This week, the Pacific Pre-COP[1] concluded after bringing climate negotiators, government leaders, and community representatives to Fiji and Tuvalu from 5 to 8 October (DCCEEW, 2026). As a climate finance adviser who has served governments in the Pacific and in Africa, I view the meeting as an essential stepping stone. It placed the realities of frontline island states before decision-makers ahead of COP31 in Antalya, Türkiye, hosted by Türkiye, with Australia serving as President of Negotiations, in close partnership with the Blue Pacific (DCCEEW, 2026).
At its core, the climate crisis is fundamentally an energy challenge. Burning coal, oil, and natural gas to power our homes, factories, and transport systems generates nearly three-quarters of all global greenhouse gas emissions (IEA, 2025). Consequently, climate negotiations are at the heart of transforming our global energy system from fossil-fuel dependence to cleaner, more resilient sources.
When world leaders gathered at the UN General Assembly just two weeks ago, the UN Secretary-General António Guterres described the rapid expansion of clean power as ‘a profound rebalancing of power relations,’ reminding us that ‘the sun belongs to no one’ and ‘the wind cannot be embargoed’ (UN-Energy, 2026). Unlike imported fossil fuels, which subject developing nations to severe price shocks and supply chain disruptions, solar and wind power offer countries genuine energy independence, price predictability, and national security (UN-Energy, 2026).
Clean Energy is getting affordable, but financing it is not
The economics of clean energy have changed dramatically. Solar, wind and batteries have become cheaper and more capable, and in many markets new renewable generation is among the lowest-cost options. But it is too sweeping to say renewables are cheaper everywhere and under every condition. In remote islands, for example, transport and installation costs can be high even when renewable energy offers major lifetime savings over imported diesel.
This distinction is crucial because clean-energy projects are capital-intensive. Most of their cost is paid upfront, while fuel savings arrive over many years. Interest rates, loan tenors, and risk premiums therefore have an outsized effect on the final electricity price. The International Energy Agency has found that the cost of capital is substantially higher in many emerging and developing economies because of real and perceived risks, including currency volatility, uncertain revenues, regulatory instability and limited grid access. In some developing markets, solar financing costs can be several times those in advanced economies.
The result is a financing penalty. The same solar panel can generate electricity under the same sun, yet produce much more expensive power when it is financed at 12 or 15 per cent rather than 4 or 5 per cent. Falling equipment prices cannot fully compensate for expensive debt, short loan maturities, or the risk that local-currency revenues must service foreign-currency obligations. The challenge is therefore no longer only how to make clean technology cheaper. It is how to make clean-energy projects bankable on fair terms and electricity affordable to households, businesses and public services.
Why is the Pacific COP an important one?
The Pacific is an especially important lens because its countries combine acute climate vulnerability with small, dispersed power systems, dependence on imported fuels, limited economies of scale, and high exposure to fuel-price and foreign-exchange shocks. This is why COP31’s structure, combining Pacific leadership, Australia’s role as President of Negotiations and Türkiye’s host presidency, is so significant (DCCEEW, 2026; UNFCCC, 2026).
As a Pacific COP, COP31 places frontline ocean nations at the centre of international decision-making (DCCEEW, 2026). Small Island Developing States contribute negligibly to global emissions, yet face rising seas and increasingly severe weather. They also illustrate the close relationship between climate action, energy security and finance: replacing imported diesel with resilient solar microgrids can reduce exposure to oil-price volatility and supply disruptions, but small markets, high upfront costs and limited access to affordable capital can delay investment. For island communities, this transition is not only about reducing carbon; it is about affordability, resilience, economic survival and energy sovereignty (Isah, 2026).
International financial institutions and development banks should establish accessible guarantee windows for payment, policy and selected political risks; expand local-currency lending and concessional foreign-exchange hedging; and use blended finance to reduce risks that the private sector cannot efficiently absorb. These tools should demonstrably lower tariffs or financing costs, rather than simply subsidise investor returns (Isah, 2026).
Equity must extend beyond jobs and skills to include affordable, reliable access; local ownership; participation by women, young people, Indigenous Peoples, and communities; fair land and benefit-sharing arrangements; and protection for low-income consumers from unaffordable tariff increases.
From cheaper technology to fairer energy
The Pacific Pre-COP has concluded, but its most important message should travel to Antalya: implementation will remain uneven unless the cost and structure of finance change. Developing economies do not need convincing that renewable energy can support growth, resilience, and energy security. They need financing that reflects the long-term value of those investments rather than amplifying short-term perceptions of risk.
A successful COP31 would therefore be judged not only by new targets or announcements, but by whether it lowers the financing premium vulnerable countries pay. Guarantees must reduce borrowing costs. Foreign-exchange facilities must prevent currency shocks from becoming unaffordable tariffs or public debt. Blended finance must deliver additional investment and public benefit. Grid and storage finance must move alongside generation. And equity must be measured through access, affordability, ownership, participation and resilience, not only through aggregate job numbers.
Clean energy is becoming more economical, but economics alone will not produce a just transition. The decisive question is whether the international financial system can make the lowest-carbon option affordable, reliable, and investable in the countries that need it most. That is the implementation challenge COP31 should resolve.
The article is written by Dr Deepa Pullanikkatil, Commonwealth National Climate Finance Adviser to Eswatini (formerly to Fiji). Views expressed are personal.
End Note
1COP stands for the Conference of the Parties to the United Nations Framework Convention on Climate Change. It is the annual international climate negotiation, held alongside the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement.
References
- Australia-Pacific Partnership for COP31. (2026). Pacific Pre-COP and COP31 information, including the 5-8 October Pre-COP and the Pacific Partnership policy framework.
- International Energy Agency. (2024). Reducing the Cost of Capital: Strategies to Unlock Clean Energy Investment in Emerging and Developing Economies.
- International Energy Agency. (2025). Cost of Capital Observatory.
- Türkiye-Australia COP31 Presidency. (2026). Joint Letter: The Türkiye-Australia Partnership.
- United Nations Framework Convention on Climate Change. (2026). UN Climate Change Conference, Antalya, 9-20 November 2026.
