quantified goals for individual Parties or groups
of Parties challenging. This points out to the necessity of an approach that also considers the importance
of creating conducive environments for private finance catalysation. This includes strengthening policy and
regulatory frameworks to enable efficient capital reallocation, as further discussed in Cluster 3, "domestic
efforts" (section 3.4).
If Parties wish to specifically address the catalysation of private climate finance within the NCQG,
approaches may include:
• Recognising the importance of scaling up private finance to achieve the goals of the Paris
Agreement, including through policy support, technical assistance and other approaches.
Given the uncertainty and difficulty in tracking private climate finance catalysed, the NCQG could
include strong language that recognises its key role, without setting specific guidance on the course
of action. Other provisions of the NCQG, such as those proposed for domestic efforts under cluster
3 in this paper, can provide clearer guidance to both Parties providing support and Parties receiving
support on what steps to take to incentivise the catalysation of private finance going forward: For
example: “Parties recognise the key role to be played by the private sector in scaling up climate

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finance to achieve the goals of the Paris Agreement and the critical role played by public
interventions in this context”.
• Setting an aspirational goal for Parties contributing to the NCQG to strengthen capacity
building and co-operation efforts with developing countries on regulatory environments
and policies conducive to scaling up private investments for climate action. Notwithstanding
the importance of domestic action to set relevant enabling conditions for catalysing private
investments (see cluster 3), developed countries can play a pivotal role in supporting developing
countries in this endeavour. Efforts should focus on helping reduce known barriers (e.g., relatively
weak local capital markets, high risk and cost of capital) through mechanisms like risk guarantee
instruments, facilitating access to international capital markets, and providing technical assistance
to improve local financial institutions' capacity to support green investments. This approach could
also involve setting a quantitative aspirational target for catalysation, recalling the top-tier, holistic
goal presented in the NCQG’s preamble (section 3.1). For example: “[Parties contributing to the
NCQG] [are urged to / are encouraged to] enhance their support to developing countries
specifically to promote the catalysation of private finance by advancing targeted policy
interventions, improving regulatory frameworks, and fostering capacity-building initiatives”.
3.4. Cluster 3: Domestic efforts by all Parties
Parties’ own domestic efforts can have a significant impact in scaling up finance for climate action. Overall,
the establishment of incentives that foster a positive reinforcement cycle and acknowledge the ambition of
all Parties that provide and benefit from support can significantly increase the NCQG’s efficacy. The
usefulness of targeted domestic incentives, policies, and enabling environments for steering climate
investments is further supported by a wide range of literature (OECD, 2023[39]; Ang, Röttgers and Burli,
2017[103]; OECD, 2021[104]). The 2022 Kunming-Montreal Global Biodiversity Framework sets a relevant
example in this context. The framework includes targets related to reform of subsidies harmful to
biodiversity (target 18), increase of domestic resource mobilisation for biodiversity (target 19) and
stimulating innovative financing schemes for biodiversity (target 19) (Convention on Biological Diversity,
2022[105]).
As part of the initial phase of the ad hoc work programme on the NCQG, it was widely acknowledged that
setting economic policies and goals at the national level is effective in channelling public funds efficiently
and ensuring that the flow of climate finance aligns with a trajectory that supports development resistant
to climate change and minimizes greenhouse gas emissions (Fricano and Kumarsingh, 2022[82]). Some
Parties in their submissions refer to the relevance of domestic efforts in the context of the NCQG
(UNFCCC, 2024[9]).
This third cluster is designed to offer guidance on actions and efforts conducive to incentivising the more
efficient provision and utilisation of climate finance, with the aim of ultimately contributing the mobilisation
of resources at a scale compatible with the financial needs for the achievement of the Paris Agreement’s
goals. These elements would address both developed and developing country Parties. At the same time,
considering the unique challenges and resource constraints of many developing countries, each element
discussed in this cluster also incorporates signals and incentives targeting developed countries specifically,
encouraging further targeted support for developing countries in implementing their domestic efforts (see
also cluster 1, section 3.2.4). These mechanisms are calibrated to strike a balance, ensuring that the
guidelines foster co-operation without imposing disproportionate responsibilities on developing countries
or on national sovereignty.
The cluster identifies three possible elements, discussed in the following sections:
• Incentives for public climate budgeting and spending (section 3.4.1),

