At COP30, can development banks deliver finance for a people-powered energy system?

Three highly provocative agendas collide at COP30 in Belem: energy, finance and just transition. At their intersection lies a pivotal question: how can climate finance fund a truly just transition from fossil fuels to renewable energy?

Here we present the criteria for funding the just, renewable energy system that should be the legacy of the Brazil COP, and ask whether the multilateral development banks (MDBs) are fit to finance this transition.

The climate negotiations starting this week in Belem will be fraught, with rising tensions in global politics adding to rapidly rising temperatures worldwide.

There is a strong debate going into the talks on how to transition away from highly damaging fossil fuels, and meet the target of tripling renewable energy capacity and doubling energy efficiency by 2030, agreed two years ago at COP28. And, of course, high on the agenda is how this should be funded from public and private sources.

The negotiations in Brazil cannot be solely about numbers and emissions targets. They must be about power, both electrical and political.

When it comes to the energy transition, building a sea of solar panels and forests of wind turbines is less than half a story. Brazil is championing an initiative to quadruple production and use of ‘sustainable fuels’ (including advanced biofuels, biogases, and low-carbon hydrogen) by 2035. However, a technology-only focus risks building a system that is green in name, but deeply unjust in practice.

Civil society has for years said ‘no’ to fossil fuels, rightly. Now we are calling for a just transition to 100% renewable energy systems, and for COP30 to establish an action plan for achieving it. A just transition is not merely a swap of energy sources, but a fundamental re-imagining of who owns, controls and benefits from the energy that powers our societies. The question is not if we can build a renewable world, but who that world will be built for—people, or profit?

Multilateral development banks are major architects of the global energy landscape, but their track record suggests they are part of the problem.

COP30 must compel MDBs to be part of the solution.

Recent analysis of investments by the World Bank-operated Climate Investment Funds shows that only two projects out of 466 (0.4 %) were found to be supporting just transition. The current model promoted by MDBs prioritises private profit, pushes Global South nations further into debt, and fuels an extractive approach where large-scale renewable projects export power and profits away from local communities.

For example, the World Bank is putting numerous countries in massive debt to build green hydrogen for export, displacing people and damaging fragile nature to serve an as yet non-existent global hydrogen market. The Bank is also aggressively promoting large-scale hydropower in Pakistan, despite severe impacts to the fragile Indus Delta ecosystem and the people who rely on it for their livelihoods. These approaches are far from a just transition; they are a greenwashed replication of the old, colonial dependencies of the fossil fuel era.

True energy sovereignty—a concept that should be central to the COP30 negotiations for a just transition action plan—is not only about “clean energy” megawatts. It is about Global South countries’ capacity to build, maintain, and govern their own energy future to deliver the energy needs of people so they can thrive. This demands a radical shift in how MDBs operate, on three fronts:

First, MDBs must stop funding fossil fuels and false solutions.

This requires a firm, immediate end to all fossil fuel finance and a rejection of techno-fixes such as carbon capture and storage or co-firing fossil plants with biofuels. Funding principles must include strict, science-based criteria, and exclude technologies that cause social and environmental harm.

Second, finance must be fit for purpose.

Many developing countries—who did little to cause the climate crisis—are stuck paying back debts: 3.4 billion people now live in countries that spend more on servicing debt than on health or education. Rich countries at COP30 must live up to the Paris climate commitments by providing grants, and not the debt-creating instruments that MDBs tend to favour.

Third, MDBs must fund democratised, decentralised renewable energy.

This means shifting finance from harmful mega-projects, towards multiplying thousands of small and medium-scale modular projects like solar microgrids, community-owned wind power, and decentralised systems that keep benefits local, as seen in Kenya’s Off-grid Solar programme, backed by the World Bank. Public climate finance must build local renewable economies, keeping communities and safeguarding at the centre, not just powerlines for export away from people.

As the UN Secretary General Antonio Guterres has stated, the renewable energy “transformation is fundamentally about energy security”, “people’s security” and “smart economics”.

COP30 and the Belem Action Mechanism offer a pivotal opportunity to redefine our path.

We must demand that MDBs, as stewards of public finance, are held accountable. They must be forced to stop the harm, change their model, and finally finance an energy transition that is truly just, democratic, and renewable. If they cannot make this change, the world must question whether they are the right channel to deliver our precious and essential climate finance at all.

Authors:

• Sunil Acharya is a campaign manager at Recourse, based in Nepal. He is an expert in clean energy, climate justice, and inequality, having worked also at Oxfam, Practical Action, and the LDC Group on Loss and Damage negotiations in the UNFCCC.
• Alison Doig is an independent consultant with the Climate & Energy Justice Collective and an advisor to Recourse, based in the UK. She has worked for more than 25 years in the international development and environment sectors, with specialisation in climate policy and clean energy.

Header photo: The President of the New Development Bank (NDB) in a session on energy transition at COP30. Photo © UN Climate Change – Diego Herculano.