New Data Exposes Private Finance Failure to Meet Energy Transition Needs

Dominant finance approach drives 4-7 times less private investment in the Global South than promised

• Only 38% of $5.7 trillion in global annual finance needed for a fair transition to renewable energy is flowing.
• ‘Blended finance’, the main approach promoted by rich countries and international institutions, is a key driver in this shortfall — attracting 4-7 times less private investment than predicted. 
• Biggest gaps are in Global South and the key sectors least suited to private finance like grids and support for impacted workers
• Strongest results seen where governments take more active role in coordinating and investing 
• For public sector-led options to be available to all, rich countries need to back calls for fair debt and finance reforms at key Spain “FfD4” summit, South Africa G20, and Brazil COP30. 

A report released today by Oil Change International and 17 other civil society organizations, including Climate Action Network International and 350.org, exposes the failure of the current approach to financing a transition away from fossil fuels, posing a grave threat to global efforts to combat the climate crisis.

The report, titled Private Fantasies, Public Realities: Why private finance isn’t delivering an energy transition and the case for public sector leadership, analyzes a new decade-long dataset on blended finance, a key energy finance tool that rich countries and international institutions like the World Bank, International Energy Agency, and International Monetary Fund, promote. It finds that every public dollar of this concessional (subsidized) money is bringing in 4-7 times less private investment than anticipated. 

These unrealistic assumptions about blended finance are a key driver behind massive shortfalls in energy transition finance in the Global South. Global North countries and China are getting the biggest share of just energy transition finance, with the remaining 69% of the world’s population receiving just 15% of finance in 2023–2024.

Meanwhile, the report shows that in every region, even in the Global North and China, critical sectors like public transit, universal energy access, 100% renewable-ready electricity grids, and fair fossil fuel phase-out programs are dangerously behind. 

An analysis of the last 15 years of major international energy finance pledges and policies finds that the core problem is that governments are relying too heavily on weak financial incentives to attract private finance to green projects. Looking across some of the strongest examples of financing for a just energy transition, the report finds a much wider policy toolkit in use, including fair and consistent subsidies, building community- and publicly-owned projects directly, and regulating private banks and industry.

But the report also warns that amidst the worst-ever global debt crisis and unfair financing rules, these options are out of reach for many of the most climate-vulnerable countries. 

The report is being released right as Global South-led diplomatic pushes for fair climate finance and debt workout rules are coming to a fore in Bonn, Germany at the midyear climate negotiations and in Seville, Spain ahead of the once-in-a-decade United Nations Financing for Development conference (FfD4). 

Bronwen Tucker, Global Public Finance lead at Oil Change International, said: 

“A just energy transition is dramatically more affordable than continued fossil fuel dependence. But unfortunately affordable doesn’t mean ‘attractive to banks and hedge funds’. It is clear from the data that private investors are not fit to lead the way to the fossil free future we need, and that governments must step in. To start with, we need the rich countries who are most responsible for the crisis, and have an outsized say in global financial rules, to stop pushing dodgy models on the rest of the world and start taking accountability. That means paying up their fair share of public, grant-based climate finance and cancelling unfair debts so that every country can transition.” 

Shereen Talaat, Director, MenaFem Movement for Economic, Ecological Justice and Development, said:

“This report confirms what communities across the Global South have been saying for years: the private finance-first model is failing us. It doesn’t serve people, it serves profit. Women and marginalized communities carry the heaviest costs – through unpaid care work, lost livelihoods, and exposure to climate disasters – while rich governments continue to push failed models. A just transition must be public-led, rooted in care, and funded through grants, not debt. At FfD4 and beyond, we demand climate finance that repairs harm, not deepens inequality.”

Beyrra Triasdian, Program Manager, Trend Asia, said:

Renewable energy is already cheaper than fossil fuels, even without counting the rising costs of climate damage. Continuing to support fossil fuels increases financial risks, exposes countries to volatile markets, and deepens debt, especially in vulnerable economies. A just and sustainable transition requires targeted investments in decentralized renewable energy, resilient public infrastructure, energy-efficient housing, and inclusive support for workers and communities. This transition should be funded through public financing that ensures equity and avoids creating new long-term debt.

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Notes: 

This report has been released with a companion paper, How Public Finance Can Supercharge the Just Energy Transition, from Stamp Out Poverty, Satat Sampada Climate Foundation, Christian Aid, Climate Action Network International, CAN-Pacific Islands and 350.org that provides case studies. Here are the details of an upcoming webinar and press conference on both papers: