Developing countries may not get the investments in low-carbon energy they need, and that's a problem for everyone

Sustainable finance is not doing enough to ensure that the need for low-carbon energy investment is matched with access to capital, and Net Zero in developing countries could be pushed back 5-10 years as a result of this ‘climate investment trap’. A new report from University College London (UCL) shows how the lack of financial market development in developing countries could perpetuate lower investment in low-carbon energy sources, which would lead to worse climate outcomes for these countries and perpetuate levels of international inequality that are incompatible with achievement of the Sustainable Development Goals.

The analysis from UCL shows how the assumption that an assumed equal weighted average cost of capital in most energy transition models assumes that mo...