Recommendations for national transition planning: supporting the G20 and the Transition Finance Market Review
Around the world, governments are revising their national climate targets, for submission to the UN in 2025. The UN Climate Change Executive Secretary Simon Stiell has emphasised the opportunity, encouraging stronger ambition and calling on governments to view these targets – their Nationally Determined Contributions (NDCs) – as “investment plans for the future”.
To date, NDCs have varied widely in their starting point, ambition, comprehensiveness and quality. It is commonly the case that how they would be implemented is not made clear, and many NDCs have been disconnected from other government policy decisions. Indeed, a UN stocktake of NDCs carried out in 2023 observed that less than half of signatory countries had “integrated their NDC targets, goals and policies into national legislative, regulatory and planning processes as a means of implementation”.
National transition planning to deliver NDCs
As a result, it is difficult for actors across the economy to use governments’ NDCs to help guide their own investment decisions. As the G20’s Taskforce on Global Mobilization against Climate Change (TF-CLIMA) drew to a close on 24 October 2024, it was therefore encouraging to see ministers declare their commitment to “strong, country-led transition planning that underpins the ambition of [their countries’] respective NDCs”.
The independent report of the TF-CLIMA group of experts, A Green and Just Planet, led by Mariana Mazzucato and Vera Songwe, provides a rationale for this commitment. Recognising the systemic nature of the climate challenge, the group of experts calls for “new policies and frameworks, on both the national and sub-national levels, to steer growth in a sustainable direction”. They stress the need for ambitious green industrial strategies to deliver on countries’ NDCs, and a reallocation of investment towards sustainable, NDC-aligned activities. And they emphasise the importance of prioritising justice and equity as the economy transforms.
These recommendations chime with those in a recent CETEx policy report, Taking the lead on climate action and sustainable development: recommendations for strategic national transition planning at the centre of a whole-of-system response. Consistent with the conclusions of the TF-CLIMA group of experts, the authors of the CETEx report advocate for national transition planning to set a strategic direction for the whole of government and actors across the wider economy, and to steer concrete, costed actions that provide incentives, finance and support for actors across the economy.
To inform planning in line with these functions, the authors develop a set of globally-applicable, principles-based recommendations for strategic national transition planning. Leveraging the frameworks developed for private sector transition planning by the Glasgow Financial Alliance for Net Zero and the Transition Plan Taskforce, the authors’ recommendations call on governments to play a strategic and decisive role at the centre of a system-wide climate response.
National transition planning in line with the recommendations will support governments’ delivery against international commitments in the Paris Agreement by helping them target resources and capital allocation more effectively. Ensuring transparency of governments’ plans will give actors across the economy greater certainty, confidence and incentive to invest in the transition, scaling up private finance in advanced economies and in emerging markets and developing economies.
Steering transition finance
The CETEx recommendations are also referenced in the recent final report of the independent Transition Finance Market Review. The Review, which was launched by the UK Government at the start of 2024 and chaired by Vanessa Havard-Williams, emphasises that “financial institutions are actively looking for credible opportunities to deploy capital in a way that aligns with their broader objectives and transition-related targets”. The Review goes on to observe that “provision of policy information relevant to investment decision making in an easy-to-use format for investors is an obvious step for a country seeking to encourage investor interest”.
While recognising that the UK has already established many of the core elements of an effective national transition plan, the Review calls on the UK Government to “embrace medium-term development of a national transition plan” in line with the recommendations in the CETEx report. Among the key “gaps” identified, the Review emphasises the importance of developing more granular and strategic disaggregated decarbonisation pathways across sectors, more detailed investment needs to meet stated targets, improved coordination within government, and “positive feedback loops” between the public and private sectors.
Piloting the recommendations
We hope that the recommendations in the CETEx report can help realise the ambition of both the G20 ministers’ commitment, and the Transition Finance Market Review. The authors look forward to working with UK and international stakeholders – across international policy organisations, governments, UN agencies, civil society and industry – to pilot the recommendations and explore how they can be applied in practice to scale up finance for the climate transition and accelerate progress towards the Paris Agreement goals.
Taking the lead on climate action and sustainable development was published by CETEx in September 2024, written by Mark Manning, Riona Bowhay, Megan Bowman, Peter Knaack, Lisa Sachs, Agnieszka Smolenska, Fiona Stewart, Thomas Tayler, Perrine Toledano and Harald Walkate. An accompanying handbook provides more detailed guidance and examples to illustrate the practical implementation of the recommendations.