Unclassified
• Incentives for strengthened enabling environments for climate-related investments (section 3.4.2),
• Incentives for the use of innovative instruments to raise further resources domestically (section
3.4.3).
These elements are just a few examples of the many that could be included in a cluster focusing on
domestic efforts.
3.4.1. Incentives for public climate budgeting and spending
Climate public budgeting involves integrating climate change considerations into the planning, allocation,
and spending of public finances to support mitigation and adaptation strategies (C40 Knowledge, 2023[106]).
It serves a dual purpose: directing resources towards climate-related initiatives and catalysing additional
investments from the private sector and international sources. Moreover, for recipients of climate finance,
it can enhance eligibility for international funding mechanisms like grants.
In the context of a global effort, the NCQG could more broadly provide the incentives for all Parties to adopt
a long-term perspective in their budget planning processes to effectively integrate climate considerations
into their national development agendas. There are several approaches for the NCQG to reflect such
incentives. A non-exhaustive list includes, for example:
• Encouraging Parties to evaluate the financial implications of implementing their national
climate plans e.g., Nationally Determined Contributions (NDCs), National Adaptation Plans
(NAPs), etc. as part of their budget planning processes and/or other investment planning
processes. Incorporating cost estimates of the implementation of NDCs and NAPs enables
governments to develop realistic and feasible funding strategies to support the implementation of
their climate commitments (Avgousti et al., 2023[107]; Catalano, Forni and Pezzolla, 2019[108]). This
could include assessing the scale and type of finance needed to implement the NDC, as well as
identifying which NDC elements are unconditional and will be covered by domestic finance, and
which, if any, are conditional and require additional finance (Jeudy-Hugo et al., 2024[109]).
Moreover, clearly identifying possible cost needs for NDCs and other national climate plans can
serve as an important signal, particularly for international providers to provide support, and thus
contributing to linking demand with supply (OECD, 2023[84]). This provision could be further
strengthened by encouraging countries receiving support to report, for example as part of their
BTRs or processes such as the GST, to what extent support received was useful in implementing
their national climate plans. This approach can help create positive stories, reinforcing a cycle of
ambition. For example, the NCQG could include language along the lines of: “To ensure alignment
of support with national ambitions, and to incentivise investment, developing country Parties are
[encouraged to] include detailed cost estimates of the activities included, inter alia, in their
Nationally Determined Contributions and national climate plans. Moreover, these Parties are
[encouraged to] report on how support received in the context of the NCQG has contributed to the
achievement of their climate objectives”.
• Encouraging Parties to adopt a long-term perspective in their budget planning processes
to effectively integrate climate considerations into their national development agendas. This
involves mainstreaming climate-related goals and targets into national development plans, sectoral
policies, and strategies. Parties could also be encouraged to consider climate risks and
opportunities in their public procurement processes and investment (Martini et al., 2023[110])). This
entails incorporating climate risk assessments into project planning and appraisal processes,
conducting climate-sensitive procurement procedures, and promoting green public procurement
practices. Regarding public investment strategies, this can involve diversifying portfolios to include
climate-resilient assets, promoting investments in renewable energy, sustainable infrastructure,
and low-carbon technologies, and overall aligning investment decisions with long-term climate
goals and international commitments (Catalano, Forni and Pezzolla, 2019[108])). For example: “With

Unclassified
the aim of ensuring the efficient use of public resources in support of climate action and to leverage
these investments to attract additional funding from private and international sources, Parties are
encouraged to adopt comprehensive long-term strategies within their budget planning processes
that fully integrate climate considerations. [Parties contributing to the NCQG] are urged to assist
developing countries in implementing these strategies, through technical assistance, capacity
building, and financial support”.
3.4.2. Incentives for strengthened enabling environments for climate-related

investments
As illustrated in Chapter 2. , and further reiterated in the introduction to Cluster 2 on private climate finance,
the private sector is a key stakeholder in addressing the climate financing gap. However, in many countries,
private sector participation and investment have been limited, often due to the absence of regulatory and
institutional frameworks that facilitate investment and incentivise more sustainable practices (Hutton and
P. Rudolph, 2023[111]). Encouraging the flow of private capital towards low emission options and climate-
resilient pathways necessitates implementing suitable price and policy signals, alongside efforts to mitigate
or reduce investment risk.
In their submissions, some Parties have specifically highlighted the role of public policy frameworks to
support and enhance the mobilisation and catalysation of private finance. At the same time, some
developing countries have stressed that, due to socio-political circumstances, it is often more difficult to
attract private finance because of real and perceived risks to investors (UNFCCC, 2024[9]) Moreover,
discussions held at TED 2 and TED3, recognised the key role of public actors in enabling private sector
involvement in climate action, including through the establishment of favourable regulatory frameworks for
investments (Fricano and Kumarsingh, 2022[87]) (Fricano and Kumarsingh, 2022[82]).
In this context, the task at hand for policymakers, presenting both a challenge and an opportunity, involves
utilising policy tools and limited public resources effectively to establish frameworks and incentives that
enhance returns on low-emission investments, and make them more competitive compared to high-carbon
alternatives (Averchenkova, 2019[57]). The NCQG could play an important role in encouraging parties to
take concrete steps toward enhancing these enabling regulatory frameworks, thereby maximising the
effectiveness of the goal. There are different approaches for the NCQG to address this, including:
• Encouraging the adoption of regulatory measures to boost private sector investments. Such
measures can include the implementation of energy efficiency mandates, establishment of fuel
standards, resilient building codes, or minimum shares of renewable energy in key sectors such
as transport (IMF, 2023[56]; Hutton and P. Rudolph, 2023[111]). While providing detailed guidance
on what measures to implement nationally would fall outside of the scope of the NCQG, the goal
could include language along the lines of: “To increase the potential for mobilisation of climate
finance from private sources, Parties are encouraged to take steps for enhancing regulatory
frameworks aimed at incentivising private sector investments. [Parties contributing to the NCQG]
are called on providing dedicated capacity-building support to developing country Parties to
facilitate the establishment of such frameworks”.
• Promoting the use of fiscal instruments to incentivise climate investment and disincentivise
high GHG and non-resilient activities. Fiscal instruments could be used to mobilise climate
finance in several ways: catalysing private climate investments, raising public funds for mitigation
and adaptation initiatives, and disincentivising non-abated, high-emission non-resilient activities,
(A. de Mooij, Keen and W. H. Parry, 2012[112]). In this context, price-based fiscal instruments like
energy taxes and carbon pricing initiatives, as well as subsidies, tax incentives and payments for
ecosystem services can be effective tools (OECD, 2021[104]; Hutton and P. Rudolph, 2023[111]).
Additionally, the revenue generated from these taxes can be strategically allocated to fund vital
government services, climate mitigation/adaptation initiatives, and support vulnerable groups in

Unclassified
adapting to higher energy prices (Advani et al., 2021[113]) (see also section 3.4.3). Similarly, fossil
fuel and agricultural subsidy reform is also important to address due to its distortion of market
signals which results in overconsumption and impedes the competitiveness of cleaner energy
alternatives (OECD, 2021[104]). The NCQG can incentivise these practices to enhance the
effectiveness of the goal. For example: “All Parties [are encouraged to] consider the use of fiscal
instruments including taxation to incentivise climate investments. In parallel, they are [encouraged
to] prioritise the reform of fossil fuel subsidies, where this can be done without being detrimental to
energy access or just transitions. [Parties contributing to the NCQG] [are called on to] support
Parties that face unique challenges developing countries in the design and implementation of these
measures, as relevant”.
• Recognising the potential impact of certain domestic policies on the ability of other
countries to attract climate finance. The effectiveness of a country's climate policies can
significantly impact its attractiveness to private climate investments, and can influence another
country's investment landscape, both positively and negatively. Conversely, some policies, if not
balanced, could create trade distortions with potential negative impacts for countries with emerging
markets or less developed financial systems. The NCQG can address these dynamics. For
example, it could state: "Parties [are encouraged to] align domestic climate policies with
international climate finance objectives, fostering an environment conducive to cross-border
investments in sustainable and low-emission technologies".
3.4.3. Incentives for the use of innovative instruments to raise further resources
domestically
Beyond international public finance and private investments, closing the financing gap for meeting the
goals of the Paris Agreement will require also a scaling up of domestic resources. This could include
ensuring that money already earmarked for domestic public spending is aligned or contributes to climate
activities (see section 3.4.1), but also exploring the use of innovative instruments in raising further funding
that could be invested in climate measures.
In this context, the NCQG could recognise and incentivise Parties’ efforts in increasing domestic resources
to finance climate action. In this context, innovative instruments such as Green, Social, and Sustainability
(GSS) bonds, Sustainability-Linked Bonds (SLB), as well as carbon pricing initiatives, are a promising way
to mobilise additional resources, particularly in developing countries with limited fiscal space (OECD,
2023[114]).15 The potential of innovative instruments in raising further resources domestically is recognised
by both developed and developing country Parties in their submissions (UNFCCC, 2024[9])
In practice, in the context of a global effort and with a view of promoting increased ambition over time, the
NCQG could reflect this point by:
• Encouraging the use of innovative financial instruments to raise resources domestically for
climate action and sustainable development. A similar provision was included in the Paris
Declaration for Aid Effectiveness, whereby “Partner countries commit to intensify efforts to mobilise
domestic resources” (UNDP, 2005[115]) On a similar note, decision 4/CMA.5, emphasises the role
of governments and other actors in the context of “accelerating the ongoing establishment of new
and innovative sources of finance, including taxation, for implementing climate action […]”
(UNFCCC, 2023[83]). This could include calling Parties to carefully assess their fiscal capacity and
debt sustainability metrics when considering the issuance of such financial instruments. At the
same time, recognising the unique challenges of some developing country Parties in scaling up
the use of innovative instruments, the NCQG could also provide more guidance to developed
15
For example, through GGS bonds and SBLs, countries can tap into domestic capital markets and attract a diverse
range of investors, thereby reducing reliance on external sources of funding.

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countries in how they can more concretely support developing countries in this space. For example,
the NCQG could encourage Parties providing support to provide technical assistance and capacity-
building support to developing countries in the design, issuance, and management of innovative
climate finance instruments, to facilitate their integration into national climate finance strategies
such as NDCs. Moreover, Parties providing support and international organisations could aid in
the development of robust standards and regulations for issuing and listing innovative climate
finance instruments that ensure transparency, credibility, and alignment with internationally
recognised green finance principles. For example: “Parties [are encouraged to] use innovative
financial instruments including green, social, and sustainability bonds; sustainability-linked bonds,
and carbon pricing initiatives to raise further resources for climate action. [NCQG contributors and
relevant multilateral developing finance institutions] [are encouraged to] provide targeted capacity-
building and technical support for developing countries to implement such efforts”.

