Financing stalls energy transition at local level, say leaders in Santa Marta

With a fund fuelled by royalties, Espírito Santo bets on diversification to reduce dependence on fossil fuels

(This article covers an event co-organised by the CEFD)

Santa Marta, April 27 — How to finance the energy transition in economies still dependent on oil and gas was the focus of a high-level panel this Monday (27th), bringing together representatives from subnational and national governments during the conference on transitioning beyond fossil fuels. The discussion stemmed from a common diagnosis: although technological solutions already exist, financing the transition remains one of the main bottlenecks, especially at the local level.

The panel sought to address how regional governments can replace fossil revenues, manage fiscal constraints and, at the same time, advance climate targets. Central themes included the difficulty of accessing capital at viable costs, the absence of financial instruments tailored to the subnational level, and the misalignment between global investment flows and transition needs in developing countries.

Throughout the session, participants presented concrete experiences and differing priorities, ranging from economic diversification in oil-dependent regions to innovation and competitiveness strategies in more advanced economies. There was also criticism of the current climate finance model and a defence of compensation for countries that preserve strategic environmental assets.

The debate over transition financing already points to a deeper dispute: who will capture the industrial gains of the post-fossil economy.

Espírito Santo, Brazil
The Brazilian state highlighted the use of oil revenues to finance economic diversification and reduce reliance on fossil fuels.

“We started with US$100 million in public resources. We know that public funding is not enough. The challenge is to use these funds to attract private capital and enable the diversification of the economy,” said Gabriela Vichi, executive director of the Development Bank of Espírito Santo (BANDES).

Niger Delta, Nigeria
The delegation highlighted the challenge of aligning the energy transition with job creation, especially for the youth population.

“Our focus is to bring the transition to the territories and communities — because that is where the jobs and the future of this agenda lie,” stated the representative of the Ministry of Regional Development of Nigeria, on behalf of Minister Abubakar Momoh.

California, United States
The Californian representative emphasised the role of stable public policies in attracting investment and maintaining competitiveness.

“We have a plan to achieve carbon neutrality by 2045. The transition is already underway — what we need are stable policies that give market predictability and allow investments to scale,” said Sara Ittelson from the California Environmental Protection Agency.

Quebec, Canada
The province’s climate envoy highlighted the political decision to abandon fossil exploration and criticised the lack of global funding.

“We are facing a common enemy, but we have not yet managed to mobilise the necessary financing. Meanwhile, there is abundant money for other priorities, such as war, but we cannot find money to tackle our greatest common challenge, which is the climate,” stated Jean Lemire, Quebec’s climate envoy.

Azuay, Ecuador
The Ecuadorian representative argued that countries with large natural assets should be compensated for their role in stabilising the global climate. “It is not just about financing — it is about compensating those who protect,” said Juan Cristóbal Lloret, prefect of the province of Azuay.