Flipping the Power Switch

The world is navigating a moment of profound instability. Climate impacts are accelerating, financial vulnerabilities are deepening, global power is fragmenting, and the struggle for resources is intensifying. 

These overlapping crises are not confined to any one sector or geography; they are planetary in scale, simultaneously affecting ecosystems, economies, and societies. The polycrisis is obvious to those most profoundly affected by it, but the global response remains deeply contested. Alliances that once seemed stable are weakening. The foundations of the global order established eight decades ago face attacks from an unexpected quarter: Their own architects have joined the assault.

The energy transition is reshaping global governance as nations renegotiate social contracts. These shifts are creating new opportunities for emerging economies rich in natural resources while imposing new obligations on advanced economies seeking to end their dependence on fossil fuels.

In April, New America convened a workshop on the sidelines of the World Bank spring meetings in Washington, DC. Participants, including global experts on climate science, energy politics, finance, labor, and the extractive industries, identified three areas as central to the future of a just energy transition: how mineral refining affects local communities, how debt and finance shape climate action, and how global alignments are shifting in response to the transition. The papers in our Power Switch series explore these interconnected challenges, revealing the transition’s complexity and how to shift power toward more inclusive and responsive international cooperation. 

Power in the energy transition is not just about electricity or fuel. It is about who can afford to borrow money, who sets trade rules, and who benefits from natural resources. Existing dynamics, in which wealthy countries and companies enjoy cheap finance and secure markets while poorer nations face high borrowing costs and dependence on exporting raw minerals, reinforce the advantages of those most responsible for carbon emissions while burdening the lowest emitters. A fair transition demands jettisoning the politics of one-sided transactions.

Critical Minerals

Critical minerals such as cobalt, nickel, and lithium are essential to clean energy technologies. They are also at the center of debates about whether resource-rich countries can leverage extraction into broader development gains. Increasingly, governments in the Global South are pursuing strategies to move beyond exporting raw minerals and toward domestic processing and refining, aiming to capture more value and drive industrialization. Indonesia, with its nickel export ban and investment in refining, is frequently cited as a model. Yet this example carries warnings. Domestic processing has spurred foreign investment and created political and economic leverage, but it has also generated new human and environmental harms and reinforced a system that overwhelmingly benefits political and economic elites. 

As we move toward what seems to be a new wave of extractivism, we would be well advised to remember what decades of unequal development and environmental degradation in mining and industrial sites have yielded. In an era of unbridled digital disruption, clean energy requires massive amounts of minerals that are as difficult to price as they are to draw from the ground. Countries rich in these resources need partnerships that build more value at home, as well as investments and financial arrangements that contribute to sustainability and benefit their people. 

Climate Finance and Sovereign Debt

Finance is critical to every dimension of the transition, yet international climate finance is marred by deep structural biases. Despite repeated pledges from global institutions, much funding arrives in forms that add to existing debt burdens rather than easing them. East Asia and the Pacific receive the largest share, driven in part by a surge in Chinese investment. In contrast, Sub-Saharan Africa, among the most vulnerable regions, received only 30 percent of international concessional climate finance between 2019 and 2022. 

In 2022, 58 developing countries spent twice as much on external debt payments as they received in climate financing. This is not a side issue of the transition, but a central constraint. In Ghana, over half of government revenues go to servicing debt, more than the country spends on health, education, and climate combined. 

History has shown that finance flows will not shift through renewed donor appeals alone. Imbalances are embedded in the architecture of the global financial system, from how concessional lending is structured to how creditworthiness is defined and who sets the standards for investment risk. Countries in the Global South continue to pay higher costs of capital because regulatory frameworks systematically overweight sovereign and currency risks while undervaluing climate opportunities. Risk modeling itself is made harder by polarizing politics that have eroded public confidence in science and empiricism. 

In the last decade, a new generation of debt-for-climate and debt-for-nature swaps has emerged, among many other innovative initiatives to address the increasingly intertwined crises of debt, climate, and biodiversity loss in the Global South. While these mechanisms are particularly promising in their capacity to expand access to climate and conservation finance, they are far from adequate to meet existing gaps. To work well, they require stronger political will among creditors and debtors and better coordination on the ground.

Geopolitical Ruptures

The energy transition is already redrawing global power relationships, with countries and blocs using mineral access and industrial policy as levers of influence. Yet the rules continue to be shaped largely by institutions and actors that reflect an outdated order: the World Bank and International Monetary Fund through lending conditionality, the World Trade Organization and OECD through trade and investment standards, and credit rating agencies and private financial markets through their control over borrowing costs and capital flows. 

At the same time, wealthy states in the G7 and European Union are rewriting the rules through subsidy regimes and measures such as the carbon border adjustment mechanism, while China, the Asian Infrastructure Investment Bank, and the New Development Bank are carving out parallel spheres of influence. Resource-rich Global South countries are caught between these competing systems. They must build coalitions that allow them to negotiate collectively, turning mineral wealth and industrial strategies into tools for fairer participation in global supply chains.

Critical minerals, climate finance, and geopolitics form the architecture of the transition, and each shapes the possibilities of the others. Piecemeal reforms, donor-driven fixes, or one-off debt swaps may deliver short-term relief but cannot address the deeper inequities that define today’s climate politics. A converging agenda means addressing finance, debt, minerals, and trade together as part of a systemic shift. The interconnections are tight, and they reveal that the real barriers to a just transition are not technical, but structural.

Donors and recipients of climate finance need to collaborate more closely on rewriting the rules of clean energy development and climate adaptation and mitigation investments to create fairer pathways to debt sustainability, ensure that mineral wealth supports local development, and build industrial policies that do not reproduce dependency but enable genuine cooperation. While wealthier countries and global institutions hold much of the power to unlock these reforms, Global South governments and communities must have a central role in shaping the transition.

The coming months and years will be decisive. COP30 in Brazil, the G20 in South Africa, and other multilateral forums offer chances to align political will with the scale of transformation required. These opportunities will matter only if they move beyond technical pledges and confront the deeper systems that shape who has power and who does not. The goal is not simply to accelerate green growth but to redistribute power to give countries and communities in the Global South the space, tools, and agency to chart their own paths.