German federal chancellor Olaf Scholz today stressed the need for nationally determined contributions (NDC) to the Paris climate deal to provide a framework and incentive for climate finance.
NDCs — emissions cut targets which countries must draw up and regularly update under the Paris agreement — should provide "clear roadmaps for decarbonisation" to incentivise and reassure private investors, Scholz said at the 15th Petersberg climate dialogue in Berlin, a forum which paves the way for the UN Cop climate conference negotiations later this year.
Drawing up an NDC is also about creating good framework conditions for investments in the individual countries themselves, Scholz said. In updating their NDCs, countries have an opportunity to secure investments in green technologies, he said. "Private investors are concerned about a reliable regulatory framework and good governance."
Scholz echoed German foreign minister Annalena Baerbock's remarks made at the opening yesterday, when she proposed an "interlocking" of countries' NDCs with investment plans.
Baerbock stressed the idea goes beyond getting the countries together to improve their NDCs. It would, for instance, ensure that fossil fuel producers announcing plans to reduce their production do not get penalised by a cut to their credit rating on the financial markets, she said.
And it would be about facilitating matchmaking between the private sector in developed countries, and bringing together the ambitions enshrined in the NDCs with instruments ensuring they can be financed, Baerbock said.
She gave the example of Barbados, which she said is using its NDC "not just as a national climate action plan but also as a national investment plan", by creating a bank that brings together various factors "linking climate-policy planning, project implementation, and public and private financing".
Both Scholz and Baerbock reiterated calls for larger developing countries that have "significantly" contributed to emissions in the past 30 years, and which have the financial means to contribute, to do so.
Cop 29 will be held in Baku, Azerbaijan, in November. Finance will be a key topic as countries must decide on a new global goal, the so-called New Collective Quantified Goal (NCQG) on Climate Finance, to replace the pledge missed by developed countries to give $100 bn/yr to developing countries by 2020. Baerbock called for a new annual climate finance budget for developing countries of $1 trillion.
Germany plans to modernise its bilateral debt conversion programme, Scholz said. "This is not a panacea, but vulnerable middle-income countries that are willing to reform could also be eligible for climate debt conversion in the future," he said.
