2026 has brought the urgency of just transitions to the fore across different registers. This year has witnessed the capitals of global finance and postcolonial economic expansion in Europe and North America face unprecedented heatwaves and droughts. The US-Israel war on Iran continues to choke shipping traffic through the Strait of Hormuz and disrupt oil and gas production in the Gulf states. These events have underscored the social, economic and ecological vulnerability inherent in a fossil fuel-based global economy and highlighted the perils of disorderly transitions at the very moment when international law and policymaking arenas have opened up spaces for conversations on just, orderly and equitable transitions and how to finance them.
The 30th meeting of the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties in Belém, Brazil in November last year launched a process to establish a Just Transition Mechanism (JTM), a focal point for supporting countries transition to decarbonised and climate resilient futures in a just and equitable manner. In parallel, the COP30 Presidency developed a Roadmap on Transitioning Away from Fossil Fuels (TAFF) with the aim of ‘advancing concrete action and deepening the discussions initiated at COP30 in Belém and ‘to build a shared understanding of the transition’. At the same time, a coalition of states, subnational governments and civil society groups led by Colombia and the Netherlands had initiated the high-profile First Conference on Transitioning Away from Fossil Fuels in Santa Marta, Colombia (the Santa Marta Conference) to accelerate the global transition away from fossil fuel dependence in ‘a just, orderly and equitable manner’.
Finance as an Enabler of Climate Action
A crucial aspect of the legal, policy and political climate negotiations is the question of finance, a fundamental means for states to implement their commitments on mitigating and adapting to climate change, redressing the loss and damage of climate impacts and implementing just transition pathways. Financial resources, along with technical assistance and technology transfer, are key to ensuring that the costs and benefits of local and global transitions to low-carbon and climate resilient economies and societies are distributed fairly across countries and communities. Alongside green technologies and capital investments for the energy transition and shoring up infrastructure to withstand climatic impacts, finance is also required to fund social safety nets, workforce training and deployment and ensuring stable and affordable energy access. This is necessary to ensure that the socio-economic transformation does not exacerbate existing social and economic inequalities and disparities within and between countries.
Finance operationalises the principle of ‘common but differentiated responsibilities and respective capabilities (CBDR-RC)’ that underpins the UNFCCC and other multilateral environmental agreements (MEAs). This principle recognises that while climate change is a shared concern for all states, different states have contributed to climate change unequally and have different financial, technological and institutional capacities to respond. Here, industrialised countries – which are disproportionately responsible for historical greenhouse gas (GHG) emissions, and which possess greater financial and technological resources – should take the lead in reducing GHG emissions and providing support to developing countries to undertake climate action).
The stark disparity in capacities to respond to disorderly transitions has been witnessed this year as the financial, economic and social impacts of the US-Israel-Iran war has demonstrated. According to the United Nations Conference on Trade and Development (UNCTAD), the disruption of shipping flows through the Straits of Hormuz have resulted in
higher energy, fertiliser and transport costs across the world, with impacts more acutely felt in developing countries, especially in countries struggling with high levels of external debt.
As demonstrated during other global crises, notably during the COVID-19 pandemic, developing countries lack the fiscal and policy space and limited resources to respond to global shocks in the same way as developed countries. Dependence on oil and gas imports, reliance on remittances (especially countries with high dependence on Gulf state migrant workers), and financial exposure to monetary policy responses in other countries (notably interest rate rises) place many developing countries in especially vulnerable positions when confronted with a sudden and disorderly shock to energy markets and supply of fossil fuel-based products.
Ideational Infrastructure of Climate Finance
The current overlapping economic, military and climate crises underscore the imperative of international efforts to operationalise a fair and equitable global just transition, with the modalities of finance being a core element of their success. It is crucial that the epistemic and operational roadmaps towards decarbonisation and climate resilience include financial means of implementation that are inclusive and emancipatory and respond to domestic conditions and circumstances. As a field of inquiry and a field of practice, financial concepts, methods, institutions and regulatory landscapes shape decision-making on climate action and just transitions.
Yet much of the literature on climate finance remain organised around the technocratic concern of how to close the ‘finance gap’ or the shortfall between resources needed and resources available to support climate action). Specifically, the focus on expanding the financial toolkit and on using public resources to mobilise, catalyse or ‘derisk’ private capital flows in order to plug this gap has effectively become hegemonic in policy discussions around climate action and achieving just transitions. Part of the process of attracting these climate flows relies on what Collington and Hasselbach have recently called ‘epistemic derisking’ or using authoritative knowledge and risk models to encourage private financial flows. All this dovetails with the ongoing implementation of what Gabor has coined the ‘Wall Street Consensus’, the global effort to ‘reorganize development interventions around partnerships with global finance’ and ‘escort’ global investors into development and environmental infrastructure asset classes.
The dominance of these approaches have tangible impacts on climate law and policymaking. The epistemic authority of mainstream climate finance organises and legitimises particular pathways for just transition that are ahistorical and neocolonial. The prevailing focus on market mechanisms – blended finance, green and blue bonds, debt swaps, carbon credits, and catastrophe bond instruments – as key solutions to scaling-up and fine-tuning the climate finance toolkit discounts broader structural challengesof debt, uneven development, unequal terms of trade, and asymmetrical global economic governance as well as legacies of colonial extraction and exploitation. These regimes are reproduced and codified through legal infrastructures of the global market economy ) and are then reinforced through embedding within the multilateral climate regime.
