This report Private Fantasies, Public Realities: Why private finance isn’t delivering an energy transition and the case for public sector leadership details how governments’ dominant “private-sector first” approach to financing a just energy transition is prolonging the fossil fuel era. An over-reliance on weak incentives to attract private finance is failing to deliver the scale, distribution, and quality of investment needed. The biggest shortfalls are in Global South countries and in key “enabling” sectors like energy efficiency and fair fossil fuel phase-out programs, which are receiving less than a ⅓ of the global annual investment needed.
To address this, governments need to take a much more active role in coordinating and investing in the just energy transition. In particular, Global North governments with the most responsibility for the climate crisis must stop blocking reforms to outdated global financial rules that are limiting many countries’ options to act.
Download the full Report here.
Download the Blended Finance Methodology and Analysis here.
Key findings:
- Current approaches are not delivering the scale, distribution, or quality of funding needed: In 2023–2024, we reached only 38% of the global annual investment needed for a just energy transition. Just 15% of this went to the global majority living outside of the Global North and China. Meanwhile, impacted worker supports, universal energy access, energy efficiency, and public transit are each receiving less than a quarter of the global annual investment needed.
- Blended finance is not attracting the private finance expected: Blended finance is the primary solution posed to fill finance gaps, but our new dataset shows each dollar of this subsidized public finance is delivering four to seven times less private finance for energy transition in the Global South than major models and policies set out. These unrealistic assumptions drive an estimated 33% (USD 540 billion/year) shortfall in energy transition finance by 2030 for the Global South in the International Energy Agency’s 1.5 degrees Celsius-aligned model.
- A wider “public-sector first” toolkit is already proven: Many of the strongest results in financing a just energy transition stem from cases where governments have prioritized industrial policy, public funding, public ownership, and private finance regulation. These approaches also have benefits for affordability, energy security, and the well-being of frontline communities. However, for these options to be available to all countries, Global North countries will need to pay their fair share and stop blocking democratic reforms to our global financial rules.
- A just energy transition is much more affordable than continued fossil fuel dependence: A systems-wide just energy transition that includes transport, buildings, efficiency, and fair fossil fuel phase out will cost at least $5.7 trillion per year to 2030, with just over $2 trillion per year already flowing. More active public planning would significantly reduce these costs. In contrast, the direct costs of continued fossil fuel dependence are an estimated $10 trillion per year.
This report has been co-published with the following organizations: 350.org, Asian Peoples’ Movement on Debt and Development, BankTrack, Big Shift Global, CAN-International, Center for Biological Diversity, Center for International Environmental Law, Christian Aid, Debt Justice, EcoEquity, Environment Governance Institute, Environment Governance Institute Uganda, MenaFem Movement for Economic Development and Ecological Justice, Recourse, Solutions For Our Climate (SFOC), Stamp Out Poverty, Trend Asia, Women’s Environment and Development Organization (WEDO).
Read the Press Release here.
