Nationally determined contributions (NDCs) are critical for global efforts to limit global warming to 1.5°C and enhance climate resilience. Implementing NDCs will require rapidly increasing financial flows to support climate goals. According to the Intergovernmental Panel on Climate Change, global mitigation investments have to increase by a factor of 36 by 2030 to limit warming to 2°C (IPCC 2022). Developing countries in particular are in urgent need of finance. While only 60 percent of these countries reported on financial need in their NDCs, the combined amount still reaches $4.3 trillion, or roughly $430 billion per year—four times the $100 billion pledge made by developing countries.

This report covers three stages of the process of financing NDCs: planning, implementation, and monitoring. It provides a menu of instruments available to governments as they seek to finance their NDC targets, and it highlights some of the benefits and challenges associated with each option.

Many countries—especially in the Global South—struggle to find the human and financial resources required to develop and implement new finance initiatives. Political dynamics and a perceived trade-off between climate and development also hinder rapid action in many places.

These challenges will not be solved by one solution alone. They will require a mosaic of actions that together allow countries to channel finance towards increasingly ambitious climate targets.

Key Findings:

  • If the global climate goals outlined in the Paris Agreement are to be met, governments around the world, in partnership with the private sector, must shift and mobilize trillions of dollars in finance towards activities that will ensure implementation of their NDCs at a dramatically more rapid pace than is occurring today.
  • Some governments have begun using the policy and fiscal instruments available to them, but more action is urgently needed.
  • The process of financing NDCs will look different in every country and vary significantly between high- and low-income countries. Yet every government will benefit by undertaking a range of actions to implement three key stages of the finance process: creating a financing strategy, implementing relevant finance instruments, and monitoring success.
  • A finance strategy can help determine how much funding is required, how funds will be raised and reallocated, and which governance structures to put in place to ensure implementation.
  • Financing climate targets will typically require governments to make use of a variety of financial, fiscal, and policy instruments aimed at aligning public finance with national climate targets; to increase public finance for climate action; and to shift and mobilize private finance.
  • Finally, governments can establish various systems to track financial flows to determine progress towards the financing of climate goals. 


Image by Nav Photography/Pexels