In 2025 countries need to submit their enhanced national climate plans under the Paris Climate Agreement to the UNFCCC, called the Nationally Determined Contributions (NDCs). Where previous NDCs focused mainly on setting ambitious climate targets, the focus of this third round of NDCs has shifted to close the mitigation and adaptation implementation gap. To ensure full and adequate implementation of countries’ climate goals, effective financing and investment planning is essential. Finance ministries play a unique and essential role in designing, planning and implementing more ambitious, credible and investment-ready NDCs 3.0.
Developing Investable and Implementable NDCs
At the COP28 climate summit, the first Global Stocktake stated that the world is not on track to meet the long-term goals of the Paris Agreement. In 2024, global average temperature exceeded 1.5 degrees Celsius for the first time. A decade after the adoption of the Paris Agreement, countries will need to submit their third round of Nationally Determined Contributions to the UNFCCC. Although the formal deadline was 10th February 2025, currently only 23 countries have submitted their NDC, and the bulk of submissions is expected ahead of COP30 in Belém, Brazil. Whereas previous rounds of NDCs focused on setting ambitious mitigation targets, for the NDCs 3.0 countries are also shifting their focus to more effective implementation. As countries submit their NDCs, there is a major opportunity for Ministries of Finance (MoFs) to use their instruments, expertise and convening power to effectively contribute to, and support Ministries of Environment and Climate, in enabling and accelerating implementation and financing of the NDCs 3.0, as the Coalition of Finance Ministers for Climate Action (CFMCA) emphasized in its Climate Action Statement 2024.
NDC Investment or Financing Strategy
An important tool to mobilize climate finance are NDC investment or financing strategies. Investment and financing strategies are supporting documents to the NDC, and should quantify the NDC financing needs, include an analysis of the enabling environment, outline possible financing sources, highlight clear climate investment opportunities, and develop a pipeline of bankable projects. To date only 16 countries have published such a strategy, presenting a clear opportunity for many MoFs to engage more actively with their country’s NDC. Developing these strategies through stakeholder engagement can identify and reduce investments barriers and promote buy-in for the climate plan across society. As MoFs are in contact with key economic stakeholders, they are uniquely positioned to develop these investment or financing strategies. Several CFMCA members are already developing such a strategy including Seychelles, Morocco and Chile.
Mainstreaming NDCs in Core MoF Frameworks
The NDC investment or financing strategy should outline sources for mobilizing climate finance, including through domestic public expenditure and regulation, private capital mobilization, and international financing and support. For domestic public expenditure, the MoF can incorporate climate-budget tagging in national budget systems to provide an overview of existing public climate expenditures and identify opportunities to further redirect public expenditure towards climate action. Climate-budget tagging is a method employed by countries in all regions of the world including Serbia, Rwanda, and Uruguay. Through domestic policies, MoFs can create an enabling environment that fosters climate investments, including by identifying and addressing investment barriers and creating regulatory and fiscal incentives. Examples include Ghana’s tax incentives supporting renewable energy projects as part of the Energy Sector Strategy and Development Plan. And Singapore, for example, introduced a carbon tax, does not provide fiscal incentives fossil fuel use, and imposed excise duties on petroleum products. Cyprus introduced green tax reform including a carbon tax for fuels in non-ETS sectors.
Mobilizing Private Finance
Finance ministries have financial levers that they can use to drive private investment towards climate projects outlined in the NDC investment strategy. Countries with sufficient fiscal space and institutional capacity can use a range of blended finance instruments such as debt instruments, subordinated positions, and guarantees which can derisk projects and mobilize additional private investments.
Several MoFs are using blended finance initiatives to support the transition to clean energy including the UK which launched a Net Zero Blended Finance Project, and Singapore’s ‘Financing Asia’s Transition Partnership’. Fiscally-constrained finance ministries can also play a role in attracting concessional financing through bilateral channels or the Multilateral Development Banks (MDBs) which can also contribute to derisking climate projects. Further, MoFs can introduce sustainable or green taxonomies to help align investments with long-term climate or sustainability goals. Many countries around the world have introduced a sustainable or green taxonomy including EU member states, Malaysia, Mexico and Uzbekistan.
Coordination of Climate Finance Mobilization
To enhance access to international and private climate finance, finance ministries can establish climate finance units (CFUs) as a dedicated coordination entity within their ministry. CFUs can enable climate mainstreaming into core national development and financing instruments, identify and prioritize climate investments, develop investment-ready projects, and leverage opportunities for private sector participation. Several finance ministries such as Uganda, Fiji, and Bangladesh have already established a climate finance unit, and several of these units have developed their country’s first climate financing strategy.
Another coordination mechanism that MoFs could use are country platforms. Country platforms bring together various stakeholders including ministries, private sector, and MDBs, to more effectively leverage existing resources and attract more climate finance. Through enhanced coordination, country platforms allow stakeholders to align their efforts and resources with national climate policies and strategies, especially NDCs, thereby better leveraging existing resources and avoiding fragmentation and isolated bilateral approaches. Nine platforms are established so far, including Brazil’s Climate and Ecological Transformation Investment Platform (BIP). As MoFs are in continuous dialogue with key financial stakeholders, MoFs should be central to the establishment and coordination of country platforms.
International Support for Climate Financing and Investment
Finally, international cooperation and support can play an essential role in strengthening domestic capacities to mobilize climate finance. The Coalition of Finance Ministers for Climate Action helps countries engage in peer exchange, sharing challenges and good practices openly. Through workstreams including private sector mobilization, carbon pricing, and macro-economic policies, CFMCA members can share good practices and challenges, and learn from one another. Through a wide network of partners, the CFMCA can provide capacity building support to finance ministries around the world. And together with the NDC Partnership, the CFMCA offers finance ministries dedicated capacity building and technical assistance through the Joint Support Initiative for NDCs.
By Aoife Fleming, policy advisor of the Co-Chair team of the Ministry of Finance of the Netherlands following the Global NDC Conference 2025 in Berlin, Germany.
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