How Can Multilateral Development Banks Better Support Green Energy Transition and Financing in the Global South?
PEP is supporting a two-year, two-country initiative to provide timely independent and evidence-based analysis on how Multilateral Development Bank (MDB) reforms currently under consideration can support green transitions and financing in the Global South.
This project, funded by the Center for Global Development (CGD), will focus on two countries: South Africa and Pakistan.

Local research to support green transitions in the Global South
South Africa and Pakistan are in the process of shifting towards sustainable green energy sources. Both countries face unique challenges that require support from MDBs.
Teams led by local researchers in each country are using cutting-edge economic modelling techniques to:
- Produce and evaluate different scenarios for green energy transition in terms of their economic, environmental, and social impacts.
- This assessment will include an analysis of the investment requirements for transitioning to green energy, covering infrastructure, technology, and capacity development.
- Explore innovative financing mechanisms—including MDBs, local options, and public-private partnerships—and deliver a debt sustainability analysis for these mechanisms.
Based on these analyses, the project teams will produce tailored policy recommendations for facilitating successful green energy transitions in, optimizing financial support and technical assistance from MDBs.
Addressing an urgent need

Pakistan is committed to transitioning towards a sustainable energy future. The country has set an ambitious target of generating 30% of its electricity from renewable sources by 2030. To achieve this objective, Pakistan is actively investing in solar, wind, and hydropower projects. It is also promoting energy efficiency measures, sustainable transportation, improving the efficiency of its power grid, and making investments in energy storage technologies.
South Africa’s journey towards a green energy future aligns with its overarching vision for a just and equitable transition to a net-zero economy by mid-century. The primary focus of the Just Energy Transition Partnership involves achieving significant emission reductions through the decarbonization of the power sector. This framework has garnered widespread support, with support from Government and sets the scene as a guiding blueprint for all stakeholder's transition. Sustaining this support and driving further ambitious reforms necessitates ongoing collaboration among communities, policymakers, and relevant stakeholders, including MDBs.
However, for both countries there is a lack of comprehensive policy simulations of options for green energy transition, and of policy recommendations that balance the need for financial support with debt sustainability. There is also weak understanding of the financing requirements and potential sources for green energy projects (with support from MDB); and a lack of knowledge and awareness among relevant MDB units, government officials, and other stakeholders about the challenges and opportunities in green energy transitions in the Global South.
By analyzing and illustrating pathways for successful engagement between MDBs and local policymakers, PEP believes this initiative will generate concrete policy recommendations and allow the target countries to address these gaps for more effective green transitions.
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