Developing nations require more than $1 trillion per year to make significant progress in transitioning to a sustainable climate, according to Mari Pangestu, a former World Bank official.

Pangestu stated in an interview with HaberTusba’s “Squawk Box Asia” that “the estimate is around $1 trillion to $3 trillion annually for developing countries to successfully transition.”

The lack of funding has made it challenging for these countries to reduce their high carbon emissions and shift towards clean energy. This has resulted in tensions between developing nations and the developed world, which is advocating for more climate progress.

Pangestu, who previously served as Indonesia’s trade and tourism minister, emphasized that “this debate will persist unless developed countries recognize that this is about both development and climate, not just climate alone.” She underlined the importance of the word “transition” in this context.

“How do you transition from high emissions to clean energy? It will require resources,” she added.

Pangestu noted that the lack of progress made during the recent Group of 20 (G20) climate ministers meeting in India was partly due to disagreements over financing developing countries’ climate initiatives.

The G20 climate meeting in July was seen as an opportunity for major polluters to take concrete steps before the G20 leaders’ meeting in September and the COP28 Summit in December.

However, the failure to reach a deal drew strong criticism from environmental activists. Alex Scott from the climate change think-tank E3G stated, “Europe and North Africa are burning, Asia is ravaged by floods, yet G20 climate ministers have failed to agree on a shared direction to halt the escalating climate crisis.”

Scott also criticized Saudi Arabia and China for allegedly obstructing discussions on energy transition and impeding the interests of developing countries.

China denied these claims, asserting that the meeting achieved positive outcomes despite certain countries introducing geopolitical issues as obstacles.

Pangestu emphasized the need for a comprehensive and urgent response to the climate crisis, requiring greater efforts from all stakeholders.

She suggested that funding should come from countries’ own resources, as well as from multilateral development banks and other sources that can reduce costs and risks to attract private sector involvement.

Pangestu argued that if developed nations want developing countries to abandon fossil fuels and retire coal plants early, they should provide adequate support to cover the associated costs.

She highlighted the legal and financial issues involved in compensating private companies affected by such transitions, emphasizing the importance of policy reforms.