QAZAQ GREEN.  Clean energy projects in emerging markets hold major potential for advancing global climate goals, yet they continue to face significant financing barriers. Guarantees and insurance instruments can mitigate risks, improve creditworthiness and attract private investment. Despite their effectiveness, their use remains limited. New OECD analysis examines how these tools are already supporting clean energy and energy efficiency projects, and why they are not yet deployed at scale.

The global energy system is undergoing rapid transformation. According to the IEA, renewable power additions grew by 22% in 2024 to a record 685 GW, with total global capacity expected to double by 2030. Still, progress is too slow to meet international climate and energy targets. Energy efficiency is especially lagging: annual improvements average just 1.3%, far below the 4% needed through 2030.

The clean energy transition represents not only a climate imperative but also a USD 31.5 trillion investment opportunity by 2030, largely in emerging markets. Yet steep barriers persist. Energy efficiency projects require large upfront capital, small borrowers often lack collateral and credit histories, and markets suffer from limited performance data. Utility-scale renewables depend on the financial stability of off-takers, while off-grid solutions face volatile revenue streams.

These challenges are amplified by macroeconomic pressures in EMDEs — constrained public budgets, currency risks and elevated investor perceptions of uncertainty.

According to OECD, targeted financial instruments such as credit risk guarantees and portfolio guarantees can shift risk perceptions and facilitate access to funding. The analysis highlights examples already demonstrating impact:

• Pakistan — local currency guarantees enabled a developer to secure financing for 21 MW of rooftop and ground-mounted solar assets.
• Sub-Saharan Africa and Southeast Asia — a USD 50 million portfolio guarantee reduced risks for distributed energy solutions, supporting investment in solar, e-mobility and clean cooking.
• India — a partial risk-sharing facility issued 79 guarantees, mobilising USD 132 million for energy-efficiency projects across SMEs and municipalities.
• Colombia — an energy savings insurance scheme helped small businesses access financing, delivering more than 600 policies with a default rate below 1%.

Despite strong results, guarantees remain underused, accounting for just 4% of MDB commitments. Challenges include product complexity, insufficient project pipelines, high transaction costs and inconsistent regulatory treatment of guarantees.

OECD stresses that guarantees work best alongside complementary measures—technical assistance, concessional finance, clear regulatory frameworks and strong market incentives such as green procurement and minimum efficiency standards.

While not a standalone solution, guarantees and insurance can play a decisive role in unlocking capital for the clean energy transition in emerging markets when deployed under the right conditions.