The global projected investment requirement for climate action as estimated by the latest IHLEG report is around $6.3–6.7 trillion per year by 2030, of which $2.3 - 2.5 trillion will be in developing countries (incl. emerging economies) other than China. As a means of comparison, the IMF estimated that the world spent $7 trillion on fossil fuel subsidies in 2022 alone. This shows that while the figures may seem staggering, it is possible to mobilize the financing to address climate change effectively.
Developing countries, and in particular the Least Developed Countries (LDCs) and Small Island Developing States (SIDS) will continue to require international support to be able to fund their response to the climate crisis and provide their population with renewable energy access. The New Collective Quantified Goal (NCQG) outcome will have to determine the level of support they will be able to count on in the future.
Many countries and experts have been calling for the NCQG to reach at least $1 trillion per year to help poorer and more vulnerable countries with the just energy transition and address adaptation challenges. The core of the NCQG must be funded through international public finance and include a significant amount in highly concessional financing, including grants for highly indebted countries. While part of this funding must continue to come from wealthy countries’ budgets, for instance as part of their Official Development Assistance (ODA), it is insufficient to limit the concessional financing on ODA only, mostly for two reasons: ODA in key donor markets is being cut heavily, as Global Citizen’s tracker shows; and even if all donors were to meet their commitment to allocate 0.7% of their GNI to ODA, the amount (around $420 billion, nearly twice as much as today) wouldn’t be enough to address for instance climate adaptation in poorer countries, let alone other priorities such as access to health and education.
The below table shows that agreeing on an ambitious NCQG is not a question of means, but of political will. The money is there - and most often, the instruments to mobilize more resources could also help to drive down emissions. It also shows that an ambitious quantum for the NCQG doesn’t have to come at the detriment of the quality of funding, as most instruments below would raise money which could be reallocated in the form of grants. The only exceptions are MDB reform and Special Drawing Rights (SDRs). Agreeing on a clearly defined NCQG while giving it credibility through the endorsement of new financing sources such as levies, an ambitious timeline on the phaseout of fossil fuel subsidies and further MDB reform is needed and possible.
An ambitious and credible NCQG delivering high quality funding, including to the poorest and most indebted countries, is a matter of political will!
More details can also be found in Global Citizen’s Where’s The Money report and on the There Is Enough Money page.