The global transition away from fossil fuels (TAFF) requires vast amounts of financing and a lot of expertise in how to deploy it effectively to ensure a just and equitable transition. Multilateral Development Banks (MDBs) have both, and whether they commit to support the TAFF agenda will enable or impede both countries’ commitments and implementation of plans.
This paper focuses on promoting green diversification as an area where MDBs can increase their support. Industrialisation is the central goal of many developing countries, and they need concrete visions of economic development that promote not only energy security but also green industrialisation and local value chains with the potential to create jobs and generate prosperity in line with net zero. The paper suggests different options for how MDBs can mainstream green diversification in their country support in order to 1) mitigate risks of fiscal downturn for fossil fuel producing countries, 2) to prevent new fossil exploiters from betting everything on fossil fuels, and 3) to help non-fossil countries leapfrog towards clean industries.
