Empowering Climate Action: Ministries of Finance's Role in NDCs and LTS
As we tackle the escalating global climate crises, the effective implementation of Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTS) has become not just a necessity but an urgent imperative. Yet, this ambitious endeavor requires coordinated financial support. The Partnership has collaborated closely with the Coalition of Finance Ministers for Climate Action (the Coalition) and has provided support to several Ministries of Finance (MoFs) to drive climate action and ensure a sustainable, low-carbon, and climate-resilient future.
In a virtual workshop held on 12 September 2023, over 70 participants from the NDC Partnership, the Coalition of Finance Ministers for Climate Action (the Coalition), and beyond convened to discuss the critical role of Ministries of Finance in the design, update, and implementation of NDCs and LTS.
Key Takeaways from the Event
Drawing insights from the Coalition report “Ministries of Finance and Nationally Determined Contributions Raising Ambition and Accelerating Climate Action”, the event underscored the central role of MoFs in designing, implementing, and updating NDCs. Representatives from the European Commission, Kenya, Philippines, and Uganda shared how MoFs are being instrumental in designing and implementing ambitious NDCs and LTS.
Experiences and practices shared by participants included:
- Collaborating with the Ministry of Environment and/or other relevant ministries overseeing climate policy and action monitoring.
- Integrating climate into macro-economic and macro-fiscal modelling.
- Mainstreaming climate into Public Financial Management and economic and fiscal policies (i.e., reviewing regulations and taxation policies to achieve climate objectives, administering climate-smart regulations and fiscal policies within the budget, and including investment screening to prevent technological lock-ins and stranded assets)
- Enhancing national enabling environments for private and public investments.
- Establishing financing mechanisms for climate action policies.
Moreover, MoFs are also contributing to monitoring and evaluating climate finance, aligning NDC implementation with the national budget cycle, and assisting in establishing the required policy mix to meet Paris Agreement commitments.
In this context, the Coalition of Finance Ministers for Climate Action holds a distinctive position, enhancing the engagement of Finance Ministries in climate action. Ms. Ralien Bekkers, Co-Chair Sherpa of the Coalition and Special Representative of the Minister of Finance for Climate Action for Netherlands, highlighted the Coalition's growth, with over 90 Finance Ministries members increasingly involved in ambitious climate action.
NDC Partnership's Support
The NDC Partnership has a strong track record of supporting climate-finance needs. Since 2016, the Partnership has supported over 90 developing countries in their climate-development priorities. For instance, the Partnership has strategically embedded approximately 50 economic and climate advisors in Ministries of Finance, Economy, and Planning and provided tailored technical assistance to support MoFs. This support focuses on various areas, such as mainstreaming climate change into national plans and budgets, improving public investment management, identifying and designing fiscal policies and instruments, and greening the financial sector.
Ministries of Finance hold a crucial position in driving climate action and the implementation of NDCs and LTS, both nationally and internationally. The NDC Partnership remains committed to supporting MoFs in advancing NDC and LTS implementation and achieving the Paris Agreement and Sustainable Development Goals.