A recent survey analyzing 41 NDCs found that many do not fully integrate macroeconomic considerations, limiting their effectiveness in aligning climate ambitions with socioeconomic prosperity (ESCAP, 2026). While nearly 90% of NDCs mention GDP or its components—and many discuss trade, exports, employment and productivity—explicit references to core macroeconomic policy tools are scarce. Only 12% explicitly reference “fiscal policy,” with none mentioning “fiscal revenues” or “fiscal expenditures” in detail. “Monetary policy” does not appear in any NDCs, while “interest rates” and “inflation” are noted in just 10% and 15%, respectively. Debt and taxes receive moderate attention (32% and 49%, respectively), but carbon taxes appear in only 15%. This indicates that NDCs treat climate targets primarily as environmental or sectoral commitments rather than embedding them within broader economic strategy frameworks.  

These omissions hinder holistic planning. The survey emphasizes that the energy transition, which is central to most NDCs, involves substantial short-term costs (e.g., impacts on GDP growth, inflation, fiscal sustainability, and job displacement in fossil fuel sectors) alongside long-term benefits. Without rigorous macroeconomic modeling of trade-offs, such as effects on public finances, financial stability, labor markets, or distributional impacts, countries risk policy incoherence, stranded assets, regressive burdens on vulnerable groups, and undermined implementation feasibility. For instance, rapid decarbonization can crowd out investments or strain fiscal space in fossil-dependent economies like Indonesia or Malaysia, yet NDCs rarely assess these dynamics or sequence policies with monetary/fiscal tools.  

The survey proposes a three-step framework to bridge this gap: priority goals, socioeconomic trade-off analysis, and feasibility diagnostics. It highlights how a lack of macroeconomic integration reduces NDC credibility and durability. For MoFs, strengthening NDCs with such assessments would better support macroeconomic stability, sustained growth, and wellbeing amid the transition and improve the chances of achieving ambitious NDC climate action goals.  

Source: Based on a contribution by Michał Podolski (ESCAP).  

Costing is a central way for MoFs to become more involved in NDC preparation. Estimating the cost of implementing NDC targets against business-as-usual scenarios is a foundational step that enables governments to make informed strategic decisions on fiscal policy, investment priorities, and financing needs. This includes the identification of funding gaps that may require external support. MoFs play a central role in this process by ensuring that costing is credible, policy‑relevant, and aligned with macroeconomic and fiscal realities. As holders of core responsibilities for economic analysis, budgeting, and public investment, MoFs are well positioned to lead or coordinate NDC costing exercises, using fit-for-purpose methodologies, and international good practices to assess fiscal, economic, and distributional impacts. Table 1 summarizes common practices used. In practice, countries often combine more than one of these approaches rather than applying a single methodology in isolation.  

Table 1. Common practices for NDC costing 

Source: NDC Partnership, 2024. 

Costing enables Ministries of Finance to identify and quantify financing gaps by comparing estimated implementation costs with available and projected resources. This clarifies where domestic budgets can be reprioritized and where additionalpublic, private, or international climate finance will be required (Caldwell et al., 2023,; UNEP, 2022a). Cost and cost–benefit information also allow MoFs to prioritize and sequence NDC measures over time, distinguishing near-term, high-return actions from higher-cost investments that depend on enabling reforms or concessional finance. 

This works on two fronts. First, it disciplines target-setting, helping ensure that commitments do not outpace what fiscal space and institutional capacity can deliver, since targets that cannot be financed or implemented erode credibility as surely as unambitious ones fall short. Second, it structures delivery once targets are set, improving implementation feasibility (Caldwell et al., 2023). Robust costings capture both direct and indirect costs, including employment impacts, potential job losses, and reskilling needs to assess feasibility within medium- to long-term fiscal constraints. 

