Bridging Gaps, Facing Limits: Opportunities and Constraints of Private Finance under the New Collective Quantified Goal (NCQG) for LDCs and SIDS.

Least Developed Countries (LDCs) and Small Island Developing States (SIDS) are the countries that are most vulnerable to climate change, facing threats posed both by slow-onset processes and extreme weather events. They bear disproportionate shares of climate risk relative to historic responsibility and have very limited resources and capacity to deal with the climate crisis. Consequently, international climate finance is critical to drive climate action in LDCs and SIDS.

The New Collective Quantified Goal (NCQG), which sets a US$300 billion climate finance target annually by 2035, and the Baku to Belém Roadmap, which is to be finalised at COP30 and will outline pathways for mobilising US$1.3 trillion for developing countries from all actors, emphasise private climate finance to fill the gaps where public climate finance is limited. While the NCQG decision states that developed countries should take the lead in mobilising the US$300 billion, climate finance is expected to come from “a wide variety of sources, public and private, bilateral and multilateral, including alternative sources”.1 The decision further calls on all actors to scale up financing to developing countries from “all public and private sources” to at least US$1.3 trillion per year by 2035.2

Considering the limits to publicly mobilised climate finance, this larger mobilisation goal implies that the private sector is expected to step up to provide significant amounts of climate finance. In LDCs and SIDS, however, there are severe limitations to mobilising both domestic and international private climate finance.