Who will pay for the energy transition?

Making the case for financially viable green energy

Maire Berkeley, Senior editor

As climate ambitions collide with economic reality, COP31’s push for implementation could rest on making lower-carbon choices affordable and cleaner-energy infrastructure investable

November’s United Nations Climate Change Conference, COP31, comes at a transition point for climate conversations. Recep Tayyip Erdoğan, president of Turkey, the host nation, said the goal of this year’s meeting is to “move from negotiation to implementation” and “turn commitments into concrete action”.

Achieving this is going to rest on millions of day-to-day investment and purchasing decisions by consumers, businesses and governments around the world. But today’s economic environment could make those decisions harder.

So which financial levers will decide the pace of the energy transition, and what can policy-makers do to improve them?

Climate action has to be affordable

Lower-carbon energy can have higher upfront costs, which might dissuade people and businesses from making more sustainable choices. Deloitte research finds that price is consumers’ top reason for not buying more sustainable products.

If governments want to encourage businesses and consumers to switch to lower-carbon products, systems and processes, they need to provide financial incentives. Norway’s electric vehicle (EV) policy is an example of this. Between 2001 and 2022, the government made all EVs exempt from VAT, reducing the cost by 25 per cent, and introduced other toll and parking benefits. Some of the incentives have been scaled back, but the impact was significant: in 2025, about 96 per cent of new passenger cars sold in Norway were fully electric.

Another vital part of modernising energy infrastructure will be updating existing fossil fuel heating systems that many building rely on. This will be expensive, but governments in countries including France and the UK aim to accelerate adoption by providing financial assistance for more energy-efficient building upgrades.

Can governments attract private capital?

Even if consumers and businesses want to reduce their emissions, any progress will stall if the infrastructure around them cannot support that change. But renewable energy and storage infrastructure are capital-intensive and need significant upfront investment.

This means governments are likely to need support from private capital. But to attract investors, the conditions will need to be favourable. KPMG research finds that 68 per cent of energy companies say government policy is critical to the profitability of energy transition investments, but more than half (58 per cent) say it creates unnecessary risks or complications.

Financing the energy transition is an even greater challenge in emerging economies. Although they are home to half the global population, emerging economies and developing countries receive less than 15 per cent of clean energy investments. Many of these countries have outdated, fragmented energy systems that are incompatible with renewable sources, but they lack the public finances to modernise their infrastructure. At the same time, investment activity is limited because many investors see these markets as high risk. Without incentives to attract private capital into these economies, the global energy transition will be constrained.

What to watch for at COP31

Discussions in Antalya look set to move from strengthening energy commitments to how to make them a reality. And central to this will be consumer incentives, policy certainty and private capital.

For businesses, it will be essential to keep track of how the conversation evolves, because the policy priorities, investment trends and financing models discussed at the conference will play an important part in their future decision-making.

To play an active role in that conversation, brands and marketing leaders have an opportunity to produce proprietary insights, practical guidance and expert perspectives on the energy transition. This will help to position them as trusted partners that help global businesses navigate an increasingly complex landscape.

Are you planning thought leadership or a brand campaign for COP31? Get in touch with our team of experts and we will help you plan, design or create a thought leadership programme that stands out from the crowd.