New Collective Quantified Goal (NCQG)

Syllabus: GS3/Environment Conservation 

Context

• Countries are negotiating the draft of the new collective quantified goal (NCQG) on climate finance at the ongoing UN summit on climate change (COP29).

Background

• In 2009, at the COP15, developed countries set a target of $100 billion per year to be met by 2020.
• COP21 2015, resulted in the Paris Agreement where countries agreed that they would set a New Collective Quantified Goal for finance in 2024. 
• This NCQG would replace — and be higher than — the $100 billion target. 
• The NCQG is expected to be decided and adopted at the ongoing COP29 in Azerbaijan.

What is NCQG?

• The New Collective Quantified Goal (NCQG) is basically a target for finance.
  • It will indicate the funds that should be mobilised annually to support climate action projects in the developing countries. 
  • It reflects the priorities and preferences of all negotiating groups among developed and developing countries — from $100 billion to $ 2 trillion. 
• Need of NCQG:
  • The figure of $100 billion is inadequate for the climate finance needs of developing countries, which, by varying estimates, range from $1-2.4 trillion per year until 2030. 
  • The goal of $100 billion was not a negotiated one – it was a political one.
  • Developing countries expressed that climate finance should be “adequate, predictable, accessible, grant-based, low-interest and long-term”. 

What is Climate Finance?

• Climate finance refers to large-scale investments required for actions aiming to mitigate or adapt to the consequences of climate change.
• Adaptation: It involves anticipating the adverse effects of climate change and taking appropriate action to prevent or minimise the damage they can cause. 
• Mitigation: It involves reducing the emission of greenhouse gases (GHG) into the atmosphere so that impacts of climate change are less severe. 

Who should Finance?

• Developing countries have argued that developed nations should provide financial assistance to tackle climate change because it was due to the (now) rich world’s emissions over the last 150 years that caused the climate problem in the first place.
• The 1994 United Nations Framework Convention on Climate Change (UNFCCC) required high-income countries to provide climate finance to the developing world.
  • However, the high income countries are yet to fulfil their pledge.

Global Initiatives for Climate Finance

• The Global Environment Facility (GEF): It was founded in 1991, and has been a provider of grants to address climate change, biodiversity, land degradation, and other environmental challenges.
  • It works with multilateral organizations, governments, and the private sector.
• Adaptation Fund: It was established in 2001, to finance concrete adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change.
• The Green Climate Fund (GCF): Established in 2010 under the United Nations Framework Convention on Climate Change (UNFCCC), the GCF is a primary vehicle for channeling funds to developing countries. 
• Carbon Pricing: The initiative also often integrates market-based solutions like carbon pricing (carbon taxes or cap-and-trade systems) that provide incentives for reducing emissions while generating funds to be reinvested in climate solutions.

India’s Initiatives for Climate Finance

• National Action Plan on Climate Change (NAPCC): It was launched in 2008, for climate actions aimed at promoting sustainable development while addressing the challenges of climate change.
  • It outlines eight national missions covering areas like solar energy, energy efficiency, sustainable agriculture, and water resources.
• National Adaptation Fund for Climate Change (NAFCC): It was launched in 2015, to meet the cost of adaptation to climate change for the State and Union Territories of India that are particularly vulnerable to the adverse effects of climate change. 
• Clean Energy Fund (CEF): The government has set up the Clean Energy Fund to promote clean energy technologies. The fund is sourced from a cess on coal, known as the Clean Energy Cess, which is levied on coal production and imports.
• Atal Mission for Rejuvenation and Urban Transformation (AMRUT): AMRUT is aimed at improving urban infrastructure and making cities more sustainable and climate-resilient.
  • It includes projects related to water supply, sewerage, solid waste management, and green spaces.
• Renewable Energy Investments: India has become a global leader in the development of renewable energy, particularly solar power.
  • India has also attracted significant investment in wind energy, hydropower, and biomass. 
  • These investments are being supported by the Indian government through incentives like tax breaks, subsidies, and preferential financing mechanisms, including from India’s National Investment and Infrastructure Fund (NIIF).

Source: TH