The overlooked banks that could power the renewables revolution

We’re often told there isn’t enough money to solve the climate crisis.

Not enough money to create good jobs. Not enough money to make homes warmer and energy bills cheaper. Not enough money to rebuild our economies around renewables rather than fossil fuels. 

This isn’t true. There is plenty of money out there – it just isn’t being used well. At Oil Change International, we know that there are trillions in public money that could be unleashed to build a prosperous, sustainable world.

Imagine a future where government-owned banks take control in a chaotic energy market, and use their financial firepower to create green jobs and cheap renewable energy. In this future, national development banks (NDBs) are tasked by their governments to redirect billions that used to flow to fossil fuel projects towards a just energy transition. NDBs – able to ignore the pressure to maximise profit that shapes commercial l banks, thinking more long-term and with a mandate to finance the public good, not just profit – create programmes where households can access low-interest loans to retrofit their homes and cut energy bills. Where local governments can borrow cheaply to build their own publicly-owned wind farms and solar projects, ensuring jobs and profits stay in their communities. 

Imagine an energy transition planned for the public good, rather than dependent on the short-term decisions of private investors. Instead of being susceptible to market shocks, local economies are resilient to energy crises.

This is not a fantasy. This is already happening in some parts of the world. And we could make it happen everywhere. 

Oil Change International’s new report, Untapped Potential: National Development Banks Can Anchor Just Energy Transitions, looks for the first time at how national development banks are financing the energy transition. We found that these institutions are already providing around $37bn a year for renewables, and could add at least $28bn more annually by redirecting their fossil fuel finance to the buildout of affordable renewable energy.

That represents a huge opportunity – and one that does not require inventing an entirely new financial system. It just requires governments to use the tools they already have.

Today, the biggest G20 NDB financiers of clean energy are Brazil, India and China. Collectively, they provide 88% of renewable energy finance. Across the G20, NDBs are already investing more in clean energy than multilateral development banks (MDBs) such as the World Bank. The MDBs’ strategy to leverage trillions in private finance for the energy transition is failing while NDBs are better positioned to drive locally led energy transitions and invest in local economies. 

This matters because climate finance currently relies too heavily on attracting private investors to fill the gap, whilst simultaneously facing cuts alongside development aid – even as extreme weather batters communities. That approach has struggled to deliver the scale of investment required, particularly in countries where clean energy projects are most urgently needed.

NDBs offer a different model. As publicly-owned financial institutions, they can take a longer-term outlook and support projects that deliver wider social benefits, even when these are not the most profitable.

All over the world, there are examples of how this is already happening.

In India, the National Bank for Agriculture and Rural Development (NABARD) has used profits from other operations to finance widespread rural solar energy access. In Germany, the government-owned development bank, KfW – a massive institution with assets over twice the total assets of the World Bank – has played a key role in financing the country’s energy transition for decades. In Australia, the government-backed Clean Energy Finance Corporation has provided billions for renewable investment while thriving under both left and right-wing governments.

Other countries are beginning to explore what is possible. In Mexico, government-owned NDBs plan to achieve universal energy access largely by providing free solar panels to low-income populations vulnerable to heat stress. The UK government’s new National Wealth Fund is already funding renewable energy projects, including the UK’s largest community-owned wind farm. This could be scaled up by new prime minister Andy Burnham to meet the challenges of financing a renewable future.

However, the picture is mixed.

Our analysis also shows that a handful of NDBs are still financing billions in fossil fuels. We found that 78% of fossil fuel finance from G20 NDBs between 2022 and 2024 came from just three countries: Canada, South Korea and China. But there is still potential here, too. The Korea Development Bank (KDB) is a large, highly involved financier in the Korean economy, but continues to direct almost all of its energy financing towards fossil fuels. With a strategic shift, the bank could become a significant force for clean energy instead.

The choice facing governments is clear.

Governments should give NDBs the mandate, governance and resources needed to power our future. In particular, global north governments should provide debt-sustainable finance to global south NDBs as part of a wider responsibility to meet their climate debt and support those nations most in need.

For too long, these institutions have been overlooked in conversations about climate finance. Yet they could hold the key to a liveable, prosperous and fair energy future for all.

The money exists. The institutions exist.  What we need are politicians prepared to give them the tools to bring that future to life.

Adam McGibbon is a campaign strategist at Oil Change International.

This blog was originally published via GreenCentralBanking.com