Joint submission from the Debt and Climate Working Group for the 11th Technical Expert Dialogue (TED11) of the New Collective Quantified Goal (NCQG) process

The agreement on a New Collective Quantified Goal on Climate Finance (NCQG) as a post 2025 finance goal is expected to be one of of the primary outcomes of COP29. In the run-up to COP29, the 11th Technical Expert Dialogue (TED11) of the NCQG is an important opportunity for UNFCCC Parties and Observers to discuss the new climate finance goal, including agreements on the qualitative elements.

The process of setting up a post-2025 New Collective Quantified Goal (NCQG) on climate finance, as part of the negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, is critical. It is imperative that the NCQG process recognize the huge climate debt owed to the Global South, and the historical, ethical and legal responsibility of the Global North to repay the said debt with urgency. To begin addressing the said climate debt, governments of the Global North must provide at least US$ 5 trillion per year as initial payment and use this as the basis to determine the quantum of the new climate finance goal aimed to address the urgent and rising climate needs of the Global South.

The NCQG process must also aim to improve the quality of the mobilisation and provision of climate finance that will not lead to the further exacerbation of existing economic and debt burdens of the people and communities in the global south. While we consider the discussions on the quantum to be central to the NCQG process, this submission focuses on the quality of the new climate finance commitments. In this sense, the undersigned organizations consider that debt issues related to climate finance must be further analysed and discussed as part of the next Technical Expert Dialogue ( TED11).

Unsustainable debt burdens are threatening to jeopardise the very integrity of the Paris Agreement and the objective of limiting global temperature rise to below 1.5. Unsustainable debt burdens are preventing meaningful efforts to implement mitigation and adaptation measures in global south countries, which are also very vulnerable to climate change, and are derailing measures to avert, minimise, and address loss and damage, affecting the most vulnerable and underrepresented populations, for example women, youth, rural farmers, indigenous peoples, afro-descendants and local communities.

Therefore, we recommend that:

• TED11 provides the opportunity for UNFCCC parties and observers to further discuss a quantum, which is key for this process, but also qualitative issues. The debt implications need to be further analysed while discussing a new climate finance goal.

• The NCQG process should guarantee the urgent provision of adequate, high-quality, new and additional, public, grants-based climate finance based on the actual scale of need, and as part of the huge climate debt owed to the global south. The governments of the global north must take the lead in the mobilisation and provision of climate finance based on their historical, ethical and legal responsibility as the greatest contributors to the climate crisis.

• All climate finance contributions must respond to the needs and priorities of global south countries, including local communities, indigenous peoples, afrodescendants, local communities, vulnerable groups, women and youth.

• The NCQG should not result in further indebtedness from climate finance in the global south and thus should follow the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) and adopt a climate justice perspective. This includes limiting the role of the multilateral development banks (MDBs), International Monetary Fund, and private sector in channelling funds raised through the NQCG unless significant democratic reforms are pursued.

• The provision and mobilisation by developed countries of public climate finance, in the form of grants and highly concessional finance, should form a majority core of the NCQG. A focus on private sector mobilisation cannot deliver the quantity nor quality of finance needed.

• The historical responsibility of global north countries should not be diluted by enlarging the base of contributors, aligning the new goal with Article 2.1.c, or overstating the role of the private sector, instead of focusing on Articles 9 of the Paris Agreement.

• The NCQG process should guarantee direct access by the most vulnerable groups to climate finance (indigenous peoples, local communities, afro-descendant peoples, peasants, especially women and girls, children and youth, the elderly and persons with disabilities, as well as persons discriminated against on the basis of their sexual orientation, gender identity and expression, and other vulnerable and underrepresented populations). Most of the current climate finance mechanisms such as the Green Climate Fund (GCF), Adaptation Fund (AF), and Green Environment Facility (GEF) are mired in cumbersome procedures and time-consuming bureaucracy.

Parties must agree on a single definition for climate finance, based on the UNFCCC and the Paris Agreement, focusing on the provision and mobilisation of finance by developed countries to developing countries, and a single methodology to measure and report on climate finance among parties, to promote transparency.

• The political decisions to be taken in 2024 should be guided by scientific evidence, as well as by the technical inputs obtained during the TEDs, and they should be timely, needs-based, and attentive to removing barriers that prevent vulnerable and underrepresented peoples and communities from accessing concessional funding for action on the ground.

Other elements on debt to be considered outside UNFCCC negotiations:

• When a climate-extreme event takes place and significantly worsens a country’s economic outlook, there should be an immediate, cancellation of all debt payments from that country across all creditors for a specified period. This must go alongside additional, grant-based financing for addressing Loss and Damage. After a period of assessing the impacts of the shock, a debt sustainability analysis should be conducted, considering the losses and damages and the financing needs for recovery and reconstruction, followed by a debt restructuring plan, including cancellation, if needed, across all creditors.

• Unconditional debt cancellation must be ensured for all countries that need it, across all creditors (bilateral, multilateral, and private).

• New legislation in key jurisdictions, including New York and the UK, should be introduced to compel private creditor participation in debt relief processes.

• Agreement on a UN Framework Convention on Sovereign Debt should encompass the global consensus on the necessary rules and procedures, principles and structures throughout the different interdependent stages of the debt cycle, including the establishment of a multilateral debt workout process under the auspices of the United Nations that can help countries break the vicious cycle of escalating debt and climate crises.

• In addition to establishing and implementing the NCQG, a UN Framework Convention on International Tax Cooperation should be supported to further contribute to meeting the financing needs of global south countries.

Download full submission here.