Finance Ministries play a crucial role in enhancing the ambition and implementation of Nationally Determined Contributions (NDCs), which are essential to achieving the Paris Agreement's goals of limiting global warming to 1.5°C and advancing sustainable development. NDCs outline each country's commitments to reduce greenhouse gas emissions, build resilience, and adapt to climate change impacts. These commitments are updated every five years.

However, progress toward the Paris Agreement goals has been limited. The first Global Stocktake released in 2023 revealed that current policies will result in higher emissions than projected by the NDCs, indicating an implementation gap. Additionally, the 2022 synthesis report on NDCs shows that even with full implementation, emissions in 2030 will be only 5.3% lower than in 2019, highlighting a significant ambition gap.

The upcoming 2025 NDC submission cycle is an unique opportunity for Finance Ministries to leverage their economic, regulatory, and fiscal policy role to enhance NDC ambition and implementation, as stated in a recent Joint Call for Action. This will ensure alignment with national and subnational development priorities, country platforms, sectoral strategies, and the goals of the Paris Agreement.

Well-designed NDCs not only enhance climate resilience but also improve livelihoods, eradicate poverty, eliminate hunger, and promote health and well-being. Despite their importance, previous research indicates that only a quarter of Coalition members are involved in all stages of NDC development and implementation. This technical note aims to address this gap and support Finance Ministries in their role.

Following the discussions held during the 11th Ministerial Meeting, the Coalition of Finance Ministers for Climate Action (the Coalition) is pleased to share its first in a series of three thematic policy notes. This technical note, written by the Coalition's HP1/6 workstream Co-Leads and the NDC Partnership, highlights key takeaways and strategies for Finance Ministries to bolster their engagement in NDC processes and available resources.

Key Takeaways:

• Early Involvement for Enhanced NDCs:

Finance Ministries should be involved early in the NDC development process. Their central role in economic, fiscal, regulatory, and financial policies enables them to design ambitious and investment ready NDCs that align with national development priorities, investment plans and country platforms. 

• Creating an Enabling Environment:

By building an environment conducive to public and private investments, Finance Ministries can enhance market certainty and continuity. This includes aligning budget cycles, regulatory incentives, and other public financial management processes with climate and sustainable development goals.

• Tailoring to Country-Specific Circumstances:

Successful NDC implementation requires solutions tailored to each country's unique circumstances, capacities, and priorities. Finance Ministries can use various approaches and options to engage effectively, supported by mechanisms from the NDC Partnership and the Coalition of Finance Ministries for Climate Action.

To address some of the challenges Finance Ministries face, such as a lack of capacity and resources, the NDC Partnership and the Coalition are strengthening their support mechanisms. The NDC Partnership Global Call for NDCs 3.0 & LT-LEDS offers tailored, demand-driven support, leveraging the experience and resources of over countries and institutions. As of early 2024, the Partnership supported more than 100 developing member countries (~50 of which are members of the Coalition), with support deployed by over 160 implementing and development partners from the NDC Partnership network.

For more details, please refer to the full technical note.

Image credit: NDC Partnership