Just Transition Finance and its role in the Belém-Antalya Just Transition Mechanism

Published on October 7, 2026

Authors: Jodi-Ann Wang, Rebecca Thissen

Global Policy Policy reform

A Just Transition requires finance that supports workers and communities, redresses historical and contemporary inequalities, and enables developing countries to transform their economies without deepening debt burdens or restricting their policy choices. The quantity, quality and governance of this finance must advance together to avoid reinforcing the dependencies the transition is meant to overcome.

Following years of mobilisation by trade unions and civil society, governments at COP30 agreed to develop a Just Transition Mechanism (JTM) to strengthen international cooperation and enable equitable, inclusive just transitions. This discussion paper examines the necessity and vision for finance within its operationalisation. Ahead of COP31, it sets out recommendations for the mechanism, also referred to by civil society as the Belém-Antalya Mechanism (BAM), and the wider climate finance architecture.

The paper examines Just Transition finance through three registers:

Quantity (how much finance goes to Just Transition) 79% of NDCs now reference Just Transition, but only 26% attach a financial figure to it. Needs estimates range from an “illustrative” USD 50 billion a year by 2035 to a “highly conservative” USD 420 billion a year, as no common tracker exists.
Quality (what type of finance goes to Just Transition and for whom) The terms of finance often undermine its purpose. Over 90% of Just Energy Transition Partnership (JETP) finance is debt or contingent liabilities, with grants at 4%. Almost three-quarters of international climate finance comes as loans, while developing countries paid a record USD 921 billion in net public debt interest in 2024. De-risking approaches tend to socialise losses and mobilise less private capital than advertised. Even in the best-documented case, the EU Just Transition Fund, the social component of Just Transition finance is often underfunded.
Governance (who decides and who sets the rules for Just Transition) Various actors (MDBs, climate funds, the IMF, DFIs, philanthropy) define the “just” part of the transition differently, with no shared reporting standard and no body providing coherence. Deals tend to be struck bilaterally, leaving recipient countries with limited ownership over how justice is defined in their own transitions and little accountability for following up and addressing these funding approaches.

The report recommends moving forward the Just Transition finance discussion through two complementary tracks:

Just Transition Finance in the new JT Mechanism/BAM:

Work so that the BAM becomes a laboratory of what qualitative finance can look like in practice – generate learnings and good practices from BAM operations on channeling and scaling up Just Transition finance that would help inform and expand knowledge on qualitative climate finance.
The inclusion of a function that speaks to the role the BAM will play in mobilising financial resources for Just Transition strategies, along with modalities to coordinate and align various actors involved in financing Just Transition.
With the support of a Resource Mobilisation Group to be created under the Mechanism, ensure that the UNFCCC Financial institutions cover Just Transition finance, in line with agreed COP30 Principles.
Set the standards and operating modalities for other external actors active on Just Transition.
Ensure that the BAM features a specific modality to guarantee accountability for Just Transition finance, including in relation to existing transparency arrangements and financial reporting mandates.

Just Transition finance in the climate finance space:

Just Transition and New Collective Quantified Goal implementation: recognise that the current climate finance goal and its targets insufficiently address Just Transition finance needs and therefore largely underestimate developing countries’ financial requirements, both in terms of the cross-cutting nature of Just Transition as well as its dedicated funding needs.
Standing Committee on Finance reports and methodologies to recognise, include and monitor Just Transition finance, both in terms of the cross cutting nature of Just Transition as well as its dedicated funding needs. This could be factored into upcoming Biennial Assessments, Needs Determination Report and NCQG review.
Address disenablers and connect with the GST-1 decision, the NCQG decision (para 6), which speaks about the need to remove barriers and address disenablers faced by developing country Parties in financing climate action as well as the ongoing Veredas Dialogue on Article 2.1 of the Paris Agreement to establish a structured and organised discussion on those obstacles.

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