Santa Marta, Colombia — A global coalition of civil society groups and researchers has warned that mounting debt burdens are undermining efforts to shift away from fossil fuels, calling for sweeping reforms to the international financial system to enable a fair energy transition.
The warning came at a press conference held on the sidelines of the First Conference on Transitioning Away from Fossil Fuels in Santa Marta, co-hosted by Colombia and the Netherlands. The event, organised by the Debt and Climate Working Group, brought together activists, academics and policy advocates seeking to align climate action with economic justice.
Speakers argued that the current global debt architecture is locking many low- and middle-income countries into fossil fuel dependence, forcing governments to prioritise debt repayments over investments in clean energy, climate adaptation and social services.
Debt burden constraining climate action
Participants said the issue is particularly acute in the Global South, where countries facing climate vulnerability are often heavily indebted to wealthy nations and private creditors. This, they argued, creates a structural incentive to continue fossil fuel extraction to generate foreign currency.
“Without proper finance, countries simply cannot move fast enough — or at all — to phase out fossil fuels,” said Mariana Paoli of Oxfam International. She noted that many governments are spending more on servicing debt than on essential sectors such as health, education or climate resilience.
The result is a cycle in which vulnerable countries remain exposed to climate shocks while lacking the fiscal space to invest in sustainable alternatives.
Calls for debt relief and systemic reform
Advocates called for a combination of debt cancellation, new financing mechanisms and structural reforms to enable a “just transition” — one that ensures equity and supports communities most affected by climate change.
Carola Mejía of LATINDADD stressed that transitioning away from fossil fuels requires recognising what she described as the “historical climate debt” owed by industrialised nations.
She called for debt relief, progressive taxation and easier access to grant-based climate finance, arguing that funding should not only support large-scale renewable energy projects but also small, community-led initiatives that promote alternative economic models.
“These local solutions already exist,” she said, “and they need to be supported and scaled.”
Financial system under scrutiny
Speakers also criticised international financial institutions and global monetary structures, saying they continue to reinforce fossil fuel dependency.
Ariel Slipak of Fundación Ambiente y Recursos Naturales pointed to Argentina’s experience, where the International Monetary Fund has supported the expansion of fossil fuel projects such as the Vaca Muerta shale formation to help generate export revenues for debt repayment.
He warned that such policies risk entrenching extractive industries while exacerbating environmental and human rights impacts, and called for a reassessment of sovereign debt through a social and ecological lens.
Others went further, urging a rethink of the global financial order itself. Alicia Maldonado of Debt for Climate argued that both the debt system and the dominance of the US dollar must be addressed to enable a genuine fossil fuel phase-out.
“The cancellation of illegitimate debts is urgent,” she said, warning of a looming energy and financial crisis if current trends continue.
Linking climate, conflict and dependency
The discussion also touched on the geopolitical dimensions of fossil fuel reliance. Haneen Shaheen of the Menafem movement highlighted how energy systems in parts of the Middle East remain intertwined with conflict, instability and financial dependency.
She said ongoing regional tensions underscore the need for energy sovereignty and a shift away from extractive systems that perpetuate inequality and violence.
At the same time, speakers emphasised that countries in the Global South are increasingly taking initiative, pursuing alternative development pathways despite financial constraints.
Proposals for alternative financing
Policy experts at the briefing outlined several proposals aimed at easing financial constraints on climate action. These included expanding the use of Special Drawing Rights (SDRs) by multilateral institutions, cancelling debt linked to fossil fuel investments, and increasing access to grant-based funding rather than loans.
Andrés Arauz of the Center for Economic and Policy Research argued that sustainable development requires investment in local economies, particularly sectors such as food systems, healthcare and renewable energy.
However, he stressed that such investments must be financed without adding to debt burdens, warning that reliance on loans risks perpetuating the very constraints that hinder climate progress.
A critical moment for global negotiations
The press conference was held ahead of the conference’s high-level segment on April 28–29, where government representatives are expected to discuss concrete pathways for transitioning away from fossil fuels.
Advocates hope their proposals will influence those discussions, particularly as countries prepare to update climate commitments under the Paris Agreement and navigate rising economic pressures.
They argue that without addressing debt and financial inequality, global climate goals — including limiting warming to 1.5°C — will remain out of reach.
Conclusion
The message from Santa Marta is clear: tackling the climate crisis is inseparable from reforming the global financial system. For many developing countries, the path to clean energy is not just a technological challenge but an economic one, shaped by debt, inequality and historical responsibility.
Whether these concerns translate into policy action will likely depend on the outcome of ongoing negotiations — and the willingness of wealthier nations and financial institutions to rethink the rules that govern global finance.
