An energy transition will be especially difficult for countries staring down onerous debt burdens. Just 42 countries have doubled their governmental, corporate, and household debt over the last decade and now carry a combined load of $3.5 trillion. In Nigeria—an OPEC member—debt payments of $7.5 billion exceed government revenues by $900 million.
“The energy transition cannot be just, equitable, or fair if it isn’t funded. Developed countries who are responsible for historical emissions must not only take the lead in reducing current emissions but also provide the adequate climate finance that developing countries need,” Ubrei-Joe Maimoni Mariere, of the Nigerian NGO Environmental Rights Action, wrote in a statement about the end of the talks. “Without finance, the so-called ‘just transition’ put on the table here at COP28 won’t deliver the long-term transformation that is needed in my country, Nigeria, and across Africa.”
According to the U.N. Commission on Trade and Development, about half the world’s population lives in places where debt payments exceed spending on education and health care. The Federal Reserve’s commitment to keeping interest rates higher for longer has worsened that picture. That also makes countries all the more eager to exploit fossil fuels that can be sold off for much-needed U.S. dollars. Multilateral development banks often encourage countries to drill for fossil fuels in exchange for desperately needed funds. As part of its aid package to Argentina—which increased by $7.5 billion this past summer—the International Monetary Fund is directly supporting the development of the country’s massive Vaca Muerta oil and gas fields with the aim of boosting exports.