What will it take to unlock climate finance for just energy transitions?
At the 100th World Energy Congress earlier this year, over 4,000 energy transition leaders and investors from 118 countries convened to work on redesigning energy for people and planet. In this urgent work, climate finance is essential, and the need for it is growing. The congress concluded with a powerful call to action: how we got here will not get us to where we need to be. Recognising this is key to unlocking finance for just energy transitions.
Although investment in clean energy has nearly doubled over the past decade, the rate of increase falls far short of the levels required to meet global climate targets. Climate finance needs to increase at least fivefold by 2030 to mitigate greenhouse gas emissions from energy systems.
Taking stock of the situation
Private sector investment is growing, but not fast enough. Public finance remains essential, and new solutions including green bonds and blended finance need to be more widely adopted.
Meanwhile, regional energy transition narratives, pathways and financing are diverging. The capital allocated to financing transitions is highly unbalanced: 99% flows to the Global North, 1% to the Global South, according to the International Solar Association. Climate adaptation financing – estimated at $4.3 trillion – is needed now, especially in developing economies.
An ‘all green, electric dream’ ideology and simplistic ‘plug-and-play’ narratives contribute to gridlock and blame-gaming. Yes, there is ‘no transition without transmission’ – nor without shipping, storage, climate adaptation and better livelihoods.
Not all energy uses can or will be electrified by 2050. Recent experiences with green-only energy solutions and hydrogen hierarchies highlight the risks of premature policy prescription, adding unnecessary costs and delays. Swapping old for new power generation assets is not enough. The desire for development cannot be denied – emerging and developing economies will need more energy for sustainable development for decades to come –
but neither can the realities of significant energy project delays and cost overruns.
System-wide infrastructure action planning is essential to secure investment in maintaining, repurposing and decommissioning existing systems, and building new power systems and value chains. We need to talk about productive energy access and less wasteful behaviour, as well as project management and energy efficiencies.
There is no shortage of technology or money, but the necessary combination of financial and energy literacy is rare.
Success depends on a more holistic approach and a socially transformative energy transition agenda. South Africa recently learned the hard way that inadequate social participation can derail plans to exit early from coal, despite the World Bank mobilising $497 million. The societal scars from the transition from coal to gas in the United Kingdom remain evident and continue to shape the national discourse.
How is the World Energy Council helping?
The council promotes a humanising energy action agenda and is pivotal in facilitating faster, fairer and more far-reaching energy transitions in all regions. Initiatives include the following.
Building holistic dialogue to unlock finance for just energy transitions. Most new energy projects fail due to country and project risk. Last year’s United Nations climate conference failed to reach agreement on mechanisms for pricing carbon.
De-risking the private capital needed for the energy transition in developing countries and new risk allocation mechanisms are vital in unlocking finance for a wider set of energy transition solutions.
The World Energy Council is convening global finance – including listed, private and sovereign sources of capital, insurance and banks on all continents – with an equivalent diversity of energy transition leaders, to forge new catalytic partnerships, as it prepares for its next congress, hosted by Saudi Arabia in October 2026.
Measuring performance improvements, which can be help reset yardsticks for environmental, social and corporate governance. The lack of a globally recognised environmental, social and governance taxonomy and disclosure standards hinders efforts to scale up the necessary finance. For over two decades, the council has been measuring progress in energy for sustainable development and helping to improve performance, leading to best practices through the World Energy Trilemma Index and Framework.
The Covid-19 crisis reminded us that energy systems’ resilience extends beyond assets to people and communities. Modern energy systems need to be resilient to climate change impacts and new energy shocks, such as extreme weather events, demand destruction and digital disruptions. We are promoting a new approach to dynamic resilience and new World Energy Scenario foundations to stress test combinations of policies, incentives and collaboration choices.
Looking beyond ‘green jobs’ to elevate more inclusive and intergenerational approaches to capability developments. Assumptions of ‘old for new’ job equivalence are questionable, with unclear implications for wages, affordability and decent livelihoods. Politics and number games need to be put aside to address the wider capabilities and skills transitions essential to securing any return on investment.
For 40 years, the council has persisted in building vibrant Future Energy Leaders programmes, including Women in Energy and Kids in Energy, and enabling start-up energy transition entrepreneurs to acquire the attention they need in all regions. We are actively invested in developing the intergenerational skills and wider capabilities needed to make faster, fairer and more far-reaching energy transitions happen. The World Energy Council is committed to helping the world work together to build momentum in making better energy transitions happen.