Unclassified
4. Potential indicators for different

elements of the NCQG
Transparent tracking towards the elements that will be included in the NCQG is essential not only for
informing more effective financing and policy actions but also for building trust among Parties. While
transparency arrangements can be developed at a later stage, the potential nature of indicators and
information sources should be considered in the process of designing and structuring the goal. This chapter
outlines what types of indicators could be used for tracking progress towards the various elements
identified in chapter 3. (section 4.14.1) and provides an overview of what sources of information could be
useful for tracking progress towards the goal (section 4.24.2).
4.1. Types of indicators to track progress towards different elements
An indicator is a specific, observable, and measurable characteristic or change that shows the progress
towards achieving a goal. Identifying good indicators for the elements included in the NCQG is crucial for
effectively measuring progress towards their achievements, evaluating outcomes, and making informed
decisions. While originally developed as a management tool, the SMART criteria are widely accepted as
best-practice approach for developing indicators (Doran, 1981[116]; McCarthy et al., 2012[117]; OECD,
2019[118]). Accordingly, a SMART indicator would be specific, measurable, attributable, relevant, and time
bound.
In the context of the current USD 100 billion goal, no specific indicators were defined to track progress. In
practice, annual volumes of climate finance provided and mobilised by developed countries have been
the main indicator used (OECD, 2023[50]; UNFCCC SCF, 2022[119]; Oxfam, 2023[120]). The USD 100 billion
goal was set in the context of “meaningful mitigation action and transparency of implementation”, which,
despite having received less attention un terms of indicator development and operationalisation, has led
some organisations and institutions to track both qualitative and quantitative indicators, such as mitigation
activities. For example, the UNFCCC Standing Committee on Finance (SCF) considered data on the
adoption of policies, laws, and regulations pertinent to climate action. This includes the number of countries
with climate laws directly targeting GHG reductions, carbon pricing mechanisms, and the percentage of
total GHG emissions these cover (UNFCCC, 2022[121]). In 2022, the OECD also attempted to measure
progress towards the goal by assessing the impact of climate finance on reducing GHG emissions and
increasing climate resilience in developing countries. However, due to limited data, a comprehensive
assessment was not possible (OECD, 2022[37]).
This paper highlights that, beyond monetary volumes, the NCQG offers the opportunity to capture a variety
of other dimensions critical for assessing the impacts and effectiveness of climate finance. These
dimensions include qualitative indicators such as technical and financial capacity in developing countries,
their ability to access finance, and improvements in the environments that facilitate climate investment.
Table 4.1 below outlines possible headline indicators to track progress towards the different NCQG
elements explored in Chapter 3. .

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At the same time, the possible wider scope of the NCQG presents challenges, especially in capturing
quantitative or qualitative information on progress in areas mentioned earlier. Measuring the environmental
impact of specific climate finance or policy interventions is difficult, as there is no widely accepted method
to accurately quantify GHG reductions per dollar spent (Eltokhy et al., 2021[122]). Moreover, data availability
on these elements often remains very limited (see section 4.2). For instance, (Martini et al., 2023[110])
illustrates that assessing the extent of green public procurement (GPP) uptake us challenging due to the
lack of mandatory across countries. Similarly, as noted in section 3.4, although practices like climate
budget tagging have become more common, obtaining robust and comparable data on domestic climate
expenditure is still difficult. This is partly because public financial management systems, often structured
by sector, struggle to accommodate cross sectoral issues like climate (Allan et al., 2019[123]). Finally,
assessments by third-party experts and international organisations generally relay on government-
provided data through predominantly public channels as part of their budget documentation. However, this
data tends to vary in terms of its level of detail, timeframes, and reference points, making cross-country
comparisons challenging (Eltokhy et al., 2021[122]).
Despite these challenges, including such indicators in the NCQG could encourage gradual improvements
in transparency data availability over time. Initially, NCQG tracking could capture information on those
elements for which information is relatively readily available (e.g., volumes of public finance and private
finance mobilised by public finance interventions), while gradually expanding towards for a more
comprehensive assessment. The future review of the Paris Agreement’s ETF CTFs may offer further
opportunities for capturing new information relevant for the NCQG. However, it is important to note that
the NCQG will need to rely on a range of information sources beyond the ETF.
Lessons can be drawn from the framework developed for the Kunming-Montreal Global Biodiversity
Framework, which outlines twenty-three action-oriented global targets to combat biodiversity loss to be
achieved by 2030. Each target is accompanied by guidance notes detailing indicators for effective progress
monitoring. These notes also offer a series of guiding questions to aid countries in setting their related
national targets, along with additional resources that can help the target’s implementation. For instance,
target 2, “restore 30% of all degraded ecosystems,”, is supplemented with a list of headline and
complementary indicators, which are measurable and directly related to the target, such as "annual tropical
primary tree cover loss" and "percentage of cropped landscapes with at least 10 per cent natural land."
This approach ensures that the goals of the framework are actionable, and progress is efficiently tracked
(Convention on Biological Diversity, 2024[124]).

