A lack of financing is emerging as a major barrier to moving away from fossil fuels, officials and experts said at a global conference in Colombia. High borrowing costs, debt and limited access to capital make it easier for many countries to invest in oil and gas than in renewable energy.
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SANTA MARTA, Colombia — Lack of financing is one of the biggest barriers to moving away from fossil fuels, officials and experts said at a global conference Monday incomes as governments face mounting pressure to move beyond climate pledges and begin outlining how to phase out oil, gas and coal, the main drivers of global warming. While U.N. climate talks have acknowledged the need for a transition, they haveWhile renewable energy such as solar and wind is often cheaper to generate than fossil fuels, experts say the cost of transitioning is driven by other factors.
Governments must invest heavily in infrastructure, including power grids and storage, while replacing existing oil and gas systems that still underpin many economies. In developing countries, high borrowing costs and limited access to financing can also make clean energy projects significantly more expensive to build, even if they are cheaper to run over time. Experts say the problem is rooted in how the global financial system is structured.
Many countries and regional governments are not opposed to shifting away from fossil fuels, but are constrained by debt, limited fiscal space and the high cost of financing cleaner energy projects, said Amiera Sawas, head of research and policy at the Fossil Fuel Non-Proliferation Treaty Initiative.
“They aren’t wedded ideologically to fossil fuels,” she said. “They can access financing for fossil fuels more easily. ” People arrive at a conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia. People arrive at a conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia.
In many developing regions, borrowing costs for renewable energy can be several times higher than in wealthier economies — averaging about 15% in parts of Africa compared with roughly 2% in Europe and North America — making it cheaper in the short term to continue investing in oil and gas. That dynamic can create what researchers describe as a “debt–fossil fuel trap,” where countries rely on oil and gas income to service debt and maintain energy access, leaving them with little room to invest in alternatives.
Against that backdrop, some governments are turning to fossil fuel revenues themselves as a way to help finance the transition. Espírito Santo state, officials said money earned from oil and gas production is being used to help pay for the transition to cleaner energy, including funding projects that reduce emissions and attract private investors, including a new fund aimed at attracting private investment into emissions-reduction projects — an example of how some governments are using fossil fuel revenues to help fund the transition away from them.
People attend a session during a conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia. People attend a session during a conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia. Officials said such revenues can provide a starting point in regions where alternative financing is limited and, in some cases, can help attract private capital into cleaner energy projects.
“Climate finance is a challenge all over the world, but at the sub-national level, it’s even bigger,” said Nicolas Lippolis, founder and executive director of the Centre for Energy, Finance and Development, who moderated a panel at the conference about the use of royalties for the energy transition. Officials from wealthier regions said they are trying to fill part of that gap through policy and market mechanisms.
In the United States, California, for example, has used carbon markets —“We remain steadfast in our commitment to carbon neutrality by 2045,” said Sarah Izant, deputy secretary for climate policy at the California Environmental Protection Agency, which oversees the state’s environmental and climate policies, adding the shift also brings public health and economic benefits. She said California remains a “stable and reliable partner” on climate action and pointed to coalitions of U.S. states continuing to pursue emissions cuts, even as federal policy has at timesand regulations on fossil fuels.
She acknowledged the transition has brought challenges, including disruptions in fuel supply as refineries close and the need to supplement with imports in the short term.to the Santa Marta conference, which organizers said was focused on governments seeking to accelerate a transition away from fossil fuels. A family walks near a Make Polluters Pay demonstration along the Caribbean Sea demanding oil companies pay for the energy transition during a nearby conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia.
A family walks near a Make Polluters Pay demonstration along the Caribbean Sea demanding oil companies pay for the energy transition during a nearby conference aimed at transitioning away from fossil fuels Monday, April 27, 2026, in Santa Marta, Colombia. In Canada, Quebec has taken a more direct approach, passing a law to halt new fossil fuel exploration and production altogether.
“We decided, with a consensus, to say no to fossil fuel in Quebec,” said Jean Lemire, the province’s climate envoy, even as he acknowledged pressure over costs and energy policy. “Right now, at the U.N. , we will not make big advancement on anything … because we are under the rule of consensus,” he said, referring to a system where countries must all agree before decisions are adopted. Efforts to build momentum outside formal U.N. talks are continuing.
Tuvalu, a low-lying Pacific island nation highly vulnerable to rising sea levels, announced at a side event during the conference that it will host the next one.
“Tuvalu is not waiting for the rest of the world to act, we are leading the way,” said Dr. Maina Vakafua Talia, the country’s minister of home affairs, environment and climate change. “This is not a negotiating position — it is a matter of survival.
” The discussion in Santa Marta is underscoring a broader shift in the energy transition — from a technological challenge to an economic one, focused on mobilizing investment and reshaping economies long dependent on fossil fuels.
“There’s a lot of money for war,” said Lemire. “But there’s one common enemy — climate change — and we don’t find that money. ”The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content.
Find AP’sGrattan reports on the Amazon rainforest and deforestation around Latin America for The Associated Press. He is based in Bogota, Colombia.
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