The shift towards a low carbon economy is not only urgent but also demands substantial investment. For many Global South nations, the high costs of decarbonising sectors pose significant challenges. These transition costs are complex and vary across sectors, encompassing financial, technical, social, and political dimensions. The South-South Cooperation (SSC) presents a powerful avenue and an effective channel if realised effectively to address these barriers by offering solutions rooted in shared experiences, mutual trust, and collective innovation that are frugal. South-South cooperation offers vital support for decarbonisation in developing nations, addressing challenges like limited financing, technical gaps, costly green imports, and poor coordination ensuring climate goals are met without compromising economic development pathways. By prioritising affordability, job creation, and inclusive models, SSC aligns with just transition principles and avoid imposing top-down, imported solutions.
Building on this year’s South-South Cooperation (SSC) day’s theme, ‘New Opportunities and Innovation through South-South and Triangular Cooperation’ the seven recommendations outlined in the 2025 Global Report on South-South and Triangular Cooperation serve as critical enablers. These recommended actions are not only timely but also represent foundational steps toward advancing a low-carbon economy through strengthened South-South and Triangular Cooperation in an era of geo-political uncertainties. Industrial decarbonisation has become a major buzzword in climate and development discourse, yet it is not materialised due to its high capex costs for upgrading, retrofitting, replacements, carbon capture storage and process decarbonisation. The costs are often not forecasted for the existing assets and their financials and therefore, the willingness lies low. According to the International Energy Agency, emerging and developing economies (excluding China) will require nearly $ 2 trillion annually by 2030 for clean energy transition, a fivefold increase over current planned investments. Where is the finance?
Countries are developing decarbonisation pathways and addressing the high costs of industrial decarbonisation especially in low- and middle-income nations. It has been realised that the effort demands not only financial support but also collaboration, knowledge-sharing, and joint innovation. Initiatives such as the South- South galaxy platform, India’s International Solar Alliance, and UNOSSC’s joint pilot projects are focussed on climate action and low-carbon transition to lower costs and risks. Yet some channels remain untapped, underutilised and unsustainable at scale. Given these pressing challenges and limited resources, countries can improve access to financial resources for de-carbonisation initiatives through innovative financing to overcome challenges and unlock additional capital required to meet high cost of transition that is just and equitable. Pooled financing directly tackles financing barrier by blending concessional and commercial resources to de-risk projects and unlock affordable capital at scale. By aggregating resources from multiple countries, governments, regional development banks, donors, and private investors into a single digital SSC platform shall create economies of scale, reduce risk concentration, enhance bargaining power, increase efficiency and help in diversification. This not only lowers the cost of capital but also improves investor confidence in high-capex sectors such as renewable energy parks, electric mobility infrastructure, and carbon capture networks.
South-South Cooperation (SSC) can anchor pooled financing to support decarbonisation while deepening regional integration. Initiatives like the India-Bhutan power partnership and East Africa Power Pool highlight this potential. Regional bodies such as ASEAN, SAARC, and the African Union can lead efforts by creating green finance hubs, issuing joint instruments, and attracting funding through risk-sharing frameworks. SSC also drives knowledge exchange and stronger MRV systems, boosting transparency and trust. To maximise impact, harmonising industrial policies and standards across regions is crucial reducing compliance costs, attracting investment, and enabling efficient decarbonisation of cross-border value chains. SSC stands as a pillar for inclusive, low-carbon growth based on enhanced transparency and mutual trust.
As the world moves toward a low carbon future, regional, bottom-up decarbonisation pathways must be prioritised tailored to sectoral needs with clear technical specifications. Joint procurement through unified platforms can unlock economies of scale, while cross-country dialogues and MoUs help translate ideas into action. For countries with limited resources, South-South Cooperation offers a vital platform to bridge gaps in finance, technology, and capacity. By sharing knowledge, pooling resources, and collaborating across borders, nations can lower transition costs and ensure that climate action is inclusive, equitable, and sustainable further transforming shared challenges into opportunities for regional growth, resilience, and long-term prosperity in the Global South.
(This article is authored by Dhriti Kharbanda, lead, strategic partnerships and collaboration, climate change and sustainability practice and Aanchal Jain, associate director, impact investment vertical portfolio, IPE Global.)