Unclassified
Table 4.1. Selection of possible indicators for different NCQG elements

Cluster Element Examples of possible headline Type of Availability of information and trackability
indicator for measuring progress indicator
Cluster 1 – Bilateral public finance Volume of bilateral public climate finance Quantitative Information mostly available through Paris Agreement ETF. However, only developed
International support provided by contributing Parties monetary country parties are required to report. Other Parties are requested to report.
for climate action Multilateral public finance Volume of multilateral public climate Quantitative Information on multilateral outflows not available under the ETF, but mostly available
finance outflows provided by multilateral monetary through OECD DAC statistics.
institutions [and attributed to contributing
Parties]
Volume of multilateral public climate Quantitative Information on inflows to multilateral institutions mostly available through Paris Agreement
finance inflows provided by contributing monetary ETF. However, only developed country parties are required to report. Other Parties are
Parties. requested to report. Important to clearly separate information on multilateral inflows from
information on multilateral outflows to avoid double-counting.
Non-commercial finance Volume of non-commercial finance Quantitative Would require significant efforts. Currently there is no individual dataset that collects this
contributions from non-Party contributed by non-Party stakeholders monetary information. Non-Party stakeholders do not have reporting obligations under the Paris
stakeholders Agreement.
Support for capacity building Number of Capacity Building and Quantitative Information mostly available through Paris Agreement ETF. However, only developed
and technology transfer by Technology Transfer Initiatives Supported non-monetary country parties are required to report. Other Parties are requested to report.
Parties providing support and/or associated financial contribution.
and, potentially, non-Party
stakeholders
Cluster 2 – Private Private finance mobilised by Volume of public climate finance Quantitative Information mostly available from the OECD DAC and increasingly through Paris
finance mobilised public finance interventions mobilised by public finance interventions monetary Agreement ETF. However, under the UNFCCC, only developed country parties are
and catalysed for required to report. Other Parties are requested to report.
climate action
Private finance catalysed by Aggregate indicators on volumes of public Quantitative Information on private climate finance catalysed by policy interventions may be available
other public interventions climate finance catalysed and/or private monetary and/or through Paris Agreement ETF. However, under the UNFCCC, only developed country
sector development non-monetary parties are required to report. Moreover, further work on methodological development
for measuring catalysation of public policy interventions will be required. Comprehensive
assessment of private finance catalysed would likely require compilation of data from a
wide variety of sources, including non-official ones. Unlikely to be able to provide a
complete and comprehensive picture in the near future.
Cluster 3 - Domestic Incentives for public Volume of domestic public climate Qualitative Information may be available through national budget documents and reports to
efforts by all Parties budgeting and spending spending; percentage of climate-related and/or international frameworks like the UNFCCC. Tracking may vary by country depending on
spending in total public expenditure; quantitative non- transparency and reporting mechanisms.
number and effectiveness of financial monetary

Unclassified
Cluster Element Examples of possible headline Type of Availability of information and trackability
indicator for measuring progress indicator
strategies for implementing climate
commitments.
Incentives for strengthened Number of regulatory measures Qualitative Information on regulatory changes can be tracked through national legal and policy
enabling environments implemented to facilitate private sector and/or documents. International organisations and financial institutions may provide additional
climate investments investments; level of financial quantitative non- data and assessments.
transparency and risk disclosure in monetary
climate investments; extent of progress
on fossil fuel subsidy reform.
Incentives for the use of Volume of green, social, and Qualitative Information could potentially be available through national financial market regulators,
innovative instruments to sustainability bonds issues; adoption rate and/or bond markets, and international financial databases.
raise further resources of carbon pricing initiatives; development quantitative non-
domestically and adoption of standards and monetary
regulations for innovative instruments.
Source: Authors.

