Is the Green Economy Only for Wealthy Nations or Can Developing Countries Keep Up?

As the world faces the dual challenges of climate change and economic development, the green economy has been hailed as a critical pathway to sustainability. With promises of cleaner energy, lower emissions, and sustainable industries, it is a win-win solution for both the planet and future generations. However, there is growing concern that the green economy may be leaving behind those who need it most: developing nations. In a world where the wealthiest nations are at the forefront of green technology and innovation, can developing countries keep up, or is the green economy a privilege for the wealthy?

The stark disparity in resources between developed and developing nations has long been a point of contention in global climate conversations. Countries like the United States, Germany, and Japan have the financial clout to invest in cutting-edge renewable energy projects and infrastructure. Meanwhile, developing nations, many of which are already burdened by significant debt and economic challenges, often need help to balance economic growth with environmental sustainability. A 2022 report by the United Nations Conference on Trade and Development (UNCTAD) warns that least-developed countries (LDCs) are at risk of being "stranded" as they lack the necessary resources to transition to a low-carbon economy.

The report highlighted that many LDCs face compounded challenges: climate vulnerabilities, limited financial resources, and a heavy reliance on fossil fuel industries for their economic development. For these nations, a rapid shift away from fossil fuels could mean economic devastation leading to the question: is the green economy feasible for countries that can't afford to leave behind their traditional industries?

At the heart of this issue is the question of financing. Developing nations are often saddled with high levels of debt, making it difficult to fund the expensive transition to green technologies. According to a report by the Debt Relief for Green and Inclusive Recovery Project (DRGR), debt-ridden countries are often forced to prioritize immediate economic relief over long-term sustainability initiatives. Specifically, the Debt Relief for Green and Inclusive Recovery Project (DRGR) discovered that if 47 developing nations were to allocate the required funds to meet the targets of the 2030 Agenda and the Paris Agreement, they would reach external debt insolvency levels, as outlined by the International Monetary Fund (IMF), within the next five years. This creates a vicious cycle in which developing nations are left unable to invest in green infrastructure, perpetuating their reliance on fossil fuels and outdated industries.

However, some experts argue that the transition to a green economy could actually be a lifeline for these nations. The World Economic Forum notes that investing in a green economy could open new avenues for economic growth in developing countries. Particularly, regions with abundant natural resources like solar and wind energy like countries in Sub-Saharan Africa have significant potential for solar power, which could provide much-needed electricity to millions while also creating jobs and reducing carbon emissions.

In theory, a shift toward green energy could not only mitigate the impacts of climate change but also drive economic development. Yet, the reality is that without significant financial support from the international community, many developing nations will struggle to make this transition.

One of the primary obstacles facing developing countries in the green economy is the technological gap. Advanced economies have the resources to invest in cutting-edge green technologies, from electric vehicles to smart grids. These innovations are driving the transition to a low-carbon economy, but they are often inaccessible to poorer nations.

For instance, while European countries are rapidly adopting electric vehicles, many African nations are still struggling to provide basic public transportation systems. In fact, the infrastructure required for electric vehicles—such as charging stations and reliable electricity grids—remains largely absent in developing countries. The Technology and Innovation report released in 2023 by UNCTAD revealed that developing countries ranked low in the frontier technology readiness index which measures how ready countries are in terms of implementation of communication technologies (ICT), available workforce skills, research and development (R&D), industrial capabilities, and access to financing. This technological divide raises the question: can developing nations ever catch up in the race to build a green economy in the face of an urgent climate crisis?

There are some hopeful signs, however. Countries like India and Bangladesh have made significant strides in solar energy, thanks to innovative financing models and international partnerships. Bangladesh's solar home system program has provided electricity to over 20 million people in rural areas, demonstrating that with the right support, developing nations can harness green technologies to address both energy poverty and climate change.

The transition to a green economy is not just a challenge for developing nations—it is a shared global responsibility. Wealthy nations, which have historically contributed the most to carbon emissions, bear a significant moral and financial responsibility to support developing countries in their green transition.

In 2009, the international community pledged to mobilize $100 billion per year by 2020- to support climate action in developing countries, yet actual financial flows have fallen short of this target. The COVID-19 pandemic has further exacerbated the economic challenges facing developing nations, making it even more difficult for them to prioritize green investments.

Moreover, many developing nations feel that the push for net-zero carbon emissions is unfair. As a recent Brookings Institution article notes, poor and developing countries are often pressured to reach net-zero emissions earlier than wealthier nations, despite their relatively small contribution to global carbon levels. For countries like Nigeria or Vietnam, which are still heavily dependent on fossil fuels for their economic growth, such expectations are not only unrealistic but also detrimental to their development goals.

Instead of imposing blanket targets, many experts argue that a more equitable approach would involve differentiated responsibilities, where wealthier nations provide the financial and technological support needed for developing countries to transition at a pace that aligns with their development objectives. The World Bank suggests that blended finance—combining public and private investments—could be a key mechanism to help developing nations overcome the financial barriers to green growth.

Despite the many challenges, there are also promising examples of developing nations making progress in the green economy. Brazil has made significant strides in renewable energy, with nearly 85% of its electricity coming from renewable sources such as hydropower, wind, and solar energy. As the largest country in Latin America, Brazil’s energy mix is heavily dominated by hydropower, which accounts for the majority of its renewable capacity. The country is increasingly diversifying into wind and solar power, making it a leader in clean energy transition.

Similarly, Morocco has become a pioneer in solar energy, with the Noor Ouarzazate Solar Complex standing as one of the largest solar power plants in the world. The project has not only reduced Morocco’s reliance on fossil fuels but also created thousands of jobs and positioned the country as a leader in the green economy. These success stories highlight the potential for developing nations to leapfrog outdated technologies and adopt greener alternatives—if given the right support.

In Southeast Asia, Vietnam has rapidly expanded its solar capacity in recent years, thanks to favourable government policies and international investments. Between 2019 and 2020, the country increased its solar power capacity by 25-fold, making it one of the fastest-growing solar markets in the world. This rapid expansion demonstrates that with the right mix of policies, financing, and international cooperation, developing nations can indeed compete in the green economy.

The transition to a green economy is inevitable, but whether it will be inclusive remains an open question. As global leaders convene for climate conferences and economic forums, the focus must shift from lofty goals to tangible actions that support developing nations in their green transitions.

A greener economy can benefit everyone—but only if the international community acknowledges the unique challenges faced by developing nations and provides the necessary financial, technological, and policy support. As UNCTAD's recent report suggests, LDCs cannot afford to strand their assets, nor can they afford to be left behind in the race to build a sustainable future.

Ultimately, the green economy must be a global effort, one that prioritizes equity, innovation, and cooperation. If developing nations are given the tools and resources they need, they can not only keep up but also lead the way in creating a more sustainable and just world for future generations. The green economy is not a privilege for the wealthy—it is a necessity for all.