At COP30, over 80 governments are proposing an initiative to address the debt crisis in the Global South by financing the transition to renewables with public grants instead of loans. The current debt architecture traps developing countries in a cycle where fossil fuel revenues are needed to service debt, hindering efforts to phase out coal, oil, and gas. Policy recommendations include debt cancellation and ending international finance for fossil fuel expansion to address climate challenges. Proper funding for renewable energy and diversification is crucial, as many countries in the Global South lack support for making the energy transition. The broken debt system must be fixed to confront future climate shocks and ensure a successful transition to renewable energy sources.
To phase out fossil fuels, developing countries need exit route from “debt trap”
Written by
in