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4.2. Data sources for tracking progress towards the NCQG
The ETF is an important source of information and possible starting point for tracking progress towards
the NCQG. It covers four key climate finance components crucial for monitoring progress towards the
NCQG: financial support provide through bilateral, regional, and other channels; financial support provided
through multilateral channels; financial support mobilised through public interventions; and financial
support received. Table 4.2 provides an overview of reporting rules for each one of these finance
components, as well as a short commentary on key considerations and informational gaps in relation to
each component. It is important to note that the reporting requirements are however different with reporting
being mandatory (“shall”) and not mandatory (“should”). Such difference in reporting requirements is
relevant for considerations on data availability. Importantly, this section only discusses data sources, and
does not discuss what entity or entities, if any, could be in charge of compiling different data sources in a
comprehensive tracking exercise.
Table 4.2. Overview of reporting requirements under the Paris Agreement ETF
Reporting element Requested (“should”) Reporting Information to be Challenges, gaps, and further considerations
or required (“shall”)? format provided (non- in the context of tracking progress towards the
exhaustive list) NCQG
Information on Required for developed Common tabular Climate-specific amount; Significant inconsistencies in terms of
financial support country Parties. format recipient; status methodologies, categorisations, and
provided: Bilateral, Requested for Other (disbursed, committed); definitions adopted across countries (see
regional, and other Parties that financial instrument; Annex B in (OECD, 2020[125])). For
channels (Annex provide support climate theme example, variations occur in currency
MPGs V.C) (adaptation, mitigation, conversion, point of measurement
cross-cutting); sector and (commitment and disbursement) and
sub-sector. estimation of climate-specific amounts.
Information on Required for developed Common tabular Core-general or climate Specific field will allow for the reporting of
financial support country Parties. format specific amount; inflows outflows. However, data on outflows are
provided: Requested for Other and/or outflows; status not available as this information is
Multilateral Parties that (disbursed, committed); ultimately held by multilateral banks or
channels (Annex provide support financial instrument; agencies which do not report to the
MPGs V.C) climate theme UNFCCC.
(adaptation, mitigation, Therefore, data will most likely focus on inflows.
cross-cutting); sector and
sub-sector.
Information on Required for developed Textual and/or Climate-specific amount; Data will in principle cover private climate finance
financial support country Parties. common tabular amount of resources used mobilised by both public finance and policy
provided and Requested for Other format to mobilise the support; interventions. Given the challenges in
mobilised: Parties that type of public intervention estimating private climate finance
Information on provide support used; recipient; sector mobilised by policy interventions, there
finance mobilised and sub-sector. may be inconsistencies across developed
through public countries’ reporting.
interventions Data on private climate finance mobilised by
(Annex MPGs V.C) multilateral institutions will not be available
under the UNFCCC ETF.
Information on Requested for Common tabular Climate-specific amount; For many Parties, it will be the first-time reporting
financial support developing country format recipient entity; on climate finance information, and this
received by Parties implementing entity; type reporting may be heterogeneous and not
developing country of support; sector and comprehensive at first.
Parties under sub-sector.
Article 9 of the
Paris Agreement
(Annex MPGs VI.D)
Source: Adapted and expanded from (Falduto and Ellis, 2019[126]).

Unclassified
Depending on the final scope of the NCQG, it is likely that information from sources beyond the ETF will
be required. Examples of data sources that could be relevant are presented below, noting that many further
data sources could be considered. The intention here to illustrate the range of potential data and
information points that could contribute to tracking progress towards the NCQG in a comprehensive
manner, but also the complexity of relying on a multitude of sources.
Importantly, apart from statistics relating to development finance, the majority of these data sources cover
developed country Parties much more comprehensively than developing county Parties. Reporting on
information related to domestic efforts in a more systematic way will likely represent a non-negligible
additional burden for many Parties, including developing country Parties that face significant capacity
challenges. These countries will necessitate relevant support to enhance their reporting efforts.
• OECD DAC database on bilateral and multilateral development finance, a repository that
systematically records international aid, grants, and financial flows from DAC members, multilateral
institutions, and some non-DAC countries to developing countries. This database captures various
types of financial flows, including Official Development Assistance (ODA), Other Official Flows
(OOF), private flows at market terms, and grants by NGOs. The OECD DAC's methodology
ensures the data's relevance, accuracy, and comparability, making it an essential tool for
understanding international development finance dynamics. The OECD DAC database has
potential to inform the monitoring and progress towards the NCQG in the areas of:
o International public finance (cluster 1). The DAC database includes data on bilateral
and multilateral climate-related development finance provided by DAC members and
multilateral organisations including MDBs and multilateral climate funds. Importantly, data
on multilateral public finance outflows, reported directly from multilateral channels to the
OECD DAC is complementary to the multilateral inflows data to be provided by Parties to
the UNFCCC and Paris Agreement, and essential in tracking progress assessments. Such
data on multilateral outflows has been used in OECD assessments of progress towards
the USD 100 billion goal.
o Private climate finance mobilised (cluster 2). Under a high-level mandate from
development ministers, the OECD DAC has developed an international standard for
measuring the amounts mobilised from the private sector by official development finance
interventions, including for climate. The scope of the OECD DAC methodology for
measuring the amounts mobilised from the private sector covers the main mechanisms
used by development finance providers, including syndicated loans, guarantees, credit
lines, direct investment in companies or special purpose vehicles (SPVs), shares in
collective investment vehicles (CIVs) and simple co-financing arrangements, as well as
technical assistance in some cases. OECD DAC data on private finance mobilised has
been used in OECD assessments of progress towards the USD 100 billion goal.
• Total Official Support for Sustainable Development (TOSSD), an international standard for
measuring the full array of resources to promote sustainable development in developing countries,
including for climate action. Agreed by a large group of governments and organisations, TOSSD
monitors all official finance flows to developing countries for their sustainable development (Pillar
I), contributions to International Public Goods (Pillar II), as well as private resources mobilised
through official means. In this context, TOSSD engages with public finance providers globally,
including in Africa, Asia, and Latin America. The latest TOSSD dataset (2022) hosts activities from
119 bilateral and multilateral providers. With the number of reporters growing every year, TOSSD
has served as a data source for the SDG indicator 17.3.1: Additional financial resources mobilised
for developing countries from multiple sources. When it comes to the recipients of support under
Pilar I, some high-income countries that are no longer eligible for ODA finance but still receive
international support remain on the list of TOSSD recipients. Any country can also request to be
included, thereby allowing to recognise the various contexts in which countries find themselves,