Collectively, they form an ideational infrastructure of knowledge, expertise and power about climate finance that privilege certain constituencies (global north/ powerful/ private/ corporate) over others (global south/ vulnerable/ public/ community-centred). This epistemic architecture can and does influence negotiating trajectories and regulatory options within the multilateral climate regime. As Okonjo argues, the ‘ideological and performative role of ideas and their related technologies and practice’ both conceals the reproduction of inequality and power asymmetries between developing and developed countries as well as restricting ‘the regulatory possibilities’ available to global south law and policymakers. In other words, the debates around climate and just transition finance within the UNFCCC and other international law and policymaking fora can be foreclosed by epistemic capture that can and does privilege some groups while marginalising others. This, in turn, can lead to poor outcomes for developing countries at the sharp end of the climate crisis and foreclose broader sustainable development pathways.
For example, by presenting financialised, private sector-led, market-based finance as the only viable options for addressing the climate finance challenge to implementing multilateral climate commitments, developed countries have shifted away from commitments to ‘provide’ direct financial resources to developing countries to discharge their commitments under the Paris Agreement and instead focused on vague commitments to ‘mobilise’ them from a variety of sources instead of increasing the amounts of grant-based and concessional official finance..
Unsettling Climate Finance Epistemologies
The centrality of knowledge regimes to the framing of climate finance challenges and solutions within the international financial architecture and the multilateral climate regime renders it imperative that we map and understand the epistemic authority of climate finance and how its constituent elements shape law and policymaking for global climate action. Critical scholars have examined the epistemic geographies of climate science and knowledge gaps shaping climate law and policy . Less attention has been paid to epistemic ecosystems within which climate finance paradigms are authorised and governed.
It is crucial that we examine the epistemic foundations of climate finance and interrogate the knowledge politics, institutional logics, discursive frames and epistemological practices underpinning climate finance scholarship, law and policymakingto better understand how these dynamics and structures work to enable or constrain transformative just transitions in developing countries. There is an imperative to move away from treating the challenge of climate finance as a technical exerciseand instead, approach it as a terrain of legal, socio-political and economic contestationwhich needs to be unpacked for it to be effective.
The prospective impact of not critically unsettling these climate finance epistemologies can be deeply damaging to climate action and just transitions, especially in developing countries. For example, the Academic Dialogue at the aforementioned Santa Marta TAFF conference published a ‘menu of actions’ for global energy transition which included ‘Border Carbon Adjustments for traded energy intensive commodities,’ so as to allay concerns about carbon leakage and to ensure that ‘investments in clean industrial capacity thrive on an international level playing field’ (Santa Marta Action Repertoire (SMART)). This policy option is one that has been heavily contested by global south researchers, policymakers and other stakeholders for its potential to shift the terms of trade dramatically in favour of developed countries while doing very little to reduce global greenhouse gas emissions.
The reinforcement of historical and present-day realities of unequal global economic structures within climate policy prescriptions is unsurprising given the continued marginalisation of global south and critical voices from these sites of law and policymaking. Within a few days of the publication of the SMART document, an open letter was circulated criticising the organisers of the Academic Dialogue for lack of meaningful inclusion and representation from global south constituencies in the drafting of the SMART Synthesis Report and the monopoly of the process by a handful of global north academics.
This example of epistemic hierarchies is only one of many within the climate architecture. Trawling through Bilateral Transparency Reviews recording climate finance flows, or examining International Aid Transparency Initiative data on climate finance, reveals the extent to which a small handful of influential consultancy firms shape climate finance policy advice and instrument design. Recent research has identified an overwhelming dominance of a handful of institutions, individuals and journals – primarily in the global north – shaping knowledge around just transitions. This epistemic capture of climate and climate policy and practiceby global north scholars, experts, institutions and networks steers discourses towards technical fixes over transformative structural social and political change and gatekeeping access to finance, with other recent work demonstrating how the widespread use of global north-based climate finance intermediaries steers developing country options toward donor priorities and results in uneven distribution of financial resources.
The establishment of the aforementioned UNFCCC Just Transition Mechanism and parallel TAFF roadmaps and processes open up spaces in which mechanisms for financing just transitions are being actively designed and contested but these spaces are often established without a critical framework for scrutinising whose expertise are shaping those instruments. The marginalisation of global south knowledge and critical ideas within this architecture can undermine the legitimacy of norms and policy prescriptions produced within these spaces and create more gridlocks in multilateral climate governance.
The work to unsettle and decolonise climate finance epistemologies is therefore imperative because material effects are being acutely felt across the global south, where critical minerals extraction, battery supply chains, data centres and carbon markets are reshaping land use and resource access in countries with the least historic responsibility for but bear the greatest burden of climate change. But without paying close attention to the geographies and ecosystems of academics and consultants who shape climate finance instruments, there is a risk that the ‘menu’ of policy options considered essential for just and equitable transitions is one which in fact entrenches inequalities and hierarchies within the global economy, doing little more than greening empire.
* Celine Tan is Professor of International Economic Law, Warwick Law School, University of Warwick, UK and Paul Gilbert is Reader in Development, Justice and Inequality (Anthropology), School of Global Studies, University of Sussex.
Developing Economics 