The long-standing commitment of developed countries to provide financial resources to developing countries goes back to the adoption of the UN Framework Convention on Climate Change (UNFCCC) in 1992.

As part of the 2015 Paris Agreement, developed countries reaffirmed their commitment to support developing countries, including to continue “their existing collective mobilization goal ($100 billion per year) through 2025 in the context of meaningful mitigation actions and transparency on implementation” (decision 1/CP.21, paragraph 53).

But what happens after 2025? Taking the $100 billion as a floor, countries also decided (decision 1/CP.21, paragraph 53) to set a new collective quantified goal to succeed the existing target, considering the needs and priorities of developing countries. Further decisions were made in Katowice in 2018 as part of the Paris Rulebook. These emphasized the need for the new goal to support sustainable development and poverty eradication as well as the Paris Agreement’s long-term goal of making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development (decision 14/CMA.1).

Parties to the Paris Agreement will start to formally consider this matter in Glasgow. This process, like the rest of COP26, comes after a year of delays due to the COVID-19 pandemic. That means that countries will only have three years to set the new goal before 2025. Finance negotiators will need to strike the appropriate balance between procedural and substantive elements, including key milestones expected for the deliberations to set the post-2025 collective quantified goal.

There is limited time available for these negotiations during the two weeks of COP26, and countries already have to deal with the largest finance agenda under the UNFCCC. But kicking off negotiations to set the new climate finance goal will play a crucial role in delivering a successful Glasgow package

4 Procedural Options for Setting a New Collective Quantified Goal

Much attention will be focused on the new number that will come with a new quantified goal. But to get there, countries need to agree upon a process and a series of milestones under the Conference of the Parties of the Paris Agreement (CMA) that can pave the way for success ahead of 2025.

Based on existing practice at the UNFCCC, lessons learned from previous finance-related processes under the Conference of the Parties (COP) and emerging approaches suggested by a variety of stakeholders ahead of COP26, finance negotiators may consider the following options:

1. Create an Ad Hoc Technical Committee under the UNFCCC

At Pre-COP26, government representatives identified a potential approach to create an ad hoc Technical Committee under the UNFCCC to inform the setting of the new collective quantified goal, no later than COP28/CMA5 in 2023. As laid out during the sessions in Milan, the Committee would be integrated by representatives of developing and developed countries, be time-bounded and have a set of expected deliverables.

The work of the Technical Committee would focus on quantitative, qualitative and transparency elements, including guiding principles such as adequacy and predictability of climate finance, and accountability of those providing and mobilizing financial resources.

Under this proposal, the Technical Committee would build on lessons learned, considering existing criteria used by the operating entities of the Financial Mechanism of the Convention, the Global Environment Facility (GEF), and the Green Climate Fund (GCF) as well as the Adaptation Fund, all of which also serve the Paris Agreement. In this approach, the Committee would also consider ongoing work by the Standing Committee on Finance (SCF).

2. Mandate a technical process led by the Subsidiary Body for Implementation

Countries may consider giving a mandate to the Subsidiary Body for Implementation (SBI) to implement a technical process to inform the negotiations to set the new collective quantified goal. This would be in line with its existing agenda, which already covers matters related to finance, as well as transparency, technology and capacity-building, among others.

This mandate could be time-bounded, in a similar way to the previous approach, for example, up to CMA5 in 2023 or CMA6 in 2024, and include specific guidelines and expected deliverables. The SBI would consider the matter at the spring sessions (SBI56) and report back to CMA4 in 2022, and subsequent sessions, on progress.

This approach could address matters related to the quantity, quality and transparency elements, according to the specific guidelines and expected milestones to be included in the CMA3 decision. The SBI could build on previous experiences and lessons learned, for example, from efforts to advance measurement, reporting and verification (MRV) issues and the best use of the constituted bodies under the Convention and the Paris Agreement. This process could be supported by the UNFCCC Secretariat, which could, among other things, organize convenings and prepare all relevant documents.

3. Establish a Work Program on the new collective quantified goal

Parties may also consider establishing a Work Program on the new collective quantified goal, building from the process on long-term climate finance. As done in 2011 at COP17 in Durban, countries may undertake a dedicated Work Program, overseen by the CMA and led by co-facilitators appointed by the COP president. This process could convene workshops, dialogues and other gatherings with a broad set of stakeholders to inform the negotiations.

This mandate could be time-bound, starting with a one-year Work Program and reporting back to CMA4 in 2022. Such an approach, as happened with long-term finance in 2012, could be extended as necessary by the CMA. This process could also be supported by the UNFCCC Secretariat.

4. Outline the process by the CMA for deliberations on the new collective quantified goal

Finally, countries may consider outlining the process the CMA will establish for the deliberations on the new collective quantified goal. This approach could entail the appointment of co-facilitators at each CMA session by the COP president, run until the new goal is set before 2025 and consider specific milestones for the process. These could include a call for submissions by Parties and other stakeholders to inform annual negotiations under the CMA agenda item.

Using this approach, the CMA would lead the process and could consider ad hoc meetings convened under the authority of the COP president. Again, this process would be supported by the UNFCCC Secretariat, to assist the COP president and to prepare relevant documents.

Grasping the Opportunities in Glasgow

As the climate crisis continues to unfold, and doubts persist on the delivery of the annual $100 billion goal, the process to set the next climate finance goal can significantly enhance the support developing countries need to implement the Paris Agreement.

The above list of procedural options and elements is not exhaustive and aims to contribute to a constructive framing for the upcoming finance negotiations at COP26.

An inclusive, sound and robust technical process to inform the negotiations could create a unique setting to advance countries’ common understanding of the current climate finance challenges. This process could grasp the lessons learned on the $100 billion goal under the UNFCCC in the past decade and explore innovative approaches to help scale up not only the provision of climate finance from developed to developing countries but also the broader mobilization effort, in line with the long-term goals of the Paris Agreement. As the process moves forward, in-depth consideration of the needs and priorities of developing countries, both quantitative and qualitative, will be required if this goal is to support enhanced climate action by all.