EXPECTED OUTCOMES

i.

Enhanced resource mobilisation and technical partnerships to support the implementation of strategies to achieve adaptation and resilience, particularly in the global South.

ii.

Enhanced collaboration in addressing loss and damage in developing countries, including technical support, capacity building, and sharing of experiences and best practices.

"GLOBAL CLIMATE INVESTMENT NEEDS ARE VAST, WITH ESTIMATED ANNUAL REQUIREMENTS EXCEEDING US$10 TRILLION FROM 2031 TO 2050, A SIGNIFICANT INCREASE FROM THE CURRENT FLOW OF AROUND US$1.3 TRILLION IN 2021/2022

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SUB-PRIORITY : CLIMATE FINANCE AND JUST TRANSITION FOR ALL

Global climate investment needs are vast, with estimated annual requirements exceeding US$10 trillion from 2031 to 2050, a significant increase from the current flow of around US$1.3 trillion in 2021/20221 . While this is a notable increase from previous years, the funding is still insufficient and uneven across sectors and regions. Most of the growth in climate finance has been driven by clean energy investments in a few countries thatreceived 90% of the increased funds. However, climate finance remains concentrated in developed economies, with the 1 Global Landscape of Climate Finance, Climate Policy Initiative, 2023 countries most affected by climate change receiving disproportionately low amounts.

Mitigation finance flows primarily to energy and transport sectors, where private finance dominates, while agriculture and industry—also major emitters—receive much less funding. Emerging technologies like battery storage and hydrogen are attracting some private investment, though they remain underfunded. On the other hand, adaptation finance lags far behind, with only US$63 billion allocated in 2021/2022, well short of the US$212 billion needed annually by 2030 for developing countries1 . Adaptation finance is mostly public, with private sector involvement still minimal.

Potential solutions to address these gaps include reforms to international financial institutions, leveraging concessional finance, improving private sector engagement, aligning financial systems with climate goals, mainstreaming adaptation and resilience, phasing out fossil fuel subsidies, and improving data transparency and accessibility for climate finance tracking, and, importantly, the exploration and development of climate finance models.

COMPONENT A: ENHANCED ACCESS TO THE NEW COLLECTIVE QUANTIFIED GOAL (NCQG) ON CLIMATE FINANCE

The 29th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC COP 29), which took place in Baku, Azerbaijan, from 11 to 22 November 2024, adopted a decision on the New Collective Quantified Goal (NCQG) for Climate Finance that will see developed countries taking the lead in raising US$300 billion a year for developing countries by 2035. The NCQG decision also calls on all actors to work together to enable the scaling up of financing to developing countries for climate action from all public and private sources to at least US$1.3 trillion per year by 2035. The decision also states that the NCQG will support the implementation of developing countries’, inter alia, nationally determined contributions, national adaptation plans, and adaptation communications, including those submitted as adaptation components of nationally determined contributions; contribute to increasing and accelerating ambition; and reflect the evolving needs  

and priorities of developing countries, especially those that are particularly vulnerable to the adverse effects of climate change and have significant capacity constraints, such as the Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The NCQG therefore represents a critical milestone towards scaling up the mobilisation of grant and concessional financing for developing countries. To meet the scale of climate challenges over the next ten-year period, the amount of money made available through the NCQG must be significantly and progressively increased towards the US$300 billion-a-year goal by 2035. Developing economies, including South Africa, require a fair share of these funds to implement effective mitigation and adaptation strategies, as well as their Nationally Determined Contributions (NDCs). Ensuring equitable access will enable these countries to contribute meaningfully to global climate goals while addressing their unique socio-economic circumstances.

COMPONENT B: REDUCING THE COST OF CAPITAL

High costs of capital impede the ability of developing countries to invest in sustainable infrastructure and technologies. By advancing the implementation of the Common Framework for Debt into the financing model, the cost of capital can be lowered and financial burdens alleviated, particularly for developing countries. Such an approach fosters greater participation from countries with significant debt obligations and encourages investment in green initiatives. Engaging major economies, within the G20, in this aspect of the development of the model could amplify its impact and promote broader international cooperation.

Recognising and quantifying the unique contributions and assets of each country is essential for a fair and effective financing model. By assigning value to these contributions, countries can negotiate financing terms that reflect their roles in supporting global trade and the green economy. This variable component ensures that the financing model accounts for both tangible and intangible assets, promoting a more balanced distribution of resources and responsibilities.

EXPECTED OUTCOMES

i.

Enhanced climate finance mobilised for and by G20 countries, particularly for adaptation and building climate resilience for developing countries.

ii.

Enhanced collaboration and sharing of experiences and best practices, as well as resource mobilisation opportunities to support the Just Transition within G20 countries.

iii.

Advancing proposals for a new financial model to mobilise climate finance for a Just Transition for all.