Unclassified
while building a more complete and relevant statistical system to inform international processes.
Since January 2024, the TOSSD standard is governed by the International Forum on TOSSD (IFT)
with a balanced representation of provider and recipient countries (including dual
provider/recipients) and international organisations. Civil society organisations have a permanent
observer seat in all IFT bodies. Given its unique scope and coverage, TOSSD could inform the
monitoring of progress towards the NCQG, particularly in the areas of:
o International Public finance (cluster 1). TOSSD collects statistics from a wide variety of
bilateral providers and multilateral organisations. Work is being conducted to expand the
database to South-South Cooperation (SSC) providers. The data encompass resources
for sustainable development and climate action in the form of grants, concessional and
non-concessional loans, equity investments, other instruments, as well as technical
assistance and research.
o Private finance mobilised (cluster 2). TOSSD also includes data on private finance for
sustainable development and climate mobilised by official providers, both bilateral and
multilateral. TOSSD measures the mobilisation effect of all available financial instruments
and technical assistance used by providers of international public finance.
o Domestic efforts by all Parties (cluster 3). As part of its Pillar II, TOSSD offers a new
consolidated dataset on domestic spending in support of climate change mitigation and
other environmental objectives. The data are reported by both traditional and new
providers. The coverage of these data has been increasing and further work seeks to
enhance TOSSD data on climate by national development banks in provider and recipient
countries.
• Annual reports of the multilateral climate funds and joint reports of the MDBs. A group of
MDBs releases annually a joint report presenting their climate finance figures. Such figures are
compiled based on a joint MDB climate finance methodology (EIB, 2023[127]). These reports present
public source of information on MDB outflows; however, the information is presented at semi-
aggregate levels, and underlying activity-level information is not publicly available. Similarly, the
multilateral climate funds prepare annual reports to the COPs that provide detailed information on
their activities, including project-level information outflows (see e.g. (UNFCCC, 2023[128])). While
most MDBs and climate funds provide information about individual projects on their respective
websites, these are not consolidated in activity-level database formats comparable to the way in
which such data can be accessed in OECD DAC statistics. Reports and websites from MDBs and
climate funds can nevertheless contribute assessments of the multilateral climate finance element
of cluster 1, and private finance under cluster 2.
• OECD Export Credit Group (ECG) database includes data compiled and published by the OECD
concerning the activities and operations related to export credits. The statistics gathered by the
OECD Export Credit Group include information on the volumes, terms, and conditions of export
credits provided by member countries, as well as data on claims, recoveries, and other relevant
financial indicators. Such data has been used in OECD assessments of progress towards the USD
100 billion goal. Depending on where export credits will be accounted for in the context of the
NCQG, the ECG database could provide useful information for clusters 1 and 2.
• National account data based on the System of National Accounts (SNA) framework: The
SNA is framework developed jointly by the International Monetary Fund (IMF), the World Bank,
the OECD and the European Union (EU) for compiling economic activity measurements,
incorporating internationally agreed concepts, definitions, classifications, and accounting rules
(UNSD, 2024[129]). It presents guidelines to measuring gross domestic product (GDP) and its
constituent parts, as well as final consumption aggregates, income, savings, and employment
(UNSD, 2024[129]). While the SNA is not a database, it underpins the creation of national and
international economic databases. Various organisations and national statistical offices implement

Unclassified
the SNA framework to collect, compile, and publish economic statistics, resulting in databases that
contain detailed national accounts data.
o For example, the United Nations Statistics Division (UNSD) through its National Accounts
Questionnaire (NAQ) based on the SNA framework, annually collects national accounts
data from Member States and publishes it in its “National Accounts Statistics: Main
Aggregates and Detailed Tables” (UNSD, 2024[130]) (UNSD, 2024[131]). The sixty-fourth
issue released in 2023, presents data on 208 countries and areas for the reporting years
2011 to 2022 (UNSD, 2024[131]).
o The OECD National Accounts Statistics database includes annual and quarterly data for
OECD countries and selected non-OECD countries (India, South Africa, Brazil, Indonesia,
Russia). It is based on the SNA 2008 framework and it includes measures of, inter alia,
general government accounts, financial accounts flows and stocks, and central
government debt (OECD, 2023[132]).
o Finally, Eurostat, the statistical office of the European Union collects and regularly
publishes SNA-aligned data from EU Member States, EFTA countries, and EU candidate
countries to generate aggregates for the EU and euro area (European Commission,
2024[133]).
Overall, national account data and SNA compliant reporting, can be potentially useful to assess progress
towards some elements included in Cluster 3. For instance, simplified accounts for general government
provide an overview of budget appropriations. Governments do report more detailed data on
“Environmental Protection Expenditure Accounts”, including for activities relating to climate action 16; while
reported and presented separately, such data are compatible with the boundaries and definitions used
within the SNA. Within the SNA, further data on different institutional sector, specifically for corporations
and financial entities can help understand the impact of regulatory measures on private sector investments
(Cluster 3). Here, recent developments under the Advisory Expert Group on National Accounts (which
involves the UN, the IMF, the OECD, the World Bank and the EU) includes the provision of new guidance
on sustainable finance that will provide the basis for countries to start compiling official estimates of green
and ESG debt securities, shares, loans and investment funds for the national accounts and balance of
payments.17
• OECD PINE (Policy Instruments for the Environment) database, compiles data on public policy
instruments for environmental protection and natural resource management across 130 countries.
The database covers five types of policy instruments: deposit refunds, environmentally beneficial
subsidies and payments, taxes and fees, tradeable permits and offsets, and voluntary approaches.
For each instrument it provides information on when it was introduced, what it applies to, its
geographical coverage, the environmental domains it addresses, the industries concerned, its
revenues, costs and rates, as well as the exemptions granted. Finally, the PINE database also
provides in-depth coverage of environmentally related tax-revenue, including revenue from energy
products, transport services, pollution emission and resource management. which represents
about half of all instruments in the database. The PINE database could potentially be useful in
tracking progress towards some elements included in Cluster 3. For example, it could provide
insights on the adoption and impact of carbon taxes in various countries, the effectiveness of
domestic resource mobilisation through fiscal instruments, and government subsidies or incentives
for private climate-related investments (OECD, 2023[134]).
• Several commercial databases compile project-level or company level data on investments and
finance. Examples include Bloomberg, IJGlobal, LSEG, Moody’s, Morningstar, or S&P (Jachnik,
16
See for instance environmental protection expenditure data and accounts as available from the IMF and the OECD
17
See the sustainable finance item at https://unstats.un.org/unsd/nationalaccount/aeg/2024/M25/M25.asp

