Italy supports energy transition financing for developing economies

Developed economies with higher per capita emissions could help developing economies transition away from fossil fuels and accelerate the rollout of clean energy, Fabio Panetta, the governor of Italy’s central bank, said on Monday.

The plan would help reduce the overall cost of the energy transition globally, Panetta told a G7-IEA conference on ensuring an orderly energy transition hosted by the Italian G7 Presidency and the International Energy Agency in Rome.

“Financing transition projects in emerging and developing economies (EMDEs) can be twice as expensive as in advanced economies,” Panetta said at the conference, reported by Reuters.

While last year’s COP28 climate summit ended with a compromise text referencing for the first time a call to all parties to divest from fossil fuels, nations have yet to agree on a plan to help poorer countries to -finance its transition from coal. oil and gas.

Panetta supports a plan for countries with higher per capita emissions to compensate countries with lower emissions.

The resources transferred into such a scheme “would be more than offset by the avoided economic damage from climate change that they would suffer if the transition effort failed,” he said.

As the cost of the energy transition rises, developed countries should help developing countries with climate finance, but some have offered high-interest loans instead of grants.

An investigation by Stanford University’s Big Local News journalism program found that OECD G7 members routinely provided so-called climate finance to poor nations in the form of loans rather than grants, with market-rate interest attached more rather than the discount rate typical for such loans. The loans also came with some conditions: the borrower had to hire companies from the lending country for the projects that were financed.

By Charles Kennedy for Oilprice.com

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