NDC costing can be an iterative and evolving process rather than a one‑off exercise. MoFs can play a key role in progressively refining cost estimates as improved data, analytical tools, and institutional capacity become available. Scenario analysis, such as baseline, moderate, and high‑ambition pathways, allows MoFs to test the fiscal and macroeconomic implications of different policy choices and levels of implementation effectiveness, supporting more resilient and informed decision‑making over time.  

Burkina Faso completed a quantified cost–benefit analysis of its NDC measures. Its NDC 3.0 reports a cost-effectiveness ratio of US$44.8 per ton of CO₂ equivalent reduced for mitigation actions and US$46.4 per ton for adaptation actions—an improvement from the US$63.7 per ton recorded in the 2021 NDC. The benefit-to-cost ratios across actions are assessed as high, providing a concrete investment signal. The analysis is grounded in a cost–benefit analysis framework, drawing on two modeling tools applied across different sectors: the IEA’s Greenhouse Gas Abatement Cost Model for energy, transport, and habitat and infrastructure; and the FAO’s EX-Ante Carbon Balance Tool for agriculture, forestry and land use, waste, and water resources (NDC Partnership, 2026).  

Source: Based on a contribution by Joaquim Leite and Adrian Flores Aguilar (NDC Partnership). 

The ability to implement NDC commitments depends not only on finance, technology, and infrastructure but also on whether workers and enterprises have the skills and capabilities required to deliver them. Renewable energy deployment, building renovation, resilient infrastructure, industrial decarbonization, and adaptation measures can all be slowed by shortages of appropriately skilled workers. Anticipating these requirements can help reduce implementation risks and improve the effectiveness of public and private climate and nature investment. Skills are also an important part of a just transition, as workers in sectors undergoing structural change may need opportunities to reskill or upskill to move into new or alternative income generating activities. Addressing this can help to limit prolonged unemployment and income losses and associated pressures on social protection systems. This recognition is increasingly reflected in the latest generation of NDCs: 81%of NDC 3.0 refer to skills development (ILO, 2025). However, the extent to which these commitments are linked to concrete financing and implementation arrangements varies considerably.  

For MoFs, the key issue is to ensure that the skills implications and associated financing needs of NDC measures are considered alongside physical investment requirements. Depending on national institutional arrangements, this could include: 

• Costing skills needs. Where priority climate measures depend on new or changing workforce capabilities, the cost of training, reskilling, apprenticeships, and employment services can be considered alongside infrastructure and technology costs. 

• Linking skills to budgets and investment plans. Skills identified through the NDC process can be built into national budgets, medium-term expenditure frameworks, and NDC investment and financing strategies, rather than addressed only once implementation bottlenecks emerge. 

• Working across government and with social partners. Ministries responsible for labor, education, and skills, as well as employers’ and workers’ organizations, can provide information on workforce and training needs and practical constraints faced by enterprises and workers. 

Depending on country circumstances, skills measures linked to transition priorities may be supported through public budgets, fiscal incentives, public financial institutions, or wider climate and transition financing packages. Integrating skills development considerations into NDC planning can therefore help countries move from identifying what climate investment is needed to considering what capacities and financing are required to deliver it. 

Some NDCs are already making this connection more explicit. Canada’s NDC 2.0 underscores its commitment to safeguarding workers’ livelihoods during the green transition through dedicated legislation. It emphasizes aligning skills development with labor market needs to support a low-carbon economy and references substantial investments in training programs to equip workers with skills for emerging sectors, especially clean energy. 

Australia’s NDC 2.0 also places a strong emphasis on workforce skills development as a crucial component of the clean energy transition. It signals this commitment through dedicated funding, such as the Powering Regions Fund, aimed at enhancing workforce skills and capabilities specifically for the clean energy transition. The Australian Government will invest a further AUD100m (US$72m) to train 10,000 New Energy Apprentices in the jobs of the future and establish an AUD10m (US$7.2m) New Energy Skills Program to provide additional training pathways. 

Source: Based on a contribution by Ekaterina Chubarova (ILO).