Unclassified
Mirabile and Dobrinevski, 2019[135]; CPI, 2023[3]). Such databases typically cover different types of
investments, sectors, and physical or financial assets. Such data sources are widely used in the
financial sector itself. They also contribute to informing a range of investment- and finance-related
analyses by intergovernmental organisations, academic institutions, and civil society entities,
including for climate-relevant sectors or subsectors with well-defined boundaries and thus relatively
easy to separate out, such as renewable energy and fossil fuels. Generally, such data on private
actors has larger gaps for developing countries compared to developing countries. Certain types
of actors are less well covered, such as small- and medium-sized enterprises and unlisted
companies more generally. There are also challenges in terms of inconsistent definitions across
data providers (Boffo and Patalano, 2020[136]; Noels and Jachnik, 2022[137]). With these
characteristics in mind, commercial data sources could be considered as input to aggregate-level
indicators on catalysed private finance as suggested under Cluster 2, as well as for informing
qualitative considerations relating to the proposed Chapeau providing broader context.

Unclassified
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Unclassified
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Unclassified
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Unclassified
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standards/beyond-oda-foundations.htm (accessed on 27 February 2024).

Unclassified
OECD (2023), Climate Finance Provided and Mobilised by Developed Countries in 2013- [50]
2021: Aggregate Trends and Opportunities for Scaling Up Adaptation and Mobilised Private
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Unclassified
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Unclassified
Songwe, V., N. Stern and A. Bhattacharya (2022), Finance for climate action: Scaling up [17]
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Change and the Environment, London School of Economics and Political Science,
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report-2023.
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committee-on-finance-scf/progress-report.

Unclassified
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Unclassified
www.oecd.org/environment/cc/ccxg.htm
With the financial assistance
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THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

Questions and comments should be sent to:

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

JEL Classifications: F35, F63, F64, Q01, Q54, Q56

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

Classification JEL: F35, F63, F64, Q01, Q54, Q56

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

4. Potential indicators for different elements of the NCQG 56

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

AFOLU Agriculture, Forestry and Other Land Use

BTR Biennial Transparency Report

CIVs Collective investment vehicles

CPI Climate Policy Institute

CRDC Climate Resilient Debt Clauses

DAC Development Assistance Committee

DFI Development Finance Institution

DSF Debt Sustainability Framework

ECG Export Credit Group

ESG Environmental, Social and Governance

ETF Enhanced Transparency Framework

GCF Green Climate Fund

GDP Gross Domestic Product

GEF Global Environment Facility

GHG Greenhouse Gases

GPP Green Public Procurement

GST Global Stocktake

GSSS Green, Social, Sustainability and Sustainability-linked

IFC International Financial Corporation

IMF International Monetary Fund

IRENA International Renewable Energy Agency

IPCC Intergovernmental Panel on Climate Change

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

JETP Just Energy Transition Partnership

LDCs Least Developed Countries

LDCF Least Developed Countries Fund

MDB Multilateral Development Bank

NAP National Adaptation Plans

NCQG New Collective Quantified Goal

NDC Nationally Determined Contributions

NZE Net Zero Emissions

ODA Official Development Assistance

OOF Other Official Flows

SCF Standing Committee on Finance

SCCF Special Climate Change Fund

SIDS Small Island Developing States

SLBs Sustainability Linked Bonds

SNP System of National Accounts

SSC South-South co-operation

TED Technical Expert Dialogue

TPS Tradeable Performance Standards

TOSSD Total Official Support for Sustainable Development

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE

THE NEW COLLECTIVE QUANTIFIED GOAL ON CLIMATE